4.2 Requisition-to-PO Workflow (Indirect)

Indirect procurement is the wild west of the supply chain. Without a rigid process, it devolves into "maverick spend"—uncontrolled purchases made on personal credit cards, verbal promises to contractors, and mystery invoices that Finance cannot reconcile. The Requisition-to-PO workflow is not bureaucratic friction; it is the financial transmission mechanism that converts an operational need into an auditable company liability.

The Input Gate: Mandatory Data

A Purchase Requisition (PR) is a formal request for capital. If the input data is garbage, the output is financial chaos. Enforce a strict "Input Gate."

If the PR is missing any of the following, Reject Immediately:

1. Specification: Exact Manufacturer Part Number (MPN), web link, or detailed Statement of Work (SOW). "Office Supplies" is not a specification.
2. Required Date: A specific calendar date. "ASAP" is invalid data.
3. Cost Center: The specific budget bucket (e.g., Dept-901-Maintenance) that pays for this.
4. Suggested Vendor: Who sells this? (Link to source or contact info).
5. Budget Owner: Who holds the P&L responsibility for this cost center?

The Standard Workflow

Standardize the path from "I need" to "Paid."

Step 1: Requisition (User)

• Action: User submits PR in the ERP/Procurement System.
• Gate: System validates budget code and mandatory fields.

Step 2: Sourcing (Buyer)

• Action: Buyer reviews the PR.
  • Catalog Item: Confirms price matches contract.
  • New Item: Requests 3 quotes (if > $2.5k) or validates single source.
• Output: Updated cost and lead time in the PR.

Step 3: Approval (Management)

• Action: The system routes the PR to the Approver based on value (see Matrix below).
• Decision: Approve (Budget verified) or Reject (Unnecessary spend).

Step 4: PO Generation (System)

• Action: Approved PR converts to Purchase Order (PO).
• Trigger: PO is emailed to Vendor automatically.

Step 5: Goods Receipt (Warehouse/User)

• Action: Physical receiving of goods or "Service Entry Sheet" sign-off for labor.
• Rule: No Receipt = No Payment.

Step 6: The 3-Way Match (Finance)

• Logic: PO Price vs. Receipt Qty vs. Invoice Total.
• Result: If they match, AP releases payment. If they fail, the Invoice is blocked.

The Approval Matrix

Delegation of Authority (DoA) balances speed with control. High-velocity, low-risk items should not require VP signatures.

Threshold Value	Risk Level	Approver Required	Turnaround Target
< $500	Low	Auto-Approval (or Line Lead)	Instant
$500 – $2,500	Operational	Department Manager	< 24 Hours
$2,500 – $10k	Significant	Department Director	< 48 Hours
> $10k	Strategic	VP Operations + Finance	< 1 Week
Any IT HW	Security	IT Director (Veto Power)	Variable

The "No PO, No Pay" Mandate

Suppliers must be trained to respect your system.

Rule: Any invoice received without a valid PO number is Rejected and returned to the vendor immediately.

Why: If you pay an invoice without a PO, you validate "Maverick Spend." You teach the vendor that they can bypass your controls and still get cash.

Script: "We cannot process Invoice #1234 because it lacks a PO Number. Please contact the person who requested these goods and ask them to follow the correct procedure. We will not pay until a PO is generated."

Exceptions Policy

Real-world operations sometimes break the linear flow. Define the safe paths for exceptions.

The "Emergency" (After-Hours)

• Scenario: A pipe bursts at 2:00 AM. You need a plumber now.
• Protocol:
  • Use Corporate P-Card (Credit Card).
  • Mandatory: Submit "Post-Facto PR" next business day with receipt attached.

The "Post-Facto" PO (The Sin Bin)

• Scenario: User ordered goods verbally; invoice arrives.
• Protocol:
  • Do not just cut a PO to clear the invoice.
  • Action: User must create a PR. It is routed to their Manager with a flag: "violation of policy."
  • Consequence: Repeat offenders lose purchasing privileges.

Final Checklist

Control Point	Requirement	Critical Threshold
Data Integrity	PRs have correct MPN/SOW	0% Vague Requests
Approval Speed	Approvals cleared	< 48 Hours
3-Way Match	Invoice blocked if no Receipt	Automated
Vendor Discipline	Invoices rejected w/o PO	100%
Segregation	Requestor ≠ Approver	Mandatory
Receiving	Services signed off by owner	Required for Pay