Procurement vs. Purchase Orders vs. Requisitions

By Procurify

There are differences, and knowing them might save you some embarrassment. 

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  What is Procurement?

  Procurement is the process by which a company—or a department within a company—selects the vendors and suppliers it will do business with. It also refers to the process of negotiating contracts and acquiring the goods and services needed. 

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  Procurement in Action

  Let's say Mabel wants 300 blue pens but Mabel's company has never ordered 300 blue pens before. Mabel's company will go through a process of selecting a vendor, negotiating a contract and acquiring the pens. That's all procurement. 

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  What's a Requisition?

  The requisition is the request from a person in a company to that company's purchasing department to place an order. Mabel would send a requisition to head office for 300 blue pens.

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  More About Requisitions

  Some companies allow small purchases to be made without a requisition. Mabel, for example, might be allowed to purchase five blue pens without a requisition, but has to fill out a requisition order for more than 10 pens.  

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  What's a Purchase Order (PO)?

  The purchase order is the paperwork sent to a supplier officially purchasing the goods. Mabel's company would send a purchase order to Pens Inc., when the company purchases the 300 blue pens.  

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  Purchase Order Approval

  A purchase order is also a great way for a company to keep records on what has been purchased, by whom, and when. It provides proof that a requisition has been approved and enables the company to keep track of when new stock is expected. It also provides a record of the company's spending.