How to set up approval workflows in ERP that seniors will actually follow

Approval workflows in manufacturing ERP systems are meant to stop unauthorised spend and enforce policy. In practice they often become either a rubber stamp or a choke point. The problem is not the software; it is the design of the slabs and levels. Set them too low and every purchase requisition needs the managing director’s signature. Set them too high and the plant spends money it should not. The goal is to create a chain that moves documents quickly without losing control.

Why most approval workflows fail

Most plants copy the organisational chart into the ERP. The chart shows who reports to whom, but it does not show who understands the risk. A production manager may know which dye lot is critical for a rush order, but the chart may require the finance director to approve every purchase over £5 000. The result is either a bottleneck or a bypass: the manager calls the supplier directly and the ERP shows the order as approved by the finance director, who never saw it.

Another common mistake is treating every document the same. A £20 000 purchase of yarn and a £20 000 purchase of a new loom carry different risks. The yarn is consumed in days; the loom is capitalised for years. The workflow should reflect that difference. Fugen ERP allows separate slabs for purchase requisitions, sales orders, production job cards and capital expenditure, so each document type can have its own chain.

How to choose amount slabs

Start with the risk, not the hierarchy. List the document types that need approval—purchase requisitions, sales discounts, production job cards, capital expenditure—and for each type ask two questions:

• What is the financial risk if this document is approved without scrutiny?
• What is the operational risk if this document is delayed?

The answers give the slab boundaries. For purchase requisitions, a textile plant might decide:

• Up to £1 000: no approval, or storekeeper only.
• £1 001 to £5 000: production manager.
• £5 001 to £20 000: finance manager.
• Above £20 000: managing director.

These numbers are not universal. A plant that buys £500 000 of yarn every month may set the first slab at £10 000. The key is to match the slab to the risk the plant can tolerate, not to the job title.

Illustration: slab design for a towel manufacturer

A towel manufacturer processes 50 purchase requisitions a week. The average value is £8 000. The plant can tolerate £5 000 of unauthorised spend per month without materially affecting cash flow. The production manager can approve up to £10 000 without reference to finance. The finance manager can approve up to £50 000. Anything above that goes to the managing director. The slabs are set at £10 000 and £50 000. In a typical week, 30 requisitions fall below £10 000, 15 fall between £10 000 and £50 000, and 5 exceed £50 000. The managing director sees only the 5 high-value requisitions, not the 45 routine ones.

When to use single-level, two-level or three-level chains

Single-level chains are fastest. Use them for documents where the risk is low or the operational need is high: production job cards, sales discounts under a threshold, petty cash. The approver is usually the person who creates the document or their immediate supervisor.

Two-level chains add a check. Use them for purchase requisitions, capital expenditure, and sales orders that trigger production. The first level is the person who understands the operational need; the second level is the person who understands the financial risk. In Fugen ERP, the first approver can be the production manager and the second the finance manager. The system routes the document automatically and shows both approvals on the audit trail.

Three-level chains are rare. Use them only for documents that carry high financial or compliance risk: large capital expenditure, contracts with new suppliers, or changes to product specifications that affect regulatory compliance. The third level is usually the managing director or a board member. Because three-level chains slow the process, they should be reserved for the few documents that truly need them.

How to keep approvals moving when seniors are absent

Even the best-designed slabs fail if the approver is on leave or in meetings. Three tactics prevent the queue from building up:

• Delegate before the absence: the approver can temporarily delegate their right to a deputy. Fugen ERP allows delegation for a specific period, after which the right reverts automatically.
• Escalate after a delay: if a document sits for more than 24 hours, the system can escalate it to the next level. The escalation is logged, so the audit trail shows why the document moved.
• Set a fallback approver: for each role, designate a fallback who can approve if the primary approver is unavailable. The fallback is usually the next level up, but it can be a peer if the risk is low.

These tactics work only if the ERP enforces them. If the system allows manual overrides, the queue will still build up. Fugen ERP enforces delegation, escalation and fallback at the API level, so the rules cannot be bypassed.

How to test the workflow before going live

Test with real documents from the last three months. For each document, ask:

• Who would have approved it under the new slabs?
• How long would it have taken?
• Would the approval have prevented the risk the plant actually faced?

Record the answers in a table. The table below shows a sample for purchase requisitions:

If the table shows that most documents would have been approved faster without increasing risk, the slabs are set correctly. If it shows that high-risk documents would have slipped through, adjust the slabs and test again.

What to do next week

Start with one document type—purchase requisitions are usually the best candidate. Gather the last 50 requisitions and sort them by value. Decide the risk tolerance: how much unauthorised spend can the plant tolerate in a month? Set the first slab at that amount. Decide who understands the operational need and who understands the financial risk. Set the second slab at the point where the financial risk becomes material. Test the slabs on the 50 requisitions. Adjust and test again. Once the slabs work for purchase requisitions, repeat the process for sales orders, production job cards and capital expenditure.

Do not try to design the perfect workflow in one sitting. Start with one document type, test it, and refine it. The goal is not perfection; it is a workflow that moves documents quickly without losing control.

How this fits into the rest of the ERP

Approval workflows are not standalone. They tie into purchase and supplier management, sales and order processing, and production planning. A purchase requisition that is approved should automatically create a purchase order, which should update the stock ledger when the goods are received. A sales order that triggers production should create a job card, which should update the product costing when the order is shipped. The approval workflow is the gate; the rest of the ERP is the road.

For regulated plants, approvals also tie into quality control and audit trails. A change to a product specification may need approval from the quality manager before it is released to production. The audit trail should show who approved the change, when, and why. Fugen ERP enforces these chains and logs them, so the plant can prove compliance without extra paperwork.