Understanding the Core of Procurement Workflow
In any professional setup—be it a corporate office, a factory, a hospital, or an educational institute—the procurement process plays a pivotal role. This process is typically driven by three essential documents: PR (Purchase Requisition), PO (Purchase Order), and GRN (Goods Receipt Note).
These documents are part of a structured workflow that ensures goods and services are purchased in a timely, legal, and efficient manner. However, many people often get confused between them or use them interchangeably, which can lead to errors, delays, or even financial discrepancies.
This blog will break down the differences between PO, PR, and GRN, their purposes, workflows, and how they interlink in the procurement cycle.
📝 What is a Purchase Requisition (PR)?
Purchase Requisition (PR) is the very first document in the procurement cycle. It is an internal request generated by a department or employee to purchase certain items or services.
🔹 Purpose of PR:
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Acts as an internal approval request
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Validates the requirement of materials/services
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Helps budget control and planning
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Involves review and approval from department heads or management
🔹 Key Elements in a PR:
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Item description and quantity
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Estimated cost
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Purpose or justification
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Preferred delivery timeline
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Cost center/department info
Example: If the Admin department needs 10 new chairs for a conference room, they raise a PR explaining the need, quantity, type of chair, and cost estimate.
📄 What is a Purchase Order (PO)?
A Purchase Order (PO) is a legally binding document issued by the purchasing/procurement department to the selected vendor or supplier after the PR is approved. It authorizes the vendor to deliver the requested goods or services under specific terms and conditions.
🔹 Purpose of PO:
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Serves as an official confirmation of the order
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Defines price, delivery, and payment terms
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Ensures contractual accountability
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Supports audit and financial compliance
🔹 Key Elements in a PO:
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Vendor name and address
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PO number and date
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Detailed list of items/services
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Price, quantity, taxes
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Payment and delivery terms
Example: Once the chair requisition is approved, the Admin team creates a PO and sends it to a vendor like Godrej or Featherlite.
📦 What is a Goods Receipt Note (GRN)?
A Goods Receipt Note (GRN) is a document generated by the receiving department (usually Admin, Store, or Logistics) upon receipt of the items mentioned in the PO. It confirms that the goods have been delivered in the correct quantity and quality.
🔹 Purpose of GRN:
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Verifies that the items received match the PO
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Acts as a checkpoint before processing vendor payment
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Records inventory updates
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Serves as legal proof for received goods
🔹 Key Elements in a GRN:
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GRN number and date
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Items received with quantity
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Condition and inspection notes
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Reference to PO and vendor name
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Signatures of receiver and store in-charge
Example: When the chairs are delivered, the Admin/Store team checks and logs them into the GRN, marking any damages or shortages.
🔄 Workflow Summary: PR → PO → GRN
Here's how they function together:
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PR (Request): Internal request for purchase
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PO (Order): Formal order placed with vendor
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GRN (Receipt): Confirmation that goods have been received
This three-step process helps organizations:
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Maintain control over purchasing
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Prevent fraud or duplicate purchases
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Ensure accountability and documentation
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Improve vendor relationship and payment accuracy
🧾 Differences at a Glance
| Feature | Purchase Requisition (PR) | Purchase Order (PO) | Goods Receipt Note (GRN) |
|---|---|---|---|
| Purpose | Internal request to purchase | Official order to vendor | Confirmation of goods received |
| Initiated By | Department needing goods | Procurement/Purchase Team | Store/Admin/Receiving Team |
| Is it a Contract? | No | Yes (legally binding) | No |
| Used for Approval? | Yes | No | No |
| Triggers Next Step? | PO Creation | Vendor Dispatch | Payment Process |
| Audit Importance | Verifies need | Verifies approval | Verifies delivery |
⚖️ Why Understanding These Differences Matters?
Misunderstanding or skipping any of these steps can result in:
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Audit issues
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Inventory mismatch
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Payment errors
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Vendor disputes
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Policy violations
Proper use of PR, PO, and GRN helps in streamlining procurement, enhancing transparency, and ensuring better control of expenses.
🛡 Compliance Tip
Make sure your organization’s procurement policy clearly outlines:
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Who can raise a PR
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Who approves it
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Who can issue a PO
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Who is responsible for receiving and verifying items
Digitizing this workflow using ERP software (like SAP, Zoho, Oracle, or Tally) can improve speed, tracking, and reporting.
📌 Final Thoughts
The trio of PR, PO, and GRN forms the backbone of any organization's procurement structure. Each document serves a distinct purpose and ensures a transparent, traceable, and accountable process. Whether you are in administration, finance, or facility management, mastering the flow and role of these documents is key to efficient operations.
So next time you hear someone say "Raise a PO directly," pause and check: Was there a PR? And are you ready for the GRN?
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