Purchasing & Procurement
A Purchase Requisition (PR) is an internal document used by a company to request the purchase of goods or services. It signals a need for materials or supplies before a formal purchase order is created.
Full Definition
A Purchase Requisition is an internal form that initiates the procurement process, detailing what needs to be bought, its quantity, and when it's needed. It's typically created by a department that identifies a need, like production, and then submitted to the purchasing department for approval. This helps ensure that all purchases are authorized, budgeted for, and align with the company's operational needs before any external commitment is made to a supplier. For CPG brands, this is crucial for managing raw material and packaging inventory effectively.
Why It Matters for CPG Brands
For CPG brand operators, effective use of Purchase Requisitions prevents unauthorized spending and ensures that critical raw materials or packaging are ordered in a timely manner. It helps maintain optimal inventory levels, reducing the risk of stockouts that can halt production or lead to missed sales opportunities.
In CPG Operations
In CPG manufacturing, a production manager might create a Purchase Requisition for a specific ingredient, like organic oats or custom packaging, when inventory levels drop below a reorder point. This internal request then goes to the purchasing team, who will review it and eventually convert it into a formal Purchase Order sent to the supplier.
Example
A granola brand with 12 SKUs uses a Purchase Requisition when their inventory of almond butter for their nut butter bites falls below the safety stock threshold. The production lead submits a PR for 500 lbs of almond butter, which the purchasing manager reviews and approves before creating a Purchase Order with their supplier.
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Frequently Asked Questions
What's the difference between a Purchase Requisition and a Purchase Order?
A Purchase Requisition (PR) is an internal document requesting a purchase, while a Purchase Order (PO) is an external, legally binding document sent to a supplier to confirm the purchase. The PR comes first, initiating the request internally.
Why can't I just create a Purchase Order directly?
A PR process ensures proper authorization and budgeting before committing to a supplier. It adds a layer of control, preventing unauthorized spending and ensuring that all purchases align with company policies and inventory needs, especially important for managing CPG production costs.
How does a Purchase Requisition help with inventory management?
PRs help inventory management by formalizing the request for materials only when they are genuinely needed and approved. This prevents over-ordering, reduces holding costs, and ensures that procurement is aligned with production schedules, ultimately helping CPG brands maintain optimal stock levels for raw materials and packaging.