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Cloud Procurement Approval Management

Cloud Procurement offers a new interface defining approval workflow for Requisitions, Purchase Documents (Order, Blanket, Contract) and Supplier Management. Approval rules are managed in a user friendly interface that integrates back-end Business Process Management (BPM) while keeping a logical and complete setup in front of the user. While relatively simple to define rules in Approval Management, it also supports comprehensive rule sets for more complex business process needs.

Key Components:

  • Procurement Approval Rules Management
    • Setup approval rules with conditions and actions
  • Approval Management extensions (AMX)
    • Perform routing for the business document in friendly user interface
  • Business Process Management (BPM)
    • Application that allows users to access assigned tasks and perform actions (Approve, Reject, Request Information)
    • Email supported actions
  • Human Capital Management
    • Defines person, position, jobs, levels and supervisor hierarchy

AMX contains a substantial list of attributes that can be applied to Rule Conditions for the various purchasing documents. (Complete list contained in Oracle Whitepaper below).

The Simple Approach

Every business operation establishes a Delegation of Authority where people, budget owners, project owners, jobs or positions are delegated an approval limit. These approval limits can be as simple as a single limit regardless of document type or an organizational condition such as Business Unit. It can also be complex where different rule sets are invoked based on attributes found within the document seeking approval. The following example utilizes minimal HR setup where each user is assigned a Job Name and Supervisor then each Job is assigned a Level.

Example Requisition Workflow construction:

Doa Requisition

Sample Requisition Approval Authority Chart

Using the above approval example, the requester creates a requisition in Business Unit 1 for total amount $6,000 and submits for approval. The requester’s assigned job name is “Individual” with Level 1 authority. Workflow assesses the requester reporting hierarchy and determines that approval requires Level 3 or above. Resulting Workflow routing contains requester’s Supervisor and Manager 1 in serial flow.

Example Business Unit 1 Requisition Approval Rules:

Rule Description Conditions Action 1
Limit 5K New or unprocessed requisitions to 5K Business Unit equals 1
AND Requisition Amount Less than or equal to 5000
Action Type: Approval required
Route Using: Job level
Approval Chain Of: Requester
Start With: Manager
Minimum Job Level: 1
Top Worker in Hierarchy: Smith, George
Include: All approvers
Limit 50K New or unprocessed requisitions to 50K Business Unit equals 1
AND Requisition Amount Greater than 5000
AND Requisition Amount Less than or equal to 50000
Action Type: Approval required
Route Using: Job level
Approval Chain Of: Requester
Start With: Manager
Minimum Job Level: 2
Top Worker in Hierarchy: Smith, George
Include: All approvers
Limit 100K New or unprocessed requisitions to 100K Business Unit equals 1
AND Requisition Amount Greater than 50000 AND Requisition Amount Less than or equal to 100000
Action Type: Approval required
Route Using: Job level
Approval Chain Of: Requester
Start With: Manager
Minimum Job Level: 3
Top Worker in Hierarchy: Smith, George
Include: All approvers
Limit 250K New or unprocessed requisitions to 250K Business Unit equals 1
AND Requisition Amount Greater than 100000
AND Requisition Amount Less than or equal to 250000
Action Type: Approval required
Route Using: Job level
Approval Chain Of: Requester
Start With: Manager
Minimum Job Level: 4
Top Worker in Hierarchy: Smith, George
Include: All approvers
Limit 1M New or unprocessed requisitions to 1M Business Unit equals 1
AND Requisition Amount Greater than 250000
AND Requisition Amount Less than or equal to 1000000
Action Type: Approval required
Route Using: Job level
Approval Chain Of: Requester
Start With: Manager
Minimum Job Level: 5
Top Worker in Hierarchy: Smith, George
Include: All approvers
Limit None New or unprocessed requisitions over 500K Business Unit equals 1
AND Requisition Amount Greater than 1000000
Action Type: Approval required
Route Using: Job level
Approval Chain Of: Requester
Start With: Manager
Minimum Job Level: 6
Top Worker in Hierarchy: Smith, George
Include: All approvers

 

Example Purchase Order Workflow construction:

Doa Po

Sample Purchase Order Approval Authority Chart

Using the above approval example, Buyer creates Purchase Order from the example requisition for $6,000 in Business Unit 1. Purchase Order is auto-approved on Buyer submittal as the document is less than $75K limit.

Example Business Unit 1 Purchase Order Approval Rules:

Rule Description Conditions Action 1
PO 75K Limit Review for compliance Business Unit equals 1
AND Document Type Equals Purchase Order
AND Is Change Order Equals No
AND Document Ordered Amount Less than or equal to 75000
Action Type: Auto-Approve
PO 100K Limit Review for compliance Business Unit equals 1
AND Document Type Equals Purchase Order
AND Is Change Order Equals No
AND Document Ordered Amount Greater than 75000
AND Document Ordered Amount Less than or equal to 100000
Action Type: Approval required
Route Using: Supervisory hierarchy
Approval Chain Of: Buyer
Start With: Manager
Number of Approval Levels: 1
Top Worker in Hierarchy Smith, George
PO 250K Limit Review for compliance Business Unit equals 1
AND Document Type Equals Purchase Order
AND Is Change Order Equals No
AND Document Ordered Amount Greater than 100000
AND Document Ordered Amount Less than or equal to 250000
Action Type: Approval required
Route Using: Supervisory hierarchy
Approval Chain Of: Buyer
Start With: Manager
Number of Approval Levels: 2
Top Worker in Hierarchy Smith, George
PO 500K Limit Review for compliance Business Unit equals 1
AND Document Type Equals Purchase Order
AND Is Change Order Equals No
AND Document Ordered Amount Greater than 250000
AND Document Ordered Amount Less than or equal to 500000
Action Type: Approval required
Route Using: Supervisory hierarchy
Approval Chain Of: Buyer
Start With: Manager
Number of Approval Levels: 3
Top Worker in Hierarchy Smith, George
PO Unlimited Review for compliance Business Unit equals 1
AND Document Type Equals Purchase Order
AND Is Change Order Equals No
AND Document Ordered Amount Greater than 500000
Action Type: Approval required
Route Using: Supervisory hierarchy
Approval Chain Of: Buyer
Start With: Manager
Number of Approval Levels: 4
Top Worker in Hierarchy Smith, George

 

Approval Rules application

The AMX application provides predefined Approval Rule Sets targeted for different stages, voting methods and participants within the workflow process.

Amx

Each Rule Set allows for multiple rules containing Conditions that identify target documents based on attributes and Actions for the qualifying documents.

Amx Rules

Adding Complexity

One area of complexity involves defining approval for document changes. Changes to a procurement document are classified as ‘Internal’ or ‘External’. Internal changes have no impact to the value or the supply base such as altered charge accounts, changed Purchase Category or other internal focused changes. External changes would require communication to suppliers such as value change, delivery date change or other changes that need to be communicated to external parties. Using the attribute Change Order Type (Internal/External) along with other relevant attributes such as New Document Total or Change in Document Ordered Amount can be defined in conditions that determine approval requirements. Example of Change Document Rules:

Rule Description Conditions Action 1 Action 2
POC Buyer – Increase Buyer initiated change with increased value Document Type Equals Purchase Order
AND Change Order Initiating Party Equals Buyer
AND Is Change Order Equals Yes
AND Change in Document Ordered Amount Greater than 10
Action Type: Approval required
Route Using: Supervisory hierarchy
Approval Chain Of: Buyer
Start With: Manager
Number of Approval Levels: 1
Top Worker in Hierarchy Smith, George
POC Buyer- No Increase Buyer initiated change with no increased value Document Type Equals Purchase Order
AND Requester Is not blank
AND Is Change Order Equals Yes
AND Document Ordered Amount Less than or equal to 10
Action Type: Automatic
Set Outcome To: Approved
POC Requester – No Increase – Internal Requester initiated change with no increase to value and change is internal (POC does NOT create PO Revision) Document Type Equals Purchase Order
AND Change Order Initiating Party Equals Requester
AND Is Change Order Equals Yes AND Change Order Type Equals Internal
AND Change in Document Ordered Amount Less than or equal to 0
Action Type: Automatic
Set Outcome To: Approved
POC Requester – No Increase – External Requester initiated change with no increase to value and change is external (POC creates PO Revision) Document Type Equals Purchase Order
AND Change Order Initiating Party Equals Requester
AND Is Change Order Equals Yes
AND Change Order Type Equals External
AND Change in Document Ordered Amount Less than or equal to 0
Action Type: Approval required
Route Using: Single approver
User Type: Buyer
POC Requester – Increase 005K Limit Requester initiated change with increased value and under 5K Document Type Equals Purchase Order
AND Change Order Initiating Party Equals Requester
AND Is Change Order Equals Yes
AND Change in Document Ordered Amount Greater than 0
AND Document Ordered Amount Less than or equal to 5000
Action Type: Approval required
Route Using: Job level
Approval Chain Of: Requester
Start With: Manager
Minimum Job Level: 1
Top Worker in Hierarchy: Smith, George
Include: All approvers
Action Type: Approval required
Route Using: Single approver
User Type: Buyer

 

Lessons Learned

  • Develop comprehensive workflow process maps that identifies routing, decisions and document attributes that ensure two paths forward from every decision. Create separate process maps for each document type (Requisition, Purchase Order, Purchase Agreement, etc) and approval type (New vs. Changed Document).
  • Within a rule set, Rules with conditions that define a specific group of document attributes MUST have a corresponding rule containing actions for documents that do not qualify (IF-THEN-ELSE). In the example below, Rule 2 exists to tell Workflow what to do with documents that do not meet the conditions of Rule 1. In the absence of Rule 2 the requisition would fail to create approval workflow routing and generate an error with automatic Reject action.
Rule Seq Document Type Stage Rule Description Condition Action
1 1 Requisition Preapproval Header First Responder Wins IT Natural Account IT approval required for specified natural accounts Natural Account Is in (622210, 622220, 622230, 622240, 622250, 624750) Action Type Approval required
Route Using Approval group
Approval Group Information Tech
2 1 Requisition Preapproval Header First Responder Wins Other Natural Accounts Autoapprove Non-IT natural accounts Natural Account Is not in (622210, 622220, 622230, 622240, 622250, 624750) Action Type Automatic
Set Outcome To Approved
  • Whenever possible, avoid variations in approval limits within a Business Unit for the same document type. Example Job Level 4 Limit $50K for Operational Expense but $25K for Capital Expense. While possible to create such a rule, it increases complexity for setup, maintenance and user understanding. Ask if it really makes sense for Executive Management to have conditionally varied authority limits.
  • Avoid rule conditions for a named Participant. Example: Route to Jane when document Project Task equals 12345. Possible solutions include use of Approval Groups or attributes that dynamically reference to a Participant such as ‘Project Task Owner’.
  • Always seek the simplest/fewest set of rules.

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