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Author's profile photo Matthew Montgomery

For Supplier Management, what is the “perfect” approval flow?

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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):

  1. 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.
  2. 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.


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