Network Member Question

 

Can anyone advise me of the difference between a material requisition and purchase requisition?

 

Manal Al-Asousi

Manager, Operations & Projects Development  – Kazema Global Holding Co.

Kuwait

 

My Response

 

Some pundits may splice hairs by saying that one process or function is internal facing (purchase requisition) and the other is external facing (material requisition), while others may suggest that they are interchangeable terms – similar to the “differences” between purchasing and procurement, it matters not in the end if the real-world processes that define your business model are not collaboratively identified and collectively understood.

 

With 85% of all e-procurement/supply chain initiatives failing to achieve the expected results, a debate surrounding terminology would seem to be an exercise in shadow boxing.

 

I am not suggesting that the varied definitions are incorrect or even in and of themselves unnecessary.  However given that most enterprises attribute the requisition process as being an integral part of an organization’s internal financial controls, perhaps a more pertinent question would be how to overcome or “bridge” the communications gap between finance and purchasing.

 

In the context of the results of a 2007 Aberdeen survey, the disconnect between the financial imperatives of the CFO, and the operational requirements of the CPO means that supply chain issues go much, much deeper than the discernment of industry terminology.  (Note: I have provided a number of links under the Web Resources section to corresponding articles discussing the survey’s results.)

 

Here are just a few of the findings from that survey:

 

• Of the total savings claimed by purchasing departments 73% are discounted as being invalid by the finance department.
• Less than 20% of CFOs feel that the work of the CPOs and their staffs as having a very positive impact on competitiveness.
• On average only 46% of CFOs feel that the procurement team has contributed to enterprise growth.

Once again, and given the fact that the requisition process is seen largely as a means of establishing the necessary control mechanisms deemed by the finance department as being important, doesn’t it make more sense to focus on collective process understanding and refinement through effective stakeholder collaboration?

 

 

 

Web Resources:

 

• https://procureinsights.wordpress.com/2008/07/21/is-there-a-difference-between-purchasing-and-procurement-a-pi-qa/

 

 

 

 

Procurement Insights Free Access Library: https://procureinsights.wordpress.com/procurement-insights-free-access-library/