Every story has a journey, and in the world of procurement, there’s none more thrilling than the transformation of a humble purchase requisition into a mighty purchase order. It’s a tale of approvals, workflows, and the ultimate goal: making sure your business gets what it needs, when it needs it. So, buckle up, grab your favorite coffee mug, and let’s follow the epic odyssey of purchase requisitions in D365 Finance and Operations (D365 F&O).
What’s a Purchase Requisition? (The Rookie Chapter)
In simple terms, a purchase requisition (PR) is a formal request to procure goods or services. It’s like your kid handing you a list of back-to-school supplies, except with fewer glitter pens and more accountability.
A PR is the starting point where employees or departments identify a need and document it in D365 F&O. From here, the journey unfolds.
The Journey: How PRs Become POs
Initiation: Someone in the organization creates a PR in D365. This step involves specifying the items or services, quantities, and justifications.
Approval Workflow: The PR is routed through workflows for necessary approvals. Depending on configuration, approvers could include managers, budget holders, or even legal teams.
Vendor Selection: Once approved, the PR is matched with a vendor. If vendor catalogs or preferred suppliers are set up in D365, this step can be semi-automated.
Conversion: The PR graduates into a purchase order (PO), and the order is sent to the vendor. This is where the magic happens—your PR finally has some purchasing power!
Who Handles PRs vs POs?
In many organizations, the roles handling purchase requisitions and purchase orders are separate, reflecting the different stages of the procurement process:
Purchase Requisitions (PRs):
Handled By: Employees or department heads who identify a need for goods or services.
Responsibilities: Defining the requirement (items, quantities, and justifications), creating the PR in D365, and following up on approvals if needed.
Purchase Orders (POs):
Handled By: Procurement teams, purchasing officers, or centralized procurement departments.
Responsibilities: Reviewing approved PRs for accuracy, selecting vendors, negotiating terms, converting PRs into POs, and tracking orders for delivery.
Three Industry Examples of PR-to-PO Awesomeness
Manufacturing: Keeping the Lines Moving
Imagine you’re managing a manufacturing plant that produces precision-engineered bicycle components. A team identifies the need for 1,000 units of high-tensile steel. A PR is created, reviewed by the procurement head, and approved. With vendor contracts already configured, the PR becomes a PO in no time. The steel arrives, and production continues without a hitch.
Advanced Tip: Use demand forecasting in D365 to integrate PR generation directly with anticipated production needs, reducing manual entry.
Retail: Stocking Shelves Before Black Friday
A retail chain plans for Black Friday. Store managers create PRs for inventory replenishment. The PRs go through an automated workflow to ensure budget alignment and are converted to POs based on supplier agreements. Goods are delivered on time, and shelves are ready for the shopping frenzy.
Advanced Tip: Leverage trade agreements in D365 to automatically apply volume discounts during PR-to-PO conversion.
Healthcare: Procuring Life-Saving Equipment
A hospital requires new diagnostic machines. The requisition goes through strict compliance checks and approval tiers to meet regulatory standards. Once approved, the PR transitions to a PO and triggers vendor negotiations for warranties and service agreements. The machines are delivered, ensuring uninterrupted patient care.
Advanced Tip: Configure procurement categories and workflows for regulatory compliance to streamline complex approval hierarchies.
"Fun Features" (Workflow Customization) for Advanced Readers
For advanced users, workflow customization is where D365 F&O truly shines. Tailoring workflows ensures that purchase requisitions navigate the right approval paths, saving time and maintaining compliance. Here are some strategies to take your workflows to the next level:
Conditional Approvals: Use conditional logic to route PRs based on criteria like value, procurement category, or urgency. For example, if a PR exceeds $10,000, route it to a director for additional approval.
Parallel Workflows: Enable multiple approvers to review PRs simultaneously. This is particularly useful in scenarios where time-sensitive approvals are critical.
Escalation Rules: Set up escalation workflows to ensure that PRs aren’t stuck in someone’s inbox. For instance, if a PR isn’t approved within 48 hours, it’s automatically escalated to the next level.
Integration with Alerts: Configure email notifications or system alerts to keep approvers informed about pending requests. Automating reminders can significantly reduce approval bottlenecks.
Audit and Compliance: Leverage workflow logs to track approval histories. This feature is invaluable during audits, providing a clear record of who approved what and when.
Advanced workflow customization not only optimizes efficiency but also ensures that your procurement process aligns seamlessly with your organization’s policies and goals.
Who Owns Workflows?
Workflow ownership depends on the complexity and purpose of the workflows but generally involves these key players:
IT or System Administrators:
Primary Responsibility: Configuring and maintaining workflows in D365, ensuring workflows function as intended and comply with organizational policies.
Business Process Owners:
Primary Responsibility: Defining workflow requirements and business rules, monitoring workflow efficiency, and suggesting improvements.
Procurement Teams or Functional Managers:
Primary Responsibility: Approving workflows related to procurement, such as PR-to-PO conversions, and setting up vendor-specific rules or conditional approvals.
Best Practices for Workflow Ownership:
Collaboration between IT, business process owners, and procurement teams to align workflows with business objectives.
Clear documentation of workflow structures, rules, and escalation paths to ensure compliance and smooth handoffs.
Continuous review of workflows to evaluate efficiency and adjust to evolving business needs.
Final Dad Joke
Why did the purchase requisition blush? Because it saw the PO and thought, "That could be me someday!"
Here's to sipping more tea in 2025...
DynamicsDad
Do you have any insight on using PR with catchweight inventory? It seems not to be compatible.