I am very hopeful and curious if this community will chime in on the steps each of you are leveraging for a supplier approval flow. Please comment with what approval flow design is working or needs to be optimized in your environment.
Factors I consider in a “perfect” approval flow:
- What is the true value of the approval? I have observed some customers focused on management oversight which absolutely has its place, but this question is whether that review and approval step added value to the decision. I recommend challenging oversight with the option of a notification rather than a hard stop approval and/or reporting/dashboard visibility.
- Should this step have been automated? All of the technology and access to internal/external systems has gotten easier and so if there is a need to validate information instead having a human being validate the information (i.e., tax information) instead have the system check and auto-approve or auto-reject based on the same logic a human would use to make the decision.
- Do I have access to all of the information I need to make a decision (not too much more or less)? Too many times if there is a “one size fits all” form to be completed that there are a lot of unnecessary questions that just take up time for everyone involved. Or there is no context for the approval, just a standard step in the approval flow.
- Most importantly, has a relevant approval already been performed? Is this the right thing for me to approve? The most obvious is when a budget to be charged isn’t determined in advance and so the approving budget owner approval gets overwritten because the underlying budget is changed by a finance approver.
- Capacity of the approvers in that step – if the team is small, don’t put them first as they will have to go through every approval even though they might not ultimately pass.
Factors I consider indicate an unnecessary approval step (and signs that they are not working):
- Speed of Approval: There is not an expectation of instant approval when a supplier needs significant due diligence, but if there is a consistent lag where there really should not be one, that is cause for investigation and optimization.
- Bottlenecks in the process – if you see requests stacking up and the resources assign are able to simply move them ahead
Here would be my starting point, if I were to recommend a process or step back into operations myself.
- Supplier Request: 1. Manager (Optional but approving budget for any due diligence cost) , 2. Sourcing Team
- Supplier Registration: 1a. Automation to validate data, 1b. Accounts Payable if exceptions or no automatic validation
- Supplier Qualification: 1. Commodity Expert Team, 2. Sourcing Team, 3. Risk Team
- Preferred Supplier: 1. Sourcing Team
I know these are short but the challenge is to consider the value of each step and balance efficiency and risk.
Original Article:
https://blogs.sap.com/2023/05/18/for-supplier-management-what-is-the-perfect-approval-flow/