What is Agile Procurement
By Susan Mercer-Tumilty, Consultant, ProcurePro Consulting
Before jumping into what is Agile Procurement, we should take a quick pause to explain what is Procurement. In the past few years, I’ve had the opportunity to showcase our organization at a number of tradeshows and events where there are exhibitors and attendees from a broad range of businesses. More times than not, after they drop in the card, I get this question ‘so what is Procurement?’ or ‘what do you do?’ It’s a fair question. And the simplest or shortest answer is that Procurement is the process of buying goods and services to help run and grow your business.
Every business, big or small takes part in Procurement activities whether they realize it or not. Procurement is about identifying what your organization needs (requirements), determining the best source or supplier to satisfy those requirements, determining the best way of acquiring those things and ensuring you receive them as promised.
A smaller company may just buy things on a credit card or directly from a supplier. While larger businesses (enterprise) may source items through quotations or competitive bids. They may require a Purchase Order or Contract and may even have a long-lasting, trusted relationship with a supplier. These organization often have different policies around how goods or services are bought vs. others.
Procurement departments are too bureaucratic and often are seen as a roadblock rather than an enabler and trusted advisor.
Many organizations have methodologies, policies, and processes that they follow in order to procure (fancy word for buy) the products and services they require in order to maintain and grow their business. The problem with traditional linear methodologies is that it can take a long time and is often unnecessarily complicated and cumbersome, which becomes problematic for smaller companies who lack the human and financial resources to follow these methods. In larger enterprises, it promotes the perception that Procurement departments are too bureaucratic and often are seen as a roadblock rather than an enabler and trusted advisor.
That brings us to what is Agile Procurement? In its basic form, it is taking all of those traditional, linear steps, synthesizing, and boiling them down to only those activities which are critically needed to deliver a procurement initiative in a simplistic, interactive and flexible way that offers value and savings and is much more nimble and agile.
At ProcurePro, we focus on providing cost competitive value to our clients so we quickly realized that we needed a method that could still deliver excellent results, but that was more agile, practical and sustainable and one our clients would see the value in and actually pay for. With this in mind, armed with decades of experience and critical client feedback, we developed the 4 Step Agile Procurement Methodology which includes the following steps:
1. Project Planning & Requirements
2. Request for Proposal (Sourcing)
3. Supplier Selection & Negotiations
4. Implementation & Supplier Governance
All of our sourcing projects, whether they are internal to our own organization or external for our clients, follow this simplified methodology. Within each phase or step there are a number of activities to be applied or followed which drives deliverables and final outcomes.
With each new project we review what we know, size, scope, timelines etc. and then we determine if all 4 steps are necessary. Then we go through each of the phases or steps one by one, review the activities and determine which of those are critical to that particular project. From there we can develop a project plan and put together timelines for our clients that make sense for them and their unique business needs. Larger projects may follow all 4 steps and include all activities. While smaller projects may only include 1 or 2 steps and only a few activities within each step.
What is the purpose of having an Agile Procurement methodology?
It streamlines the process. Everyone follows the same 4 steps in every sourcing or procurement initiative. No one needs to reinvent the wheel, it’s already there.
It’s extremely flexible and iterative (like other agile methodologies). Depending on the size or scope the Procurement representative can determine which steps and activities are applicable and follow those.
It’s simple to follow. The 4 steps and activities within each step are already defined and create a clear path completing each phase and producing deliverables.
It’s applicable to any size sourcing project. This can be applied to small sourcing projects or to larger projects that include negotiations and implementations. It can be used for and support a 2-week engagement up to 20+ week engagement.
Our 4 Step Agile Procurement Methodology delivers excellent results while remaining more agile and practical than most methodologies.