1. Implementing Procurement
  2. Business Cases

Business Cases

In this topic, we will discuss 2 business cases around approval policies.

In the first business case, we see how to set up approvals using a supervisory hierarchy based on the requisition amount. In the second business case, we see how approval policies are driven by spending limits assigned to job levels.

Business Case 1: Acme Corp Approval Policies

Acme Corp has agreements in place for most facilities and IT services. Any noncatalog service request for these must be routed to respective category managers for approval. In addition they have set up approvals using supervisory hierarchy based on requisition amount. The approval policies of Acme Corp are as follows.

  • If amount is less than or equal to $500 then auto approve.

  • If amount is between $500 and $1000 then one level supervisory approval.

  • If amount is between $1000 and $2000 then two levels supervisory.

  • If amount is greater than $2000 then three levels supervisory approval.

  • For noncatalog IT service requests, category managers' approvals required.

  • For noncatalog facilities services requests, category managers' approvals.

Approach to set up requisition approvals for Acme Corp:

  1. There are two categories for which additional requisition approvals need to come from the category managers hence create two approval groups:

    • IT Service Category Approval Group

    • Facilities Service Category Approval Group

    Rules in Header Hierarchy Participant:

    • No approvals required (such as self-approved) for requisitions under or equal to 500 USD.

    • Rule setup:

    If Requisition Approval Amount less than or equal to 500 and

    Functional Currency Code equals USD and

    Requisitioning BU equals US Business Unit

    Then

    Action Type = Automatic

    Set Outcome To = Approved

  2. Two levels of supervisory approval required for requisitions more than 1000 USD and less than or equal to 2000 USD.

    Rule setup:

    If Requisition Approval Amount greater than 1000 and

    Requisition Approval Amount less than or equal 2000 and

    Functional Currency Code equals USD and

    Requisitioning BU equals US Business Unit

    Then

    Action Type = Approval required

    Route Using = Supervisory hierarchy

    Approval Chain Of = Preparer

    Start With = Manager

    Number of Approval Levels = 2

    Top Worker in Hierarchy = Joe Smith (CEO)

  3. Two levels of supervisory approval required for requisitions more than 1000 USD and less than or equal to 2000 USD.

    Rule setup:

    If Requisition Approval Amount greater than 1000 and

    Requisition Approval Amount less than or equal 2000 and

    Functional Currency Code equals USD and

    Requisitioning BU equals US Business Unit

    Then

    Action Type = Approval required

    Route Using = Supervisory hierarchy

    Approval Chain Of = Preparer

    Start With = Manager

    Number of Approval Levels = 2

    Top Worker in Hierarchy = Joe Smith (CEO)

  4. Three levels of supervisory approval required for requisitions more than 2000 USD.

    Rule setup:

    If Requisition Approval Amount greater than 2000 and

    Functional Currency Code equals USD and

    Requisitioning BU equals US Business Unit

    Then

    Action Type = Approval required

    Route Using = Supervisory hierarchy

    Approval Chain Of = Preparer

    Start With = Manager

    Number of Approval Levels = 3

    Top Worker in Hierarchy = Joe Smith (CEO)

Rules in Header Postapproval - Stage Header Consensus Participant:

  1. If category on requisition line is IT service, then approvals from IT Service Category Approval Group required

    Rule setup:

    If Category Name equals IT Service

    Then

    Action Type = Approval required

    Route Using = Approval group

    Approval Group = IT Service Category Approval Group

    Automatically approve if group returns no approvers = Unchecked

  2. If category on requisition line is facilities service, then approvals from Facilities Service Category Approval Group required

    Rule setup:

    If Category Name equals Facilities Service

    Then

    Action Type = Approval required

    Route Using = Approval group

    Approval Group = Facilities Service Category Approval Group

    Automatically approve if group returns no approvers = Unchecked

    Disable all the other participants that aren't in use

Business Case 2 : Beta Corp Approval Policies

The approval policies of Beta Corp are driven by spending limits assigned to job levels. In this example, we will take a look at how spending limits can be modeled using as approval rules. These are the spending limits assigned to job levels:

Job Level

Spending Limit

1

500

2

2500

3

10000

4

Unlimited

Beta Corp also requires all requisitions to be approved by the preparer's manager, even if the preparer has the spending limit authority based on the requisition amount.

Rules in Header Hierarchy Participant:

  1. Job Level 1 has spending limit of 500.

    Rule setup:

    If Requisition Approval Amount less than or equal to 500 and

    Functional Currency Code equals USD

    Then

    Action Type = Approval required

    Route Using = Job level

    Approval Chain Of = Preparer

    Start With = Manager

    Minimum Job Level = 1

    Top Worker in Hierarchy = Joe Smith (CEO)

    Include = All approvers

  2. Job Level 2 has spending limit of 2500.

    Rule setup:

    If Requisition Approval Amount greater than 500 and

    Requisition Approval Amount less than or equal to 2500

    Functional Currency Code equals USD

    Then

    Action Type = Approval required

    Route Using = Job level

    Approval Chain Of = Preparer

    Start With = Manager

    Minimum Job Level = 2

    Top Worker in Hierarchy = Joe Smith (CEO)

    Include = All approvers

  3. Job Level 3 has spending limit of 10000.

    Rule setup:

    If Requisition Approval Amount greater than 2500 and

    Requisition Approval Amount less than or equal to 10000

    Functional Currency Code equals USD

    Then

    Action Type = Approval required

    Route Using = Job level

    Approval Chain Of = Preparer

    Start With = Manager

    Minimum Job Level = 3

    Top Worker in Hierarchy = Joe Smith (CEO)

    Include = All approvers

  4. Job Level 4 has unlimited spending limit.

    Rule setup in AMX:

    If Requisition Approval Amount greater than 10000 and

    Functional Currency Code equals USD

    Then

    Action Type = Approval required

    Route Using = Job level

    Approval Chain Of = Preparer

    Start With = Manager

    Minimum Job Level = 4

    Top Worker in Hierarchy = Joe Smith (CEO)

    Include = All approvers