Receiving Vendors in Requisition and Outline Agreement Differ

Receiving Vendors in Requisition and Outline Agreement Differ: Key Differences You Need to Know

In any business, procurement plays a crucial role in ensuring that necessary products or services are acquired efficiently and at the right cost. Two methods commonly used in procurement are requisition and outline agreement. Although the two share some similarities, there are significant differences between receiving vendors in requisition and outline agreement.

Requisition: A Brief Overview

Requisition is a request made by a department or an individual within a company to the procurement team for the purchase of goods or services. This request may be initiated either from an online platform or through a manual process. The procurement team then reviews the request, assesses the need, and determines whether to approve or deny the purchase.

Outline Agreement: A Brief Overview

An outline agreement, on the other hand, is a binding agreement between a company and a supplier, which outlines the terms and conditions of the procurement process. Essentially, it is a long-term contract between a company and a vendor to procure goods or services at an agreed-upon price over a specified period.

Differences Between Requisition and Outline Agreement

1. Timing

The most significant difference between the two methods is the timing. Requisition is typically triggered by an immediate need or demand for goods or services. In contrast, outline agreements are established for long-term procurement needs, typically six months or longer.

2. Approval process

Requisitions require approval from the procurement team before the purchase can proceed. The procurement team evaluates the request, scrutinizes the vendor`s pricing and quality, and determines whether to approve or deny the purchase. In contrast, outline agreements are pre-approved, and vendors pre-qualified through a competitive bidding process before the contract is signed.

3. Flexibility

Requisition allows for flexibility to purchase goods or services as needed, without any commitment to future orders. Outline agreements, on the other hand, provide the company with a committed source of supply from a pre-qualified vendor for the duration of the contract.

Conclusion

In conclusion, it is essential to understand the differences between receiving vendors in requisition and outline agreement to make the right procurement decisions. Requisition is ideal for short-term procurement needs, while outline agreements are best suited for long-term procurement needs. When considering procurement methods, businesses should factor in the time, approval process, and flexibility offered by each method. Ultimately, choosing the right procurement method can help businesses achieve their goals, reduce costs, and improve efficiency.