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2. GE Corporate Audit Staff
3T12 FastWorks
Sourcing approval simplification project
For discussion with:
Corporate OUs
January 2013
This document is preliminary and is neither final nor complete. Rather, this is incomplete and possibly incorrect in some places, reflecting the fact that it is work in progress.  Accordingly, no inference or conclusion should be drawn from this draft document with respect to the quality or effectiveness of GE's internal control over financial reporting or disclosure controls and procedures.

3. Agenda Approval simplification project
Key highlights & process changes
Indirect requisition… process
Indirect requisition… example
Examples of new SSS process
RICO layout & logic
Notification layout
Data & inputs needed by OU
Appendix

4. Approval simplification project
Standardize & optimize # of approvers in the SSS REQ process across GE
Project overview
New process highlights
Initiated & driven by Charlene Begley & Roger Lobo
Streamline and simplify Indirect sourcing approvals
Maintain & ensure quality & controllership standards
Maintain gatekeeper hierarchy… 1 for each transaction
Reduce the number of operational approvals… max 3
Apply thresholds on auto-approval and REQ changes
Daily rhythm
Timeline
Owner
Deliverables
SSS Implementation and GO LIVE by 2/15
Timing
Identify functional owners by OU
12/14
OUs
Provide GK & Fin. approver hierarchy
1/22
Business testing in Stage instance
1/23-2/15
Testing closure and sign-off by OU
2/15
Coding in development & unit testing
1/18
SSS IT
Develop & finalize OU testing plan
Tuesday
Wednesday
Thursday
Friday
Monday
Project team discussion
New Q&A
& clearing
Follow-ups & layout next week’s plan
Project team
Tom H.
Sourcing
Sheila M.
Sourcing
Sabrio S.
SSS IT
Suresh G.
SSS IT
CAS
Phase 2… Implement Corporate OUs… GE wide initiative

5. Key highlights & process changes
Indirect REQ process overview
Key Changes
 Reviewers as control point to ensure process compliance
1 Sourcing to check correct supplier for req. > than $10K
1 Finance each req. to verify correct charge account used
Request 
Reviewers
checks
 Finance approver assessing spend against the budget
4 Tiers defined based on requisition value
“Skip logic” for requisition 
Finance
approver
No greater than
3 approvers
 Operational approvers based on OHR bands. 3 scenarios:
Auto-approval based on requestor’s threshold limits
Direct manager approval if requisition > auto-approval limit
“Skip logic” for requisition > than Direct manager limit with FYI notifications to intermediate managers 
OHR
hierarchy
Final
approval 
 RICO-a) logic simplified to minimize re-approvals on new req.
Re-approval occurring if original req. was auto-approved
Re-approval if change > than MAX of $15K OR 5%
Reviewer & Finance approver checks to happen for all RICOs
Change orders
Change
(a- RICO stands for “Request to initiate a change order”
Streamline & standardize approval process for requisitions

6. Indirect requisition… process
Indirect REQ approval simplification
Operational Delegation limits (OHR)
Auto-approval levels by band
1-1 DM levels
by band
REQ
submitted
Job band
Contractor
LP & below
SPB EB
SEB
VP & above $0
250 5K
500K
1MM
3MM $0
500
500K
3MM
5MM
Unlimited
IPP Compliance
reviewer
Additional checks for high risk transactions (HCPs, ASPs, etc..)
1 reviewer
start at $10K
Sourcing reviewer
Contract/SOW exists
Correct supplier
Tc& Cs correctly used
1 reviewer
per requisition
BUC/ADN correct
Cost center accuracy
Reject /reroute for compliance
Finance reviewer
Finance approver tiers
Tiers
Threshold
Suggested band
4 Tiers 1 approver
Finance approval
Tier 1: $0-$100K LPB
Tier 2: $100K-$1M SPB
Tier 3: $1M-$3M EB
Tier 4: >$3M SEB+
Yes
Level 1
Level 2
Level 3
Level 4
$0-$100K
$100K-$1M
$1M-$3M
>$3M
LPB
SPB EB
SEB+
Above auto-approval limit No
Above DM approval level No
Yes
Reviewer structure
Tax reviewer
Direct manager approval
Skip to 1 below max level for approval
Type of review
Threshold
Sourcing reviewer
Finance reviewer
Starting at $10K
Each requisition
REQ approved
Tax reviewer
Skip to max level for approval
Highlights
REQ approved
Tax reviewer
Threshold & approval chain based on OHR band
Auto-approval & SKIP logic in approval sequence
Notification to all levels in approval chain
Reviewers checks are applied for each requisition
= Approval
REQ approved
= Process compliant

7. Indirect requisition… example
Indirect REQ approval simplification
Delegation limits
REQ
submitted
Auto-approval levels by band
1-1 DM approval threshold by band
Job band
IPP Compliance
reviewer
Additional checks for high risk transactions (HCPs, ASPs, etc..)
Contractor
LP & below
SPB EB
SEB
VP & above $0
250 5K
500K
1MM
3MM $0
500
500K
3MM
5MM
Unlimited
1 reviewer
start at $10K
Sourcing reviewer
Contract/SOW exists
Correct supplier
Tc& Cs correctly used
1 reviewer
per requisition
Finance reviewer
BUC/ADN correct
Cost center accuracy
Reject /reroute for compliance
4 Tiers 1 approver
Finance approval
Tier 1: $0-$100K LPB
Tier 2: $100K-$1M SPB
Tier 3: $1M-$3M EB
Tier 4: >$3M SEB+
Yes
Example
Above auto-approval limit No
Above DM approval level No
Yes
SPB raising REQ for $1MM… SPB reports to EB
Direct manager
Tax reviewer
Direct manager approval
Skip to 1 below max level for approval EB
SPB
REQ approved
Tax reviewer
Skip to max level for approval
Checks complete 
REQ approved
Tax reviewer
Finance approval
PO approved
EB manager approval
= Approval
REQ approved
Tax checks
= Process compliant

8. Examples of new SSS process
Operational hierarchy
Checks & approvals
# Approvals
Example 1: SPB raising REQ for $3K
Direct manager
Sourcing & Finance checks 
Approvers  1
Finance approval EB
SPB
Auto-approval
Example 2: SPB1 raising REQ for $400K
Sourcing & Finance checks DM DM 
Approvers  2
Finance approval
DM SPB2 approval EB
SPB2
SPB1
Tax checks
Example 3: LPB raising REQ for $10MM
Sourcing & Finance checks DM DM DM DM
Finance approval 
Approvers  3
SKIP to 1-below MAX - SEB VP
SEB EB
SPB
LPB
SKIP to MAX - VP approval  
Tax checks 
Notification to all-in btw
Approval
Process compliant
Notification 
Requestor

9. RICO-a) layout & logic Change order
High level RICO process
RICO mechanism
REQ submitted by requestor
Original REQ AUTO-APPROVED Reviewer checks and re-approvals
Original REQ not AUTO-APPROVED, but change in amount is greater than MAX (between $15K OR 5% of original PO value)  Reviewer checks and re-approvals
Original REQ not AUTO-APPROVED, and change in amount is less than MAX (between $15K OR 5% of original PO value)  Reviewer checks
RICO reducing original approved PO (change in amount < 0)  Reviewer checks
RICO changing the need by date  Reviewer checks
Change order
Re-build hierarchy
Re-build hierarchy
Reviewers
checks
Yes
Yes 1 2
Original
REQ
AUTO-APPROVED
Finance and operational approvals No
RICO
> than MAX between $15K or 5% No
PO approved
Reviewers
checks
(a- RICO stands for “Request to initiate a change order”
Minimize the number of re-approvals for change orders

10. Notification layout
Notification format
New features
Layout to distinguish between Gatekeepers and Approvers
Gatekeepers defined as “Process reviewers”
Operational hierarchy & Finance approver defined as “Approvers”
Display role and activity for each step in the sequence
Current notification layout
Roles definition not displayed
GK & approvers not distinguished
New notification layout
Improved readability and traceability of process steps

11. Data & inputs needed by OU
Action item
Owner
Timing 1|
Contact matrix
SPOC OU
12/12-12/14
Provide key contacts by role: SPOC, IT, Sourcing and Finance by OU 2|
Provide new structure
SPOC OU
12/12-1/22
Submit Sourcing & Finance reviewers; Finance Approvers by threshold 3|
SSS hierarchy clean-up
SPOC OU
12/12-1/22
Align SSS employee data to accurate and updated OHR hierarchy 4|
Test plan & set-up
SPOC OU
1/8-1/22
Prepare final test cases and scenarios to be tested in SSS Stage instance 5|
Business Stage testing OU
1/23-2/15
Run business testing in Stage instance to ensure correct functionality

12. Thank you.

13. Appendix

14. Reviewers - required activities
Finance
Sourcing
Line Item Description is clear and concise
Account Distribution Number is correct and in the correct format
Ship-To Address Accuracy
Is the good delivered or service performed where the PO indicates or is the ship to address a default?
Appropriate Requester
Time period of PO
Scrutiny over Blanket PO’s (typically services) / Repeat Pay PO’s
Sales Tax flag (yes or no) is correct
PO’s > $200k have review from tax gatekeeper, but will rely on good description and Ship-To Address information
Payment Terms are per contract & Other contract considerations
Ensure correct “payment system”… GETs, T360, EMIS, Vpayment (Amex)
Preferred vendor (non-catalog only)
Contract or SOW available or needed
Correct description for back end spend analytics
Ensure right contract terms were used
Ensure contract is stored
Flag vendor for due diligence

15. $5.5M req: # 5 reviewers and # 4 approvers
Indirect requisition… layout change 1/2
“Process reviewers” and “Approvers” displayed in separate sections of action history: roles will be clearly presented & numbering in each side will start from ‘1’
BEFORE
$5.5M req: # 5 reviewers and # 4 approvers
One single section and no distinction of roles
$5.5M req: # 3 reviewers
and # 3 approvers
Increased visibility & reducing approvals as per new system logic
AFTER

16. Indirect requisition… layout change 2/2
After the PO is approved, users can raise a Request to Initiate a Change Order  In action history RICO will show only current hierarchy and one single line (“Original Req/RICO”) will show the approval date of the original req (the original req’s approval hierarchy not shown)
BEFORE
$30K change: # 5 reviewers and # 2 approvers
Expanded sequence and no distinction of roles
AFTER
$30K change: #3 reviewers and no re-approvals
Increased visibility & reducing approvals as per new system logic