How to Get Started with Agile Procurement
By Hugo Britt | May 3, 2022
Agile – that’s Agile with a capital “A” – is an iterative approach to project management that began in software development and spread rapidly to other professions.
Benefits of Agile and the iterative approach
Benefits of Agile include better communication with stakeholders, increased customer satisfaction, more flexibility, and reduced risk. These are mainly achieved through the iterative approach; this means breaking a project up into several smaller tasks and working on them step-by-step, taking each iteration back to the customer/stakeholder to gather their feedback and make any changes required as you go.
This continuous improvement approach produces a result that is much more closely aligned with customer expectations.
Procurement lagging behind the Agile movement
The procurement and supply chain professions are a little late to the Agile party. This is a missed opportunity when you think of the priorities of many procurement teams:
- Improve speed-to-value and shorten sourcing cycles
- Be more flexible/responsive to changing supply conditions or business needs
- Build better relationships with stakeholders
- Drive continuous improvement.
What is agile procurement?
It can be difficult to shoe-horn a methodology designed for software development into the procurement process, which is why many teams have opted instead for adopting and adapting agile (with a lower-case “a”) principles instead of following a strict method.
As agile procurement is an emerging discipline, there’s no single set of rules or definitions about what constitutes agile. For some, “agile procurement” simply means trying to stay as flexible as possible while working to reduce time-to-source. For others, being agile means making faster decisions.
How to implement agile procurement using the four values of Agile
The best place to start is to look at the four key values of Agile and apply them to procurement. These are:
1. Individuals and interactions over processes and tools
Procurement has a reputation for focusing more on processes and policies than relationships. Spending more time building working relationships with stakeholders and suppliers has the potential to transform the perception of the profession and help create long-term value.
Take maverick spend as an example. Procurement can implement policies and rules to try to reduce maverick spend in the business, but shouldn’t forget to reach out to mavericks and find out why they are consistently purchasing goods and services out of contract. Doing so will help discover the “why” behind maverick spend and reveal what needs to be improved, such as stakeholder education or a clunky online procurement system.
Similarly, many procurement teams make the mistake of onboarding a new supplier and “getting them set up in the system,” only to never touch base with them again beyond the usual transactional relationship. But spending time on supplier relationships (often formalized through a Supplier Relationship Management program) can yield several benefits including better prices, lower risk, continuity of supply, innovative ideas, and more.
2. Working software over comprehensive documentation
While this value seems more relevant to software development than procurement, the basic idea still applies: procurement cannot hope to become Agile until it addresses the perennial problem of unnecessarily lengthy RFP processes.
One of the emerging players in the Agile space, Mirko Kleiner, has formulated a Lean-Agile procurement strategy that reduces complex sourcing documentation down to a single page known as the “Lean-Agile Canvas”. This canvas also acts as a single-page “Agile Contract”.
Then there’s Una’s approach. As a group purchasing organization, Una has thousands of pre-negotiated contracts with top suppliers ready to go, meaning our members can completely bypass the time consuming RFP process and dramatically accelerate their time-to-value.
3. Customer collaboration over contract negotiation
Productivity expert Jeremy Jarrell describes the third Agile value as follows:
“[Customer collaboration over contract negotiation] stresses the importance of encouraging your customers and development team to collaborate to chart the best way forward together, rather than to view each other as adversaries.”
We can apply this value to procurement by replacing “customers and development team” with “stakeholders and suppliers”. Too often, procurement teams see stakeholders – the people in the business with purchasing needs – as a source of frustration rather than treating them as customers and collaborators. Similarly, real value can be uncovered in supplier relationships by regarding them as partners seeking mutual benefit, rather than an adversary to dominate in negotiations.
And don’t forget, if you partner with a group purchasing organization like Una you can skip this stage altogether and jump straight to enjoying cost savings without difficult and drawn-out supplier negotiations.
4. Responding to change over following a plan
In our view, this should be the number-one value in any Agile manifesto. Being agile is about flexibility and responding to change. In procurement, change can come in the form of new stakeholder requirements, an evolving supplier landscape, or sudden disruptions such as a sharp increase in commodity prices, a natural disaster, or port congestion.
The trouble is that project managers have traditionally sought to keep scope changes to a minimum. “Responding to change” involves a mindset shift where procurement needs to welcome changes rather than attempting to fend them off. This allows for a culture of continuous improvement and helps keep the sourcing manager aligned with changing business needs.
Stay responsive and flexible by checking in with stakeholders to get their feedback after each iterative step. Meanwhile, review your processes to identify any hurdles that could prevent you from reacting fast to disruption.
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Do you have questions about group purchasing? Wondering how a group purchasing organization works to save you money, time, and effort?
Una’s team of Sourcing Advisors is here to help. Contact us to learn more.