Applying a PO Policy

Content was last updated in 06.23.05-00

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Multiple PO policies can be defined using different criteria like Site(s), Department, Applicable to.

Depending on who is creating a PO, where it is being created and of what amount, an appropriate policy will be applied to it.

And depending on the Policy applied, the specific PO will have to be approved by a set of assigned approver(s).

Now let's try to understand it with examples.

Below you can see four policy definitions

Approval Policy Definition #1: All header parameters are defined

This is the most advanced level of PO definition, where all parameters - 'PO Type', 'Site', 'Department', and 'Applicable To' is specified.

This PO definition implies that this PO Policy will be applicable to a PO of 'Inventory' type, raised from 'Only the mentioned Site', raised by 'Specified Department'

and was submitted by 'Shaun Parker'.

Approval Policy Definition #2: 'PO Type', 'Site(s)', and 'Department' are defined

Further advancing from the previous PO definition,  In this example, along with PO type, 'Site', even the 'Department' has been defined..

Only the 'Applicable to' filed has been left blank, which implies that this PO Policy will be applicable to purchase order of 'Inventory type', raised from 'Only the mentioned Site', raised by 'Specified Department' and was submitted by 'Any Employee'.

Similar to the previous PO rule definition here as well, depending  on the PO amount, the PO approval may have to pass through 8 individual levels of approvals; some of which are mandatory.

Approval Policy Definition #3: 'PO Type' and 'Site(s)' are defined

Advancing from the previous PO definition, In this example, along with PO type, even the 'Site' has been defined..

The fields - 'Department', and 'Applicable to' have been left blank, which implies that this PO policy will be applicable to a 'Inventory type' PO- raised from 'Only the mentioned Site', raised by 'Any Department' and submitted by 'Any Employee'.

Similar to the previous PO rule definition here as well, depending  on the PO amount, the PO approval may have to pass through 8 individual levels of approvals; some of which are mandatory.

Approval Policy Definition #4: ONLY 'PO Type' is defined

In this example, the only one of the core parameters of a PO Policy definition has been specified.

The fields - 'Site', 'Department', and 'Applicable to' have been left blank, which implies that this PO Policy will be applicable to a 'Inventory Type' PO - raised from 'Any Site', raised by 'Any Department' and submitted by 'Any Employee'.

When such an incident occurs, based on the PO amount, the PO approval may have to pass through 8 individual levels of approvals, out of which 3 are mandatory. And until the preceding mandatory level has not been approved, the subsequent approvers won't be able to view and approve the PO in their system. 

Additionally,

• If more than one approver is specified (for example: the level where PO amount is more than 100, then either of the specified approver must approve the PO. 

• If a department is also specified along with Position and Approver(s), then the approver must belong to that very specific department only.

Department on the header refers to the department of Purchase Order, while the department in the level signifies the department to which approver belongs to.
They are mutually exclusive and independent of each other.

Now, let's use the above defined PO Policy definitions to analyze a PO and trace 'How would it go through the approval chain".

Sample Case-Study #1 >>> PO Gets Successfully Approved

Let's consider an example of a PO, where all the core parameters have been specified and the PO amount is 18,800

Now when such a PO is submitted for approval, based on the policy definitions the Approval Policy Definition #1 will be applicable.

Because

When the approvals begin, the overall tracking of the 'Approvals' tab in PO window will be as follows, as the first level

itself is mandatory, and system won't proceed until first level is cleared.

Once the 'Order PM' has approved the PO, the 'Approvals' tab in PO window will transition till next mandatory level as shown below:

At this point, let's say, if the 'Sales Manager' provides the approval even before the Employee 'James Dunn' does, system will 'Auto Approve' Level 1 on behalf of Employee

'James Dunn'.

 Since a higher level has already approved, any pending lower level(s) will get Auto Approved. 

Next, the responses from 'Procurement - Senior Manager' was an Approval now the 'Approvals' tab in PO window will be as follows:

Lastly, the approvals from 'Finance Director' and 'Finance Senior Director' arrive, and the final tally of 'Approvals' tab in

PO window will be as follows:

 Though approval for Level 5 came earlier, but since Level 4 is a Mandatory level it will NOT get 'Auto Approved' and R2 waits for it and logs it as a usual approval.

Since the last level is approved the final status of PO is 'Approved'.

Sample Case-Study #1 >>> PO Gets Rejected

Let's consider the same example, where all the core parameters have been specified and the PO amount is 18,800

Now when such a PO is submitted for approval, based on the Policy definitions the Approval Policy Definition #1 will be applicable.

When the approvals begin,

the overall tracking of the 'Approvals' tab in PO window will be as follows:  

as the first level itself is mandatory, and system won't proceed until first level is cleared

Once the 'Order PM' has approved the PO, the 'Approvals' tab in PO window will be as follows,

At this point, Let's say, if the 'Sales Manager' Rejects the PO even before the Employee 'James Dunn' does.

System will log Level 1 as an approval and Level 2 as Rejection.

Now the 'Approvals' tab in PO window will be as follows:

When a lower level is Rejected, all the subsequent higher levels, irrespective of being Mandatory or Optional will get 'Auto Rejected'.