Receiving Inspection: Segregation of Duties 2287
In my company, we are using an ERP system. The ERP system automatically notifies receiving dock personnel when an inspection is required. We require receiving inspection to be performed on selected items being received into our company’s plants.
The Quality Engineering Department determines which items (parts) require inspection. However, nobody in the Q.E. department has the capability to actually update the Receiving Inspection Required attribute for the item within the ERP system. The buyer in the Purchasing Department is the one who currently has authority (not necessarily exclusive) to change this attribute. The quality engineer must manually notify (by email or phone) the buyer to change the Receiving Inspection Required attribute.
The rationale for this manual process is that developer resources would be required to allow a Quality Engineer to have the ability to change just this one attribute. This is a fair statement since if we were to give the Q.E. the ability to update this Receiving Inspection Required right now, they would have the capability to modify many item attributes that are not quality-related.
My question is this: Do we violate the segregation of duties principle by allowing our buyer to be the one to update this Receiving Inspection Required attribute? :?:
I personally want the Q.E. to have the capability to modify this attribute. I also want they buyer to be able to require inspection for an item, especially if it is the first time they are ordering an item. My concern is when the buyer has the capability of turning the inspection requirement off and thus preventing inspection of a shipment. To me, this should be handled by the Quality Engineering Department.
Any comments would be appreciated.
Your question has the answer
If it is the duty of the QE team to tick/untick the goods inspection tab in the ERP, then they should be doing it.
If the buyer is given the capability to do the above, they dont even need to notify the QE of any material that requires inspection as they themselves can complete the cycle…
If the ERP that ur using is SAP, then i have the following suggestions.
- make goods inspection mandatory or tie it to the type of material that is ordered( this way we can ensure that services are out of the inspection loop)
- Restrict QE access to goods receipt, specifically to the specific movement type for confirming inspection( 105 or whatever is defined in ur orgn, under MIGO to be specific).
This should suffice ur requirment.
Thank you very much for your reply. We are using the Quality module in Oracle E-Business 11.5.10. At the risk of being long-winded please allow me to elaborate a little bit on our current process and ask a couple more questions. I want to have my facts straight before I suggest that we have not properly segregated duties for this business process.
- At the request of the QE, the Buyer turns on the Inspection Required attribute in the Item master record 100123.
- When a Purchase Order Release is created for some 100123, the value of Inspection Required is copied to the PO Release. If a change to the Inspection Required on item master is made after the PO Release, it will not automatically update the release (I’d like to give our QE the ability to modify the Inspection Required attribute of the PO release too).
- When the item is received against the PO, a receipt ‘traveler’ automatically prints telling the receiving personnel that the shipment needs to be inspected.
- Inspection is done by an inspector (i.e. not a Quality Engineer) and the results are logged in a receiving Inspection Quality Collection Plan in Oracle.
- Periodically, the Quality Engineer evaluates the Receiving Inspection Quality Collection plan and makes decisions about which items need to have inspection and which ones do not. (We are not using Skip Lot Inspections functionality at this time so that is why this is a manual process)
- These decisions are communicated to the Buyer via email
- The Buyer makes the changes to the Receiving Inspection Required attribute.
I have no problem with the Buyer turning the Inspection Required attribute ‘ON’ since it won’t negatively impact quality (tu-rning it ‘OFF’ is the issue). The main reason that I want our QEs to have the ability to edit this attribute is one of convenience as much as it is for segregation of duties. Certainly if they are responsible for quality, they need to have the authority to go along with it.
Although this is not currently happening, it is conceivable that there could be a conflict of interest with the buyer and the quality of the parts. If there are frequent quality issues with an item, more inventory may need to be carried to compensate for shipments held up in inspection. In addition to having to expedite additional shipments the Buyer may have a role in keeping inventory levels down which, in theory, could provide some motivation for turning ‘OFF’ the inspection requirement. Segregating duties would not even put the buyer in a position where they could be tempted to do this.
I would think that your opinion would only be reinforced after reading this. The argument that will likely be presented against me is that it will take significant time of an Oracle developer to ‘lock down’ the Inspection Required attribute on the Item Master and Purchase Orders. I do not disagree with this and perhaps a more strict manual system ca be implemented. Can you comment on any strategy that I might use to get this pushed through?
Eric, its a nice issue that you have brought up in the forum. Given my limited knowledge on Oracle ERP and the facts presented by you( specially that it will take a developer to disable turn off), i suggest the following.
- would it be a good idea to completely take away the quality related authority( switching inspection ON or OFF) from the buyer and grant it to the QE. This would be the most ideal way of providing authorization for the case that u have . This will also take away a step in your process ( the QE informing the buyer abt the goods that need inspection) and hence make ur process more efficient, apart from having better control
- In case modifying the access is not practicable, another option would be the periodic review of the Material Master Table change log( that has to be there with any ERP) by the QE. This way the QE can get a lot of comfort and assurance that all the materials that need inspection have it enabled and if this option has been disabled against any material that previously had the inspection enabled, why was it done.
Couple of things that i could think of
Thanks for the feedback. I am putting together a list of options on how to handle this situation and having a periodic review may be what we have to do.
Unfortunately, Oracle will keep track of who modified this particular record and when it was modified but, to the best of my knowledge, it will not indicate which fields were changed, i.e. Inspection Required. (There are some modules in Oracle where the old values are logged, but not for this).
I am anticipating a decision on this within the next couple of weeks and will post the decision.
Just to add, what if you enable the logging at the database level. That should be able to provide u the value that existed prior to change and after the change.