Purchase Document Approvals within oil and gas

Active spend for CAPEX or OPEX projects in upstream oil and gas are closely monitored by Board and Executive Committee members to ensure that business critical operations remain within budget and minimise the risk of maverick spending.

Operators and oilfield service companies establish approval processes such as Delegation of Authority and Power of Attorney in SAP which are essential for cost control and serve as a restricted and audited process from a governance perspective.

The key to effective purchase document approval processes within SAP is to define the main ‘cost object’ in the system which is a core financial process and must be administered appropriately. This can present a challenge in upstream oil and gas as costs can be assigned to various plant maintenance work orders, WBS elements, cost centres or assets.  

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SAP provides a common cost object referred to as the ‘cost centre’, which can be located across CAPEX, OPEX and corporate expenditure. The cost centre can be found in purchasing documents as well as in the assigned functional location.  Whereas, the WBS element can be further defined and summarised in the cost centre hierarchy or using organisational data such as company code, plant, or purchasing organisation.

Once the cost object is identified, the approval process and levels can be established to allow for internal (requisition) and external (order) purchasing documents to be approved. This process can also be built around other important documents such as the service entry or an invoice.

SAP functionality can also be used as the vehicle to review and approve important purchase documentation through SAP GUI, SAP Workplace or mobile applications such as SAP Fiori for procurement.  

Integration with SAP HCM allows approvals to be pointed at either position hierarchies or employee/ supervisor relationships. General SAP HCM data maintenance such as leavers, new starts and substitutions allows the approval process to be altered in an effective and timely manner.

Now that approvals can be executed in real-time, the timeframe for documents awaiting approval can be reduced significantly. This greatly improves overall purchasing lead-times, maximising efficiency and reducing costs. From defining the appropriate cost object, managing your core master data accurately and utilising standard MM processes; organisations can effectively manage the approval or rejection of purchasing documents in line with governance procedures. 

For more information, please email: info@absoft.co.uk