Mostly Harmless, Part V
An introduction to approvals.
The last post addressed the approvals process and its link to the budget process and business workflows. This post will address the associated challenges of the approval process, some associated best practices, and the benefits that could be expected from an appropriate e-Procurement solution.
Common Challenges
- Who Has to Sign Off?
The supervisor, yes. But does it have to go to the department manager? The budget manager? The CPO? All good questions that lead to:
- Long Approval Times
While trying to figure out whether or not she can sign off and/or who else has to sign off, the requisition gets stuck in limbo on a supervisor’s desk(top).
- Identification of Off-Contract Spending
Chances are, to insure that the requisitioner can keep working, anything that looks reasonable will be approved, even though it might not be the contracted workstation or the preferred vendor. And even if the pricing looks good, this can lead to cost overruns since Procurement may have calculated TCO based upon end-of-year rebates for hitting volume targets.
Best Practices
- Automated Approvals
If the requisition is within the buyer’s spending limits, for approved products, from approved vendors, that are needed in the performance of day-to-day company operations, the requisition should be automatically approved. Manual approval should only be required if it exceeds an approval limit, budget limit, or is off-contract spend.
- Budget Charting
Not only should the e-Procurement application track the budget, but it should also track what’s been spent against the budget YTD and what’s been approved, but not yet spent, YTD and whether or not it’s inline with the quarterly/monthly forecast.
- Visual BPM Workflows for Rule Definitions
This makes it easy to see the approval chains and insure that not only are there rules account for all of the normal requests, but unexpected requests as well. The last thing anyone wants is for an approval to be redirected to an unchecked mailbox.
Potential Benefits
- Faster Processing
Decreasing the time it takes to get a requisition to the right approver decreases the time for an approval, rejection or a conditional approval dependent upon a requested modification.
- Better Budget Management
Getting the right requisitions to the right budget managers helps to insure that budgets are spent appropriately.
- Reduced Maverick Spend
Similarly, the budget managers can deny any off-budget or off-contract spending that is not essential to the business.
Once the requisition is approved, a purchase order is generated, which is the subject of the next post.
Next Post: Purchase Orders, Part I
