Document Approval In Oracle Purchasing

In this article we will see how the document approval hierarchy is setup and how it works in Oracle Purchasing. Any document (Purchase Order, Requisition etc.) we create in Oracle Purchasing needs to be approved by the proper authority. The approval hierarchy setup determines how the document will be routed to different approvers.

In Oracle Purchasing, we have three methods to route documents for approval

• Approval Hierarchy Method: This method uses the Position hierarchy for approvals
• Employee Supervisor Hierarchy Method: This method uses the Employee-Supervisor relationship
• AME (Approvals Management Engine)

In this article, I will only discuss the first two methods since they can be setup using Oracle Purchasing and HR. I will cover AME in another article.

Before we discuss the different approval methods, let us understand the concepts of Jobs and Positions since we need to setup jobs and/or positions depending on the type of approval method we select.

Job: Within an organization, we have generic roles like Manager, Director, and Consultant etc. These roles are referred to as Jobs within Oracle HR

Positions: Positions are different instances of the job within an organization. If ‘Manager’ is defined as a Job, we can have ‘Marketing Manager’, ‘Production Manager’ etc. defined as Positions.

Before we start using the Jobs and Positions, we have to define the segments for the Job and position names and their valid values using the Key Flexfields Job Name Key Flexfield and Position Name Key Flexfield respectively.

OK. Now that we understand the concepts of Job and Positions, let’s see how the system determines which approval hierarchy to use

How will the system know what approval method to use?

In the Financial Options screen, Human Resources tab, we have a checkbox for Use Approval Hierarchies. If this checkbox is checked, the system will use the Approval Hierarchy method (Position Hierarchy). If this checkbox is unchecked, the system will use the Employee Supervisor Hierarchy method. The Financial Options Screen can either be accesses from the Payables responsibility or the Purchasing responsibility.

Payables Responsibility: Setup: Options: Financials

Purchasing Responsibility: Setup: Organization: Financial Options

Let us know look at the setup that is required for using either of the approval methods.

Define Jobs: We use the Jobs window to create the required Jobs. If we are not using Positions, we assign one or more employees to each Job. If we are using Positions, we assign one or more positions to each job and then assign one or more employee to each position.

Navigation: Purchasing Super User: Setup: Personnel: Jobs

Define Positions: We use the Position window to create the required Positions. Note that this setup is mandatory if we want to use Approval Hierarchies.

Navigation: Purchasing Super User: Setup: Personnel: Positions

Define Position Hierarchy: We use the Position Hierarchy window to define and administer the position hierarchies. In addition to routing the document for approval, position hierarchy is also used for Document Security Control.

Navigation: Purchasing Super User: Setup: Personnel: Position Hierarchy

Security Hierarchy: The security hierarchy controls which positions (and therefore which employees) have access to a particular document type. It does not control which employee has the authority to approve the document. If we want to use Security Hierarchy for document security control, we have to define the Position Hierarchy. (Even if we just want to use Employee-Supervisor relationship for document approval).

The Security Hierarchy is selected from a list of values in the Control zone of the Purchasing Options form (Navigation: Purchasing Responsibility -> Setup -> Organizations -> Purchasing Options). Here, select a Security Hierarchy, which is a position hierarchy from the Position Hierarchy window. When the Security Level is set to Hierarchy for a document in the Document Controls window, this position hierarchy governs access security for that document.

The Security Hierarchy field will only be enabled when the Hierarchy option is selected for the Security Level on the Document Types form.

Navigation: Purchasing Super User: Setup: Purchasing: Document Types

 If the Security Level Hierarchy is selected for any document type, we have to provide a valid value for the Security Hierarchy field in the Purchasing Options

Navigation: Purchasing Super User: Setup: Organizations: Purchasing Options

Define Document Types: We use the Document Types window to specify the security and approval controls for each document type. An image of the Standard Purchase Order document type is shown above.

Define Approval Groups: We use the Approval Groups window to define the approval groups. The approval groups are not automatically assigned to any jobs or positions. We have to manually assign these approval groups to jobs or positions using the Approval Assignment window. We have to specify the approval amount limits for the document as well as the account range. Note in the image below we have excluded specific account range from the approvals.

Navigation: Purchasing Super User: Setup: Approvals: Approval Groups

Assign Approval Groups: We use the Approval Assignments window to assign the approval groups to either jobs or positions.

Navigation: Purchasing Super User: Setup: Approvals: Approval Assignments

Assign Employees to Jobs/Positions: We use the person window to assign the job and/or position to the employee record. Depending on the type of approval hierarchy we use, it is very important to assign either of these values.

Navigation: Human Resources Responsibility: People: Enter and Maintain

Run ‘Fill Employee Hierarchy’ Program: We need to run this program every time we make any change in the Position hierarchy. It is not required to run this program if we are using the Employee-Supervisor hierarchy. We can run this program from the Purchasing Responsibility.

Employee-Supervisor Hierarchy Method:

In this method, the system utilizes the Employee-Supervisor relationship. Each employee or supervisor has a job assigned to its employee record. And for each job we assign an approval group. The approval group determines the approval limits.

Document Approval Flow Using Employee-Supervisor Hierarchy Method:

The following process flow diagram depicts the approval algorithm used in an Employee-Supervisor Hierarchy Method

Let us now look at the above flow with the help of an example. In this example, let’s assume we have 4 employees Alex, Bob, Chris and Don.

Don is the supervisor for Chris. Chris is the supervisor for Bob and Bob is the Supervisor for Alex. Their jobs and approval limits are shown in the table below

Example 1:

Alex creates a Standard Purchase Order for $400. The document type in this example is the ‘Standard Purchase Order’.

Case 1: If the ‘Owner can Approve’ option on the ‘Standard Purchase Order’ document type is set to Yes, Alex (the owner of the document) can approve the document since it is within his approval limits

Case 2:  If the ‘Owner can Approve’ option on the ‘Standard Purchase Order’ document type is set to ‘No’, the document will be forwarded to Bob for approval since he is Alex’s supervisor and the document amount is within his approval limit

Example 2:

Alex creates a Standard Purchase Order for $55,000 and submits for approval

The system will first get Alex’s supervisor which is Bob. It will then check if the document amount is within the approval limit for Bob. In this example, since the document amount ($55,000) is greater than Bob’s approval limit ($50,000), the system will check for another document type option called ‘Forward Method’. There are two types of Forward Methods: Direct and Hierarchy.

Case 1: If the Forward Method is ‘Hierarchy’, the system will route the document for approval to the next person in the approval hierarchy till it reaches the person with sufficient approval authority. So in this example, the document will be routed to Bob. Once Bob approves the document, it will be sent to his supervisor which is Chris. Since the purchase order amount ($55,000) is now within Chris’s approval limit, he will be the last person in the approval chain to either approve or reject the document.

Case 2: If the Forward Method is ‘Direct’, the system will route the document to ‘the first person with enough authority’ in the employee-supervisor hierarchy. In our example, Bob is the supervisor for Alex. But since Bob’s approval limit is less than document amount, the document will not be sent to Bob for approval. The system will get Bob’s Supervisor which is Chris. It will check the approval limit for Chris which is $500,000. Since this approval limit is greater than the document amount, the document will be routed to Chris for approval.

Example 3:

Alex creates a Standard Purchase Order for $600,000 and submits for approval

Case 1:  If the Forward Method is ‘Hierarchy’, the document will be routed to Bob, then Chris and then to Don (assuming everyone in the chain is approving the document)

Case 2:  If the Forward Method is ‘Direct’, the document will be routed directly to Don since he is the first person in the hierarchy with enough authority to approve the document.

Approval Hierarchy Method (Position Hierarchy Method):

In this method we utilize the position assigned to the owner of the document, the default Position Hierarchy specified on the document type and the position hierarchies to determine how the document will be routed for approval purpose.

Document Approval Flow Using Approval Hierarchy Method:

The following process flow diagram depicts the approval algorithm used in an Approval Hierarchy Method

If you notice, the document flow for approvals work similar to the Employee-Supervisor method except the fact that instead of looking for the next supervisor, in this method the system looks for the next position as per the Position Hierarchy. The concepts of ‘Owner Can Approve’ and the Document Forward method of Direct and Hierarchy remains the same.