Fast and more agile procurement

Introduction

Procurement organisations, like the companies they are operating in, need to respond agile and efficient to the fast changing circumstances, being it Covid-19 crisis, global warming disasters, talent management or digitisation challenges. Therefor they need to include in their design and setup the right prerequisites and conditions.

The current context is VUCA (volatile, uncertain, complex, ambiguous) at an increasing level. Typically, procurement organisations changing towards their next generation target operating model, with new processes and the related software and system landscape take traditionally 2 years, if not longer to get there.  The disadvantage is that by the time the changes near completion, the world around might have changed again. Adaptability and change need to be continuous and faster than ever before.

How do you enable an agile procurement organisation?

All 12 agile principles apply to realization of agile procurement. But there is more. Such as applying the principles to sourcing, and there are a number of key areas to look at to enable agile procurement, which are related to structure, processes, governance, people behaviors, team maturity of the organisation and an overriding drive for simplification and delivery. This article will not go into agile sourcing or purchasing, but focus more on some of the supportive behaviors and some examples and measures that can be taken to become more agile and responsive.

Clear Mission and purpose

First of all a clear company mission and purpose in easy to comprehend language helps. This will make it clear in all circumstances what the company and also the function strives to achieve. It helps employees and other stakeholders to identify themselves with the wider role and contribution to society of the company. It is also one of the cornerstones for the needed decentralization and empowerment of people in the organisation and to realize a common performance culture (know what is expected from you).

Behaviors supporting agility

Secondly, agility and resilience are not simply a change of the ‘hardware’ or ‘structures’ of an organisation or implementing weekly scrums or design thinking processes. The change is related to the behaviors displayed. This is where the change challenge comes in and where leadership needs to lead by example. Trust, collaborative attitude, information sharing, fast, quick decision making, focus on execution, empowerment to act, learning from failures, responsiveness, resilience, respect, acceptance of differences and listening are elements which are key. Teams and individuals need to grow beyond competition and self-interest (functional interest). Only when trust, respect and effective collaboration have been realized in the organisation, true delegation and empowerment of agile teams will gain momentum.

What can be done to make procurement more agile?

Lets try to bring the topic of agility closer to home by sharing some examples, that even might come across as ‘evident’ or ‘the usual’. The reality is that these examples also show that in practice procurement functions have a lot of ‘low hanging fruit’ to realize more agility.

This list is a start to help framing agility in procurement a bit more pragmatically and you are very much invited to share your views and experiences.

• Procurement close(r) to the business where the delivery takes place, but with a procurement function as home for excellence, knowledge and resources both for NPR and non-NPR. True x-functional collaboration and metrics, which takes the discussion of structures beyond the de-central, central or hybrid target operating model.
• Focus on solutions for needs and discussing suggestions from vendors in a collaborative mode instead of discussing a preset of specifications and comparing bids. Short cycle, sprints with interim results instead of full flashed ‘complete’ blueprints.
• Processes: Relentless focus on simplification and de-bottlenecking processes. Integrated in end-to-end processes, x-functional.
• Procurement strategy, category management: up to date and alive scenarios shared by x-functional teams for short, mid and long term transparent for main categories and suppliers and embedded in and part of the company reporting and planning cycle and scenarios.
• Key suppliers and partnerships: a focus on ‘significant’ delivery, clearly defined projects, risk management, supply chains, sustainability, innovation, continuous improvement, managed by relationship managers and x-functional teams. With suppliers, collaborative sharing of information and data in place as well as understanding each others language (jargon) and processes. Behaviors focused on agility and simplification.
• Procurement showing ownership for the supply base, supply chain risk, supply chain sustainability and innovation with suppliers including startups.
• Dashboard: Real time dashboard showing metrics related to key performance areas. Monthly or even quarterly data dumps are replaced by real time data availability.
• Meetings: replaced by quick video calls solving problems or taking decisions.
• Meetings: Installing an effective and efficient meeting culture and skills (information, decision and execution oriented).
• Meetings: focus on x-functional, with suppliers/customers instead of internal procurement.
• Strategic Sourcing, category management: more focus on the quality of the cross-functional team and the member selection than on approving the steps in the sourcing process. E-Sourcing and speed sourcing routinely implemented for large part of spend and applying agile sourcing principles.
• Flying sourcing squad of senior and experienced procurement experts, temporary sourcing critical products for a company.
• Category and strategic supplier teams: more decision making authority for remote teams and trained in agile sourcing principles.
• Purchase to pay: In the selection of purchase channels, the multitude of repetitive, low risk, low value orders are delegated to the businesses, departments holding the budgets. P-cards, market places, catalogs enabled.
• Daily team check-ins, remote social events and interactions organised (coffee, breakfast, celebration, etc)
• Communication: weekly 30-minute CPO reviews and once or twice-a-month 60-minute reviews.
• Digitisation: pilots, trials going on and digital support implemented for main processes (creating speed, transparency, intelligence, insights, supporting processes)

Looking forward to you reactions and examples for agile procurement.

Other areas to consider

Besides people behaviors, culture and a clear purpose also the structure, end-to-end processes and governance are important enablers for agility and resilience.