Approval mechanisms
Companies require approval mechanisms and strategies for a variety of reasons, mainly to ensure effective decision-making, maintain consistency, manage risks, and align with their goals and values. Here are some key reasons why companies implement approval strategies:
- Control and Oversight - Approval strategies provide a structured process for reviewing and approving decisions. This control ensures that important decisions are not made haphazardly or without proper consideration. By establishing clear approval hierarchies, companies can prevent errors, oversights, or actions that might be detrimental to the organization.
- Risk Management - Certain decisions can carry significant risks, whether financial, legal, reputational, or operational. An approval strategy helps assess and mitigate these risks by involving relevant stakeholders who can provide expertise and insights to ensure the decision aligns with the company's risk tolerance and compliance standards.
- Consistency - Companies often aim to maintain consistency in their operations, branding, and messaging. Approval strategies help ensure that decisions are aligned with established guidelines and standards. This consistency is crucial for maintaining a strong brand image and delivering a unified experience to customers, partners, and employees.
- Resource Allocation - Decisions related to resource allocation, budgeting, and expenditures can impact the company's financial health. An approval strategy helps ensure that resources are allocated wisely, optimizing the company's financial performance and preventing wastage.
- Alignment with Goals - Companies have specific objectives, mission statements, and strategic goals. Approval strategies help ensure that decisions made at various levels of the organization are aligned with these broader goals, contributing to the company's overall success.
- Regulatory and Legal Compliance - Many industries are subject to strict regulations and legal requirements. An approval strategy helps ensure that decisions and actions taken by the company adhere to these regulations. This can help prevent legal issues, fines, or other negative consequences that may arise from non-compliance.
Purchase or internal order approvals
Before the processing of a customer order or internal order may start, each order needs to fulfll three approval criteria:
- Financial approval - Depending on financial volume of an order, different parties need to approve the order
- Material approval - Special product groups require also a product group manager to approve the order before it is granted (e.g. shotguns)
- Personal equipment approval - Sometimes, orders may exceed organizational rules, and require clearance of a teamleader.
Financial approval strategies
Companies have diiferent approval strategies which can lead to complex workflows which slow down the procurement flows dramatically. To avoid this, ZUGSEIL allows the free definition of financial approval strategies. These strategies can be defined as companywide "fallback strategy" which can be defined to be overridden in special purchasing scenarios, e.g. when procuring certain product groups.
Most commonly used strategies are:
- Hierarchical approval - In this strategy, financial approvals follow a predefined hierarchy or chain of command.
- Threshold-based approval - This strategy involves setting predefined monetary thresholds for different levels of approval. For example, requests below a certain amount may be approved by a lower-level manager, while higher-value requests require approval from a higher-level executive or finance team.
- Costcenter based approval - The owner of the costcenter bearing the inflicted cost, has to approve the order
ZUGSEIL comes with the Financial approval strategy administration app, which allows free definition of approval strategies for various purchasing scenarios.
Material approval
If companies handle goods, which have regulations for special access (drugs, weapons, very valuable items, ... ) companies can impose material approval mechanisms based on product classification groups, which enforces an approval mechanism before these items can be ordered. ZUGSEIL comes with the Material approval strategy administation app, which allows definition of multiple approval process templates for material approval
Personal equipment approval
ZUGSEIL allows over several mechanism to govern the personal equipment process over its Personal Equipment Management (PEM) product. It has these features:
- team ordering assistant - allows to provide teamleaders a team specific sortiment
- personal equipment ordering assistant - allows to provide a team specific sortiment based on the job profile of the staff member