Lean-Agile Procurement

From Procurement, Center of Excellence, Legal Point of View

Why Lean-Agile Procurement

Volatile, uncertain and often unpredictable Market conditions demanded unprecedented levels of adaptability within and between organizations. Lean-Agile Procurement (LAP) provides it and is the first Approach, that combines Agile Values & Principles to take strategic Sourcing to a new Level.

LAP seeks to overcome the following key challenges in strategic sourcing:

  • Misalignment / misunderstanding (internally and externally) due to focus on paperwork and documentation

  • Transactional nature of Rfx including hand-offs between departments where often different people are responsible for sourcing than those for delivery

  • Complexity/unknowns where requirements are more hypothetical, and often change. Subject matter experts need to be involved as procurement can't make the assumption to know of the details up front and understand it all anymore, e.g. on issues like ESG, AI

  • Long lead times, which in turn lead to expensive and time consuming change requests in delivery, because the world has changed in the interim.

Value Proposition
of LAP

For complex, strategic sourcing cases which can't be specified & sourced easily, Lean-Agile Procurement offers a collaborative approach to get involved early and source and deliver better outcomes faster together with the business and the supplier

Procurement is a core Capability in LAP!

"Procurement as the investor for the company/government" encapsulates a profound paradigm shift in the role of procurement. Beyond a transactional function, procurement assumes the role of a strategic investor, shaping the organization's future through supplier partnerships and value creation. By leveraging procurement's influence, organizations can drive innovation, optimize costs, and strategically allocate resources, thereby maximizing their potential for long term growth, success and adaption.

Procurement invests a lot!

Commercial roles such as procurement / sales / etc. are responsible for up to ..

.. 80% of turnover in the private sector, and up to ..

.. 15% of GDP in the public sector / government

This makes the importance of improving these commercial functions and the direct, positive and powerful impact they have on the business obvious. In more recent times procurement is becoming much more significant and strategic in its impact on the environment and society!

Early Involvement & Collaboration

At its core is the cross-functional Agile delivery team, that's also responsible for sourcing. Depending on the strategic sourcing case, the skills on the team may vary, but the business owner is always leading the team and procurement, as well as legal, is a team member from the start, that facilitates through the 7-8 sourcing steps. In our experience, the mere fact of having all the skills in place improves time-to-market by 100%! - Using LAP with Scrum as the operating model for the team has shown to improve time-to-market by up to 800% for strategic sourcing cases!

Up to 80% Savings via Outcome-based Approach, Coping Uncertainty and minimizing Risks via short Feedback-/Delivery cycles and collaboration across departements and companies are promises of LAP.

Criteria for success in need of your support

  • Procurement has assessed the sourcing case and coached the business to find the optimal approach

  • Procurement provides a Scrum Master or Team Member (>2days a week available) to the delivery team to coach it through out the sourcing with Lean-Agile Procurement

  • The Scrum Master governs the team in terms of Procurement regulations

  • The Scrum Master explores with the team alternative approaches / options out-side of current behaviors if needed keeping an outcome-based / collaborative approach in the center of all activities

  • To minimize risks the Scrum Master ensures that e.g. the solution design, estimations, proposals, contracts are iteratively co-created with all shortlisted vendors simultaneously

  • Procurement supports e.g. negotiations or contracts based on agile values & principles, that support agile ways of working while delivery

  • Legal team is involved from the start e.g. as team member (no redlining back-n-forth)

Typical Results reported by Organizations using LAP

100-800%

Improved Time-to-Market

50%

80%

of usual Effort

Risk Reduction

9/10

Recommendation Rate

Benefits with LAP

  • Up to 10X improved lead time of strategic sourcing cases early involvement at Kickoff of case

  • up to 80% Savings via Outcome-based Approach Coping Uncertainty and minimizing Risks via short Feedback-/Delivery cycles
    9 out of 10 Satisfaction Rate across all stakeholder groups

  • Keeping Driver-Seat in terms of Procurement Governance / Process / Policies

  • Incfluence about e.g. supplier landscape