Sooner or later, procurement as a profession will need to become Agile.
To resist doing so in the belief that the principles of Agile don’t apply to procurement is a sure-fire way to slip into irrelevance and obsolescence as businesses everywhere adapt to a new way of working. Even if procurement itself doesn’t become Agile, it’s highly likely that the team will need to work with other functions in the business (and suppliers) who have done so. It’s therefore useful to understand the principles and think about how it can relate to your own ways of working.
Some of the language used in the 12 Principles may seem specific to Agile software development, but in this article we find a way of making each principle relevant to procurement.
- Satisfy the customer through early and continuous delivery of value.
The first step of a typical procurement cycle involves communicating with a business stakeholder to understand their needs and plan the sourcing of a product or service. Once this has been done, a common pitfall is to then cut that stakeholder out of the process until the project is completed and procurement has a signed contract in place. While the motivations behind doing so may be understandable – the procurement professional wants to display autonomy, knows the stakeholder is busy and seeks to minimize interference – this does not create a good outcome for the stakeholder.
Good communication involves regular updates to let the stakeholder know how the process is going, whether there will be any delays, get their input at set milestones, and check that their requirements haven’t changed. For some, this may require a mindset shift to think of this person not as a stakeholder, but as a customer who expects to be kept informed.
- Welcome changing requirements, even late in the process.
Agile processes harness change. For procurement, this means finding a way to build in flexibility at every stage of the sourcing cycle. Operationally flexible contracts may give you room to accommodate your stakeholder’s last-minute changes. Taking a modular (step-by-step) approach to sourcing can also help mitigate the flow-on effects of change on the wider project.
- Deliver frequently, with a preference to shorter timescales.
One of the benefits of Agile is, of course, speed. If traditional procurement processes continue to be unnecessarily lengthy while the rest of the business trends towards faster delivery, procurement will soon be left behind. Clearly, things must change.
New ways of working such as Lean-Agile Procurement (LAP) can shorten time-to-market from months to days so you can deliver business outcomes much, much earlier. This can be done through holding one-day supplier workshops instead of lengthy discovery and selection processes and cutting multi-page proposals down to single-page templates.
- Businesspeople and developers must work together throughout the project.
Procurement should never be siloed or isolated from its stakeholders. For big projects, it’s a good idea to create cross-functional teams where the procurement professional is physically located with the stakeholder team. If procurement and its stakeholders are separated by distance, no problem: there are plenty of collaboration tools available such as Slack and even collaboration capabilities within procurement software solutions. Just remember: email is not Agile.
- Build projects around motivated individuals and trust them to get the job done.
This one is for managers in procurement. Micromanagers simply can’t exist in an Agile environment as they hold up the project with approval requests, unnecessary checks and time-wasting meetings. Empowering employees through trust is also incredibly motivating.
- The most efficient method of communication is face-to-face conversation.
We’ve established that email is the least efficient method of communication, but is face-to-face conversation really more efficient than collaboration software? It depends on your ability to conduct a to-the-point conversation without going off-topic or drifting into chatter. It’s unnecessary to call a meeting to update colleagues or stakeholders on a project’s progress; simply dropping by their desk to quickly bring them up-to-date is all it takes.
The biggest time-wasters to avoid are the miscommunications and misunderstandings that frequently occur in emails. Face-to-face conversations lessen the risk of misunderstandings and give you the opportunity to address them as they occur.
- Working software is the primary measure of progress.
OK, this principle is quite specific to software development, but the idea behind it can apply to procurement KPIs and metrics.
It’s important to agree upon what will be delivered and how it will be measured before embarking upon any project. Keep in mind that different stakeholders will have different ideas of what constitutes successful “progress” in procurement. For example, your organisation’s head of CSR will mainly be interested in your progress in terms of social and environmental procurement initiatives, while a CFO will only want to hear about cost savings.
- Agile processes promote sustainable development.
Agile is becoming increasingly inseparable from Lean, which is about identifying and minimizing waste at every step of your process. In procurement, this means creating smart, lean, just-in-time supply chains, consolidating the supplier base, and keeping the team lean and working smarter, not harder. Following any work methodology (including Agile) is a key way to minimize wasted time, talent and resources.
- Continuous attention to technical excellence and good design.
Again, this is a software-related concept, but in procurement “technical excellence” can be interpreted as performance monitoring, data collection, visibility and transparency. Without visibility, there’s little procurement can do beyond carrying out its basic tactical workload.
- Simplicity is essential.
Procurement processes tend to become inexorably more complex over time, particularly in public environments where multiple levels of approval and red tape means extra work and frequent duplication. Complex procurement processes can harm relationships with stakeholders, suppliers and end-users.
Following Lean principles, a regular review of where wasted time or effort occurs in your processes will provide you with a clear roadmap of how to simplify and speed up your sourcing cycle.
- The best work emerges from self-organizing teams.
Another one for the managers. Rather than assigning tasks by role, let your Agile procurement project teams select tasks based on their individual strengths. Step back and empower your team to run their own projects, designing their own plan and timelines. A hands-off manager will make themselves available for encouragement, feedback, and to lend their weight to stakeholder communication as required.
- The team regularly reflects on how to become more effective.
Continuous improvement, enabled by supplier performance and spend data, will help the procurement team get faster, reduce risk, and improve outcomes. This analysis needn’t be left until the very end of a project, but can be undertaken at key milestones to give procurement the opportunity to rapidly adjust course as required. The key is to avoid “locking in” plans that will limit flexibility in procurement.
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