While SAP has defined the tolerance group methodology as its method for placing
limits on an employee, 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 accepted 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:
1. 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?