28 October 2010 | Adviser Q&A

Our business has a long-winded and low-threshold sign-off process. How can I convince bosses this can be done faster and more efficiently, while retaining oversight and control?
Procurement manager, Bristol

Roy Anderson, former CPO, State Street

Lay out the realities of the current approval system. I found close to 100 per cent of the requirements were approved by management with no change in product or total cost. The additional approval, as a control, was ineffective at best.

Analyse the category of spend, the suppliers used and the internal customers driving the volume of activity. Add to this the cost of lost management time due to unnecessary approval, plus the administrative cost of chasing the approval and answering questions from internal customers and suppliers regarding the delay.

You can mitigate risk by building a report showing management all the activity approved under the new structure. This overview will show trends, and year-to-date spending that can be acted upon. Work with the highlighted suppliers, and negotiate terms so that if a low-cost order is declined after management review, they will take the material back or not charge for the time invested. The risk is small. And do a quarterly audit to highlight areas of concern or inappropriate behaviour.

Eamonn Phillipson, head of procurement, Sequans Communications

First, seek to understand why the current process is there. You may need to solve a trust or other historic problem.

My key suggestions are:

• Ensure the requisition- to-payment process has a reliable audit trail.
• Demonstrate the current burden – ((“hours to approve” + “hours chasing approvals”) x an appropriate hourly rate) x number of transactions.
• Devise appropriate, stepped, values for approval authority. Compare your current burden with the costs and hours estimated for your new process.
• Win allies among other managers who are hampered by the current process. Don’t forget your boss.
• Suggest a trial period using your proposed cheaper, shorter, more efficient process. Offer monthly audits, letting approvers experience the difference.

Iain Kirwan, senior manager, Deloitte

Looking at organisations with efficient, yet well-controlled, sign-off processes, you find common attributes. These include:

• Clearly defined and efficient purchasing procedures supported by a strong internal governance structure.

• Appropriate delegations of authority with regular reviews to assess continued suitability.
• E-procurement with high levels of process compliance and no opportunities for maverick spend.
• The use of company credit cards, with an appropriate audit review process, for low-value transactions.

To convince your bosses, map out the existing process, highlighting the inefficiencies, and then explain how you intend to improve the situation. Demonstrate how these changes will not dilute the robustness of the process.

You will also need to articulate the benefits of a more efficient sign-off process. These might include freeing up time, allowing people to focus on other, more strategic, priorities, or generating commercial savings through a quantified reduction in order-processing costs.

Key Points

• Quantify the time and money wasted on unnecessary approvals

• Win allies among other managers who are hampered by the current process

• Devise appropriate, stepped values for approval authority

• Send you questions to adviser@supplymanagement.com
• Please note: responses can only be given on this page, represent writers’ personal views and should be regarded as general guidance only.