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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
Introduction to the Approval Workflow Purchasing
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.
Implementation of an effective approval workflow in purchasing
An approval workflow in purchasing structures the approval process for orders. Clear approval levels and responsibilities ensure that all procurements are controlled and authorized, resulting in cost savings and compliance.
Practical example: Approval of a large order
1. application: A department needs laptops worth €20,000 and submits a procurement request in the electronic system.2. automatic workflow: Based on the amount, the request is automatically sent to the head of department for initial approval.
3. first approval: The head of department checks the need and confirms the request.
4. second approval: The application will now be forwarded to the Purchasing Manager, as amounts over €10,000 require additional approval.
5. check by purchasing: the purchasing manager checks prices, supplier conditions and budget and approves the order.
6. documentation: All release steps are logged in the system and can be traced for audit purposes.
7. trigger order: After complete approval, the order is automatically sent to the selected supplier.
Evaluation and strategic findings
✓ Critical success factors
→ Process automation: fast, error-free processing thanks to digitalized workflows with clear escalation levels
→ Transparent regulations: Clear definition of value limits and approval levels for all parties involved
→ System integration: Seamless integration into existing ERP and procurement systems
⚠ Challenges and limits
→ Process flexibility: balance between standardized processes and the necessary agility for urgent procurements
→ Acceptance management: overcoming resistance to new digital approval processes
→ System availability: Ensuring the continuous availability of the workflow system
Future trends and implications:
"The evolution from reactive to predictive approval processes is being driven by AI and machine learning."
→ AI-supported preliminary review of applications
→ Mobile approval solutions for flexible working
→ Blockchain-based audit trails
→ Intelligent budget management through predictive analytics
◆ Strategic recommendations for action
→ Implementation of a pilot project for selected procurement categories
→ Development of a change management concept with a focus on user acceptance
→ Regular process optimization based on workflow analyses
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.
