ANOTHER LOOK

Tolerance Groups

In configuring the SAP system, a company can define toleranee groups, which are

specific ranges that define transaction limits$.$ An example of a tolerance group is shown

in Figure $2-6.$ As part of the configuration process, a company can define any number

of tolerance groups with a range of limits$,$ and can then assign employees to these

tolerance groups.

Source Line: SAP AG$.$

FIGURE $2-6$ A customization example: tolerance groups to set transaction limits

While SAP has defined the tolerance group methodology as its method for placing

limits on an cmployee, configuration allows a company the flexibility to further tailor

this methodology for other uses. Assume a sporting goods company places an order in

January for $1,000$ life jackets. The company receives only $995$ in the shipment from the

manufacturer, which arrives in March. This delivery, although it is short five life jackets,

is close enough to the original order that it is aceepted as complete. The difference of

the five life jackets represents the tolerance. By defining the tolerance group to accept a

variance of a small percentage of the shipment, the company has determined that it is

not worth pursuing the five extra life jackets. Tolerance could indicate a shortage, as in

this example, or an overabundance in an order. Thus, an order of $1,005$ life jackets

would also be within the tolerance. Tolerance groups should be defined and documented,

in part to deal with fraud issues. The sporting goods company should know the reason

for a short order: is it because the order is within the tolerance range, or is it because

a worker on the loading dock stole five life jackets?

Question:

Can you think of other areas within a company that would need to have some

limits set on variances or payments: Why would it be beneficial to set those

tolerance groups?