In the world of procurement, one often underestimated stumbling block is the realm of poor Purchase Requisitions (PRs) in ERP systems. We've all encountered them – PRs like "50x Orange Juice," "100 Nails," or even just "Office Supplies" with no further context provided. These seemingly innocuous requests can lead to significant problems when it comes to efficiently procuring the required materials or services.
Purchase Requisitions serve as the starting point for an entire company's procurement process. When PRs lack clarity or have gaps in information, itcan trigger a cascade of issues that affect the efficiency of the entire purchasing process.
Missing Information: An incomplete PR in an ERP system can result in critical information being omitted, such as item numbers, quantities, or delivery date specifications. This makes it challenging for procurement teams to make informed decisions and process orders effectively, often leading to unnecessary internal communication.I
Inconsistent Details: Inconsistent details in PRs can lead to confusion. When different departments have varying requirements for the same product, it can result in double orders or incorrect purchases, increasing costs and reducing efficiency.
Unclear Descriptions: Unclear or vague descriptions in PRs can lead to misunderstandings. This can cause suppliers to misinterpret the requirements, resulting in the delivery of incorrect products or services.
Lack of Approval: In many companies, PRs need approval before being converted into orders. Poor PRs that are not approved in a timely manner can cause delays in procurement, disrupting business operations.
Budget Oversight: When PRs are not adequately checked for budget compliance, they can lead to financial goals not being met. This can result in unexpected cost overruns and financial constraints.
The effects of poor PRs in ERP systems can be far-reaching. They lead to inefficient procurement processes, increased costs, delayed deliveries, anda higher rate of errors. This can affect your company in various ways, fromcustomer satisfaction to financial health.
Training Create clear guidelines and best practices for PR creation and communicate them within the company. Place training materials in easily accessible locations for employees, such as on the company intranet. From our experience, videos work particularly well. Conduct regular training and reviews of the PR processes to educate employees about the importance of accurate and complete PRs.
Use standardized PR forms that include relevant fields for information suchas item numbers, quantities, delivery dates, and cost centers. Various software providers, including Lhotse, specialize in creating customizable and intuitive user interfaces for PR creation that integrate seamlessly with ERP systems. These forms exist for various material categories and can betailored to your company's terminology and processes.
Implement automated validation processes to ensure that PRs contain the necessary information before they can be approved. With Lhotse Forms, you can determine which information is mandatory. Additionally, we use artificial intelligence to assist requisitioners in finding the most suitable cost centers, material categories, framework contracts, etc. This significantly reduces erroneous cost center allocations and manual efforts.
Approval Workflows
Establish clear approval workflows to ensure that PRs are reviewed and approved by authorized personnel before further processing. With Lhotse Workflows, all relevant stakeholders are involved in the process. The workflow doesn't stop at approval steps – supplier onboarding initiated, DocusSign sent, ESG checks completed, credit scores verified! With Lhotse, you can incorporate relevant intermediate steps into workflows to expedite processes while maintaining 100% compliance.
Provide approved catalogs from suppliers, ensuring that requisitioners choose from a pre-validated selection of materials and services. These catalogs often include detailed product descriptions, prices, and technical specifications, making it easier for requisitioners to create accurate and complete PRs. Using catalogs helps minimize inconsistencies and errors in requisitions and ensures a smooth procurement process, where the right products are ordered from the right suppliers.
Implement automated budget checks to ensure that PRs align with existing budgets and resources.
By implementing integrated checks, companies can ensure that selected suppliers are reliable and approved. This includes verifying supplier qualifications, reputation, delivery history, and financial stability. Lhotse can be integrated with various software providers, such as EcoVadis or Integrity Next, to enable automatic supplier checks parallel to PR creation, ensuring compliance with regulations
Efficient procurement begins with precise Purchase Requisitions. By applying these best practices, you can not only improve the quality of yourPRs but also enhance the efficiency of your entire procurement process. This contributes to cost savings, shortened lead times, and increased customer satisfaction – a win for your company and your customers alike.
Reach out to us today if you want to improve your PR quality!
