The short answer
A purchase requisition (PR) is an internal document: a request from inside the business — planning, stores, production, maintenance — asking the purchase department to buy something. A purchase order (PO) is an external document: the formal commercial commitment issued to a supplier, carrying agreed items, quantities, prices and delivery terms. The PR authorises the need; the PO commits the money. In a controlled process, no PO exists without an approved PR behind it.
That one-sentence distinction carries most of what matters. Everything else in this guide is about why the separation exists, what each document looks like inside a manufacturing ERP, and what happens on either side of them in the procure-to-pay chain.
The purchase requisition, properly understood
The PR is where demand becomes a formal, reviewable request. It names the items (from the shared item master), quantities, the need date, and the reason — which order, which shortage, which breakdown. Because it is a document with a lifecycle, it can be checked, approved, rejected, followed up and reported on; because it is internal, it commits nothing to any supplier yet.
Upstream of the PR sits the purchase estimate (PE) — an enquiry-stage document that scopes likely spend by category before a formal requisition is raised. Fast ERP categorises PEs by spend type: raw material, finished goods, capital, consumables, infrastructure, maintenance, new product development, tooling and services — so even the earliest signal of spend lands in a lane someone owns.
Where requisitions come from: the PR types
In a working factory, requisitions are raised by systems as often as by people. The PR types in Fast ERP map to the real sources of demand:
- PR against BOM — raised from the MRP explosion of a released order: the netted shortfall of the bill of materials, traced to the order that caused it.
- PR against stock — replenishment triggered when an item falls to its reorder level, for run-rate material that should never wait for an order.
- PR for finished goods — bought-out items sold as-is or completing a scope of supply.
- PR for services — job-work, subcontracting and bought-in services entering the same approval discipline as material.
- PR for rejection — replacement of material scrapped at receipt inspection or on the line, closing the loop between quality and buying.
Five doors, one corridor: however a requisition arises, it enters the same checking and approval queue, and purchasing sees one consolidated demand picture instead of five parallel habits.
The approval gate: check, approve, assign
Between the PR and any PO stands the gate that makes the whole design worthwhile. Requisitions are checked — is the item right, is the quantity sane, is there stock already? — then approved by someone with the authority to spend. Fast ERP adds an operational step most spreadsheets never manage: PR items can be assigned to specific purchase executives, so every approved line has an owner, and PR follow-up and pending-PR reports show exactly what is stuck and with whom.
Because rights are role-based, who may raise, check and approve is configuration, not convention — and every action is audit-trailed. When the auditor asks who approved the order behind an invoice, the answer is a record, not a recollection.
The purchase order — the commitment
The PO converts approved need into a supplier-facing contract: items, quantities, negotiated prices, taxes, delivery terms and conditions. It carries its own document lifecycle — draft through approval to release — because issuing it commits company money. From release onward the questions change from "should we buy?" to "where is it?": pending-PO views track what is due against required dates, PO follow-up chases suppliers, and on-time purchase reporting turns delivery performance into data for the next negotiation.
The PO is also where consolidation pays: several approved PRs for the same material can be combined onto one order for a better price — visible and traceable, because each PO line still references the requisitions it satisfies.
PR vs PO, side by side
| Aspect | Purchase requisition (PR) | Purchase order (PO) |
|---|---|---|
| Audience | Internal — the purchase department | External — the supplier |
| What it establishes | An approved need to buy | A commercial commitment to buy |
| Raised by | Planning, stores, production, maintenance — or the system itself | The purchase department only |
| Carries prices? | Estimates at most | Yes — negotiated and binding |
| Legal standing | None outside the company | Contractual once accepted by the supplier |
| Approval question | "Do we need this?" | "Are these terms right?" |
| What follows it | A purchase order | A goods receipt, inspection and a matched bill |
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After the PO: GRN and receipt inspection
Material arriving at the gate is received as a goods receipt note (GRN) against the PO. The arithmetic is automatic — pending quantity equals ordered minus received — so partial deliveries never lose their tail, and stock posts through the same store engine every other module uses. GRN barcode printing labels the received material for traceability from the first minute.
Before anything reaches the shelf, receipt inspection dispositions it: accepted (AC), rejected (RJ) or accepted under deviation (AD). Rejections raise a PR-for-rejection or a non-conformance back at the supplier — which is how the purchase chain and the quality system stay one conversation rather than two departments discovering each other's problems later.
Three-way matching and the supplier bill
The final gate is financial. Three-way matching compares the PO (what was agreed), the GRN (what actually arrived and passed inspection) and the supplier bill (what is being charged) before the bill is approved. Overbilled quantities, price drift from the PO, and charges for rejected material all surface before payment, not after. Approved bills post to Tally as purchase vouchers, advances and adjustments are tracked, and payment follow-up closes the loop.
In a disconnected setup this match is an accountant reconciling three sources by hand. In an integrated ERP it is nearly free, because all three documents live in one database and reference each other — the same one-database principle the pillar guide builds on.
How Fast ERP runs the chain
Fast ERP's Purchase module implements every step above as connected documents:
- Purchase estimates by category — RM, FG, capital, consumables, infrastructure, maintenance, NPD, tooling and services.
- Five PR types — against BOM, against stock, FG, service and rejection — with checking, approval, executive assignment and follow-up queues.
- PO lifecycle and vendor follow-up — pending-PO MIS, PO reports and on-time purchase analysis for supplier performance.
- GRN with pending-quantity tracking, barcode labelling and receipt inspection dispositioning every line AC / RJ / AD.
- Supplier-bill approval matched to GRN and PO, with Tally posting and payment scheduling.
Because demand, approval, receipt, inspection and payment share one database, the question "why did we buy this, and did we get what we paid for?" has a documentary answer at every line — the procure-to-pay half of the two spines that define a manufacturing ERP.
Frequently asked questions
What is the difference between a purchase requisition and a purchase order?
A purchase requisition (PR) is an internal document: a request from inside the business — planning, stores, production, maintenance — asking purchase to buy something, which is then checked and approved. A purchase order (PO) is an external document: the formal commercial commitment issued to a supplier, with agreed items, quantities, prices and delivery terms. The PR authorises the need; the PO commits the money. In a controlled process no PO exists without an approved PR behind it.
Why do companies use purchase requisitions instead of ordering directly?
Because the requisition separates need from commitment. Anyone close to the work can raise a PR, but only approved requisitions become orders, so spend control sits at one gate instead of being scattered across everyone who talks to suppliers. The PR also creates traceability — every PO answers to an approved need with a named requester and approver — and it lets purchasing consolidate: several requisitions for the same material can become one better-priced order.
What types of purchase requisition exist in Fast ERP?
PRs can be raised against the BOM (from the explosion of a released order), against stock (replenishment when levels fall to reorder), for finished goods, for services, and for rejection — replacing material scrapped at inspection or on the line. Upstream of the PR, purchase estimates (PEs) are categorised by spend type: raw material, finished goods, capital, consumables, infrastructure, maintenance, new product development, tooling and services. Each PR flows through the same check-and-approve gate before becoming a PO.
What happens after the purchase order is issued?
The PO is followed up to delivery — pending-PO views track what is due, and on-time purchase reporting shows supplier performance. Material arrives as a goods receipt note (GRN) against the PO, with pending quantity calculated as ordered minus received. Receipt inspection dispositions the material — accept, reject, or accept under deviation — before it enters stores. The supplier bill is then matched against the GRN and the PO before approval and payment, closing the procure-to-pay loop.
What is three-way matching in purchasing?
Three-way matching compares the purchase order (what was agreed), the goods receipt (what actually arrived and passed inspection) and the supplier bill (what is being charged) before the bill is approved for payment. If the bill claims more than was received, or prices differ from the PO, the mismatch surfaces before money moves. In an integrated ERP the match is cheap because all three documents live in one database and reference each other.