Understanding Approval Workflows in procurement. How technology is shaping its role in procurement?

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Procurement processes play a vital role in any organization. It involves various activities like sourcing goods and services, negotiating contracts, and ensuring goods are delivered on time at the right quality and price. One important aspect of procurement is approval workflows – the process of getting required approvals at different stages of a procurement cycle. In this article, we will understand what approval workflows in procurement entail and how technology is shaping its role. You will discuss key aspects like multi-level approvals, triggers, delegation, concurrent approvals and more. You will also see how digital solutions are helping optimize approval cycles and bringing more insights.

  1. Multi-Level Workflow Configurations

Procurement processes often involve approvals from different stakeholders at various stages. For example, in a large organization, the procurement of office stationery may require approval from the category manager, finance head and VP of administration. Designing approval workflows to map the hierarchy of such an organization and route requests accordingly is challenging manually. 

Technology solutions now allow creating configurable multi-level approval workflows. Admins can easily design approval routes involving multiple stakeholders based on criteria like spend limits, categories etc. Requests are then automatically routed through the defined approval chain digitally, removing inefficiencies of email threads. This brings more structure to complex multi-tiered approval processes.

  1. Dynamic Approval Triggers

Another area of improvement is setting up dynamic approval triggers. In traditional systems, approvals often had to be manually initiated. With digital tools, approvals can now be automatically triggered based on pre-defined conditions. 

For example, a purchase request of items costing over Rs5L could trigger an approval workflow involving additional finance sign-offs. Or delivery of goods against a contract crossing 90% of the order value may need category manager approval. Such automated conditional-based triggers ensure timely approvals without manual intervention, keeping procurement cycles smooth.

  1. Delegated Authority System 

Delegation of authority is another important aspect of approval workflows. In case the assigned approvers are unavailable due to leave or workload, there needs to be a clear process to delegate authority to alternate approvers. 

Technology solutions address this by allowing admins to define delegated authorities upfront. The system can then automatically route requests to delegates configured in the system when primary approvers are not available. This brings continuity to decision making without delays due to leaves or workload of key people.

  1. Concurrent and Sequential Approvals

Organizations also have flexibility in choosing between concurrent or sequential approval flows. In concurrent approval, multiple stakeholders can review requests simultaneously and approve independently. This speeds up processes but may lack visibility. 

Sequential approval routes the request one-by-one which provides better tracking but can be slower. Digital workflows allow configuring both options and switching as needed. For example, category approvals could run parallelly while finance sign-offs may follow in sequence for added control.

  1. Mobile-First Approvals

With digital approval systems, reviewers can access all pending approval requests from any location using their smartphones or tablets. They can easily view details of the request on the go. Reviewers receive real-time notifications on their mobile devices about new approvals awaiting their action. 

This allows them to quickly review the requests as well as take informed decisions even when not in office. They can conveniently approve or reject requests or provide comments and suggestions for changes to the procurement team anytime, anywhere. The mobile-first approach makes the approval process highly flexible along with responsive as approvers are not tied to their desktops. They can handle approvals seamlessly from any mobile device.

  1. Tracking Pending Approvals  

Traditionally, requesters and admins found it challenging to track the various stages of an approval request as well as identify where approvals were pending or stuck. Each approval request would be scattered across email threads as well as individual records, making it difficult to get a consolidated real-time view of all ongoing approval requests across stages in addition to departments. 

Digital dashboards now provide a centralized view of all active approval requests. Users can monitor individual requests as well as high-level portfolio data on approvals – like number of approvals pending at each stage, average processing time etc. This level of transparency helps take more informed decisions. Issues can be identified early and corrective actions taken to reduce approval cycle times.

  1. Automated Process Mapping

Digital approval systems facilitate automated process documentation without any manual effort. Based on the approval configuration defined in the system, such as the number of approval levels, conditional triggers, delegates etc., the software can dynamically generate comprehensive visual flowcharts mapping the entire workflow. These flowcharts provide a bird’s-eye view of the end-to-end po process – from what triggers initiate a request to what authorities can approvals be delegated to and the approval routing sequence. 

The automatically generated process maps ensure consistency is maintained whenever any changes are made to the approval configuration. It also serves as a single point of reference for new employees and auditors to quickly understand the approval protocols without any learning curve. This spares organizations the task of creating and updating approval process documents manually.

  1. Reducing Approval Cycle Time

Technology is enabling various ways to optimize approval cycle times. In addition to features like conditional triggers, digital tools also facilitate in-app reminders and email notifications to approvers and delegates for pending requests. This ensures requests do not get stuck and get addressed on time. Automating follow-ups in this way helps expedite the overall approval cycle. 

  1. Detailed Audit Trails

Maintaining proper records is another important governance requirement. Digital approval systems provide end-to-end audit trails capturing complete details of all approval requests, stages, reviewers’ comments and final status. This helps organizations comply with regulations and also troubleshoot process issues if any.

Conclusion

Approval workflows play a pivotal role in procurement management. Technology is transforming this space by enabling configurable multi-level approvals, automated triggers, delegation of authority, concurrent processing and insightful tracking of the process. Digital solutions are helping streamline complex approval structures, bring more transparency and optimize cycle times. This is improving organizational efficiency and compliance. As technology innovations continue to emerge, approval workflows will become even more agile and responsive, further transforming procurement operations.

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