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Running a three-quote purchasing process: request, approval, quotes, PO and receiving
A three-quote purchasing process makes every purchase traceable: who asked, who approved, which vendors quoted, why one was chosen, and what arrived. It controls cost and reduces the room for favouritism. It also fails easily, through missing quotes, side purchases and stock nobody updates. This guide sets out ten steps for a manufacturer, distributor or project business in Singapore or Southeast Asia.
Written by Kyn Technology Pte Ltd (UEN 202622080C), which builds purchasing and inventory systems.
Purpose of three quotes
- Price. A comparison on every purchase keeps vendors competitive.
- Control. Each purchase has an approver and a record, which shareholders and auditors can check.
- Continuity. Vendor knowledge lives in the system, not in one buyer’s phone.
The cost is time. A process that takes a week to buy gloves will be bypassed. Set a value below which one quote is enough, and keep the full process for purchases that matter.
Ten steps
1. Build one item master
Every request, quote, PO and receipt should point to one item record with one code, one unit and one description. Without it, the same bolt appears under four names and price comparison breaks. Merge duplicates before the process starts. Allow new items to be added during a request, marked for review, so the master grows without blocking work.
2. Raise a purchase request
The requester picks items from the master and states quantity, project or cost centre, needed-by date and reason. Free-text requests such as “materials for site” cannot be quoted or approved properly. Require the fields.
3. Approve before asking for prices
Set approvers by department, project or amount, and write the rule down. Approval comes before quotation, so buyers do not spend time pricing items nobody will buy. Log who approved and when. If an approved request is edited, it goes back for approval.
4. Request three quotes per item
Send each approved item to three vendors. Three gives a real comparison without stalling the purchase. Make it easy for vendors to respond: a quote page with the items listed, where they enter price and lead time, with no account to create. Set a response deadline.
5. Compare and select
Lay quotes side by side per item, in the same unit and currency. Preselect the cheapest quote that meets the specification and lead time. If the buyer chooses another vendor, the reason is recorded: lead time, quality history, warranty, delivery terms.
6. Handle the exceptions to three quotes
Some purchases cannot have three quotes: a sole supplier, an emergency repair, a contract price already agreed. Allow these with a named reason and a second approval. Review how often each exception is used; a reason that appears every week is a process problem.
7. Issue the purchase order
Generate the PO from the selected quote, with item codes, quantities, agreed prices, delivery address and date, and terms. Email it to the vendor and keep the sent copy. The PO is the reference the vendor’s invoice must match.
8. Receive against the PO
The store records what arrived against each PO line: full, partial or rejected, with the delivery order number. Short deliveries stay open. Rejected goods are noted with a reason. Received quantities post to stock.
9. Keep one stock ledger
Record every movement as a ledger row: received, issued to a project, returned, adjusted. Stock on hand is the sum of the rows. Set minimum levels on consumables and alert when they are reached. For tools that are lent rather than used up, record each loan and return against a person.
10. Match the vendor invoice
When the vendor’s invoice arrives, finance matches it to the PO and the receipt: ordered, received, billed. Quantities or prices that differ go back to the buyer before payment.
Roles
| Role | Does | Does not |
|---|---|---|
| Requester | Raises requests with item, quantity, project, date | Contact vendors on price |
| Approver | Approves or rejects the need | Select the vendor |
| Buyer | Requests quotes, selects, issues PO | Approve their own requests |
| Store | Receives, issues, counts stock | Change PO prices |
| Finance | Matches invoice to PO and receipt, pays | Pay without a matched receipt |
In a small business one person may hold two roles. Keep requester and approver separate at minimum.
Common failures
- Quotes collected on WhatsApp and lost. Every quote should land in the same place, per item.
- The same vendor quoting under two names. Check vendor details when vendors are added.
- Approval after the purchase. If goods arrive before approval, the process is decoration.
- Receiving skipped. Stock figures drift, and invoices are paid for goods never received.
- Prices not recorded on old POs. Without price history, the next comparison starts from zero.
Worked example
A steel fabrication manufacturer in Southeast Asia runs this process on a system KYN built: purchase request, approval, three vendors quote per item through a no-login quote page, the cheapest is selected, the PO is emailed, and receiving updates stock.
- 2,702 of 2,724 imported PO lines carry prices, giving price history from the first day.
- One item master and one stock ledger.
- Consumables raise low-stock alerts.
- Tool loans: 1,912 imported, with a withdraw kiosk for new loans and returns.
See purchasing and inventory automation for how it is built, operations dashboards for spend and stock reporting, and /pricing for fees.
Frequently asked questions
Why three quotes and not two or five?
Three gives a real price comparison and a fallback if one vendor cannot deliver, without making every purchase slow. Many businesses require three above a set value and one below it.
Should the cheapest quote always win?
Preselect it, but allow the buyer to choose another vendor with a recorded reason, such as lead time, quality history or delivery terms. The reason matters more than the rule.
What if a vendor will not quote online?
The buyer enters the quote received by email or phone against that vendor, with the document attached. A no-login quote page makes online quoting the easier option for most vendors.
How do I stop staff buying outside the process?
Make the process faster than the workaround, and make finance pay only invoices matched to a PO and a receipt.
Do I need an ERP for this?
No. An ERP can run it if your team uses it. Many SMEs run purchasing on spreadsheets and WhatsApp; a focused purchasing system can replace those without a full ERP.
How do I start with messy item data?
Import existing items and past POs, merge duplicates, and accept that the master will be cleaned over the first months. New items added during requests are reviewed before they become permanent.