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Purchasing approval workflow: definition & important aspects for purchasing specialists
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Approval workflow in a nutshell:
An approval workflow is a firmly defined, usually digital approval process that regulates the approval of procurement requests according to predefined criteria and hierarchy levels. In purchasing, it ensures adherence to compliance guidelines and enables transparent, traceable control of all procurement processes.
Example: In a medium-sized company, purchase requisitions go through a three-stage approval workflow, whereby amounts up to EUR 5,000 must be approved by the team leader, up to EUR 25,000 by the department head and above that by the managing director within a maximum of 48 hours.
Contents
What is the approval workflow in purchasing?
The approval workflow in purchasing refers to the structured approval process for procurement transactions within a company. This process ensures that all orders and expenses are checked and approved by the responsible persons before they are implemented. Clear processes and responsibilities ensure compliance with internal guidelines and budgets, which leads to improved control and transparency in procurement.
Core elements of the approval workflow
Significance for purchasing
An effective approval workflow is essential for ensuring compliance and cost efficiency in purchasing. It enables controlled approval of expenditure, minimizes risks from unauthorized orders and promotes a responsible procurement culture. It also supports the strategic alignment of procurement by ensuring that resources are deployed in a targeted manner.
Approval workflow in purchasing: from manual approval processes to automated workflows
The approval workflow in purchasing is at the heart of efficient procurement processes. Building on the theoretical understanding of this approval process, it is becoming clear in practice how crucial a smooth process is for a company's cost efficiency and compliance. Traditional methods are increasingly reaching their limits, underlining the need for a transformation to modern approaches. This development not only enables greater process speed, but also minimizes risk management and increases transparency.
Old: Manual release processes
Traditional approach:
In many companies, approval processes in purchasing were carried out manually for a long time. Purchase requisitions were forwarded to superiors by email or in paper form. Reviews were often carried out without clear criteria and documentation was inconsistent. Communication channels were lengthy and delays were frequent. There was also an increased risk of errors due to duplicate data entries or lost documents. Tracking approval steps was difficult, which impaired transparency and compliance.
New: Automated approval workflows
Approval Workflow:
Modern systems rely on automated approval workflows that are integrated into digital procurement solutions. Predefined approval rules ensure that requests are automatically forwarded to the relevant people. Electronic notifications and dashboards provide a real-time overview of pending approvals. Innovation features such as mobile approvals via apps and the integration of AI for review support increase efficiency. This leads to shorter processing times, reduced error rates and seamless documentation of all process steps for audit purposes.
Practical example: Implementation at GlobalTech AG
GlobalTech AG introduced an automated approval workflow in its purchasing department. The transformation enabled them to reduce the average approval time for orders from 5 days to just a few hours. Transparency increased significantly as all approval steps can now be viewed centrally. The compliance rate rose to 99% and unauthorized spending was virtually eliminated. Employees also reported a 60% reduction in administrative tasks, which gave them more time for strategic activities.
Conclusion on supplier evaluation in the Approval Workflow Purchasing
The Approval Workflow in purchasing is an indispensable tool for efficient and compliant procurement management. The combination of clear structures, automated processes and strategic control not only optimizes costs and minimizes risks, but also creates the basis for a sustainable procurement organization. Success lies in the balance between standardized processes and the necessary flexibility for operational requirements.
