Objective
A purchase requisition is the first step in a company's purchasing process, and the first step of the Procure to Pay process flow. A purchase requisition is a request created to indicate the need to acquire goods or services for the business.
This document, known as a purchase requisition (PR), is created when requesting goods or services. It can include catalog items from a supplier, as well as non-catalog items.
In today's fast-paced business environment, efficiently managing the procurement process is crucial for maintaining operational efficiency, reducing costs, and ensuring compliance. The Procure-to-Pay cycle encompasses the entire process from identifying goods or services needed to final payment, including requisitions, purchase orders, receipt of goods, invoice processing, and payment.
Purchase requisitions represent a request for goods or services. Users add items to their cart from a catalog, spot buy catalog, punchout catalog, or as non-catalog items. After all the details of the PR have been entered, the user submits the PR.
Approvals in SAP Ariba are highly customizable. While not required, most organizations enable approval processes on purchase requisitions, ensuring that all requests are routed to specific users or groups who either approve or deny purchases.
Once approved, a PR generates one or more Purchase Orders. POs are sent to suppliers over the SAP Business Network to streamline the ordering process. Orders for suppliers who are not on the SAP Business Network can be processed manually.
During the PO Process, suppliers on the SAP Business Network can send Order Confirmations (OC), or Advanced Ship Notices (ASN) to provide more information about the ordered items that have been approved or rejected, and to share shipping details.
Receipts are used to track receiving of tangible materials or physical goods. Once an order has arrived at the ship-to location, end users submit goods receipts to confirm the exact amounts or quantities of the items received.
Service Entry Sheet (SES)Service entry sheets are used to track intangible services, and act as a verification record that the services were performed. Service Entry Sheets are typically created by a supplier on the SAP Business Network, and include a service start and end date, and all the details of the services that were rendered. Once submitted by suppliers, Service Entry Sheets are sent to buyers, and can be made to go through an approval process in SAP Ariba Procurement.
Suppliers on the SAP Business Network send invoices electronically to SAP Ariba to request payment from buyers.
All invoices generate an Invoice Reconciliation document, which is used to address and make decisions on how to settle any discrepancies, or differences between the PO, Receipt, and Invoice data.
Once an IR has been reconciled and approved, it generates a Payment Request, which is sent to the Enterprise Resource Planning system, also known as ERP, via the OK2PAY file. The ERP then uses that data to generate and send payments to a supplier for the reconciled amounts and quantities.
Once a payment has been issued from the ERP, the payment information, known as Remittance, can be loaded into SAP Ariba to update documents, and statuses, and to maintain data for reporting.
The video below covers the key components of the Procure to Pay workflow.
Purchase requisitions are the beginning steps of procurement. PRs go through various statuses during the process, which are outlined below, with each status indicating the PRs current condition.
Composing: In this phase, the author creates the requisition, and it remains private to the user who drafted it until it is submitted..
Submitted: Once submitted, the requisition enters the approval process. At this point, at least one person still needs to approve it. The requisition is in transit between submission and a final decision.
Denied: If someone in the approval chain rejects the request, the requisition enters the Denied state. Here, it awaits resubmission by the preparer or approval from the denying party.
Editing: To modify a requisition in the Composing or Submitted status, click the Edit button. This action withdraws the request from the approval process, returning it to the Composing state. From there, the user can change item details, delete existing items, or adjust requisition fields.
Withdrawing: A requisition in the Submitted or Approved status can be withdrawn by clicking the designated button. However, fully approved requisitions can only be withdrawn if their hold date has not yet been reached. Upon withdrawal, the request is removed from the approval process, reverts to the Composing state, and allows for further modifications.
Ordering: After receiving full approval, the requisition moves into the Ordering phase. Here, it is processed for conversion into purchase orders, particularly when using the SAP Business Network for Procurement. This stage can be brief.
Ordered: Once the purchase orders are successfully sent to the designated suppliers, the requisition remains in the Ordered state until the requester receives the items or decides to cancel the order. This marks the finalization of the procurement process for that specific requisition.
Receiving: Once the received quantity of any item is recorded, the requisition's status changes to Receiving. It stays in this state until additional receipts are submitted to fulfill the entire ordered quantity.
Received: Upon completion, the requisition advances to the Received state.
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