Requisition to Order Time

Related KPIs

Requisition to Order Time Interpretation

RTO reflects the time taken from requisition creation to order placement, making it essential for procurement teams. Lower values indicate efficient processes, while higher values may signal bottlenecks or approval delays. Ideal targets typically range from 5 to 15 days, depending on industry standards.

• <5 days – Highly efficient; indicates strong supplier collaboration
• 6–10 days – Acceptable; monitor for potential delays
• >10 days – Needs improvement; investigate root causes

Common Pitfalls

Many organizations overlook the importance of timely requisition processing, which can lead to significant delays and increased costs.

• Failing to standardize requisition forms can create confusion and slow down approvals. Inconsistent formats lead to miscommunication and unnecessary back-and-forth between departments.
• Neglecting to automate approval workflows results in bottlenecks. Manual processes are prone to human error and can significantly delay order placements.
• Overlooking supplier performance metrics can hinder timely order fulfillment. Without tracking supplier reliability, organizations may face unexpected delays in receiving goods.
• Ignoring cross-departmental collaboration can create silos. When procurement teams do not communicate effectively with other departments, it can lead to misaligned priorities and extended RTO.

Improvement Levers

Enhancing RTO requires a focus on process optimization and technology integration to drive efficiency.

• Implement automated approval workflows to streamline requisition processing. Automation reduces manual intervention, minimizes errors, and accelerates order placement.
• Standardize requisition forms across departments to improve clarity. Consistent formats facilitate quicker approvals and reduce the likelihood of miscommunication.
• Regularly evaluate supplier performance to ensure timely deliveries. Establishing key performance indicators for suppliers can help identify and address issues proactively.
• Foster collaboration between procurement and other departments to align priorities. Regular meetings can help ensure that all stakeholders are on the same page regarding requisition needs.

Requisition to Order Time Case Study Example

A mid-sized electronics manufacturer faced challenges with its Requisition to Order Time, which had ballooned to 20 days, causing delays in production schedules. This inefficiency tied up cash flow and strained relationships with key suppliers. To address this, the company initiated a project called "Procurement Excellence," led by the COO and supported by IT and finance teams. The project involved implementing an automated requisition system that streamlined approval processes and integrated supplier performance metrics into the procurement dashboard.

Within 6 months, the company reduced its RTO to 10 days, significantly improving its ability to respond to market demands. The automated system allowed for real-time tracking of requisitions, enabling procurement teams to identify bottlenecks quickly. Supplier relationships also improved, as the company could provide timely feedback and address issues more effectively.

The financial impact was notable; the reduced RTO freed up approximately $5MM in working capital, which the company reinvested into product development initiatives. This strategic move not only enhanced product offerings but also positioned the company for growth in a competitive market. The success of "Procurement Excellence" established a culture of continuous improvement within the organization, with procurement now viewed as a strategic partner in achieving business objectives.