8 interpretations of agile procurement.
When you work in a particular field or industry, the lexicon / jargon / shorthand speech that’s commonly used becomes an afterthought, even if you don’t always know the exact meaning. You just get used to using the words that everybody else uses. In source-to-pay, “agile” and “agility” are getting a lot of play right now. So, when someone at IACCM (The International Association for Contract and Commercial Management) recently asked us to clarify what does “agile procurement” really mean, I asked around.
Procurement practitioners, P2P software developers, customers, suppliers, industry reps, analysts – everyone offered their unique interpretation of what “agile procurement” means. Predictably enough, the definitions varied, but there was also some overlap. Also not surprising is the fact that many people from across the industry spectrum see procurement as a business process driver, not a purchasing functionary role .
Even if agile procurement seems to be the phrase of the moment, it’s not a new idea. Ardent Partners was writing about it six years ago, and even promoted it in CPO Rising 2015 with the following call-out:
The procurement teams that adeptly connect their tools, resources, and expertise to support the evolving needs of the business will succeed above all others. Agility will define the next wave of procurement success.
While some people did call out “agile” applied to anything other than athletes as a marketing buzzword (including agile marketing!), even those folks acknowledged the importance of the concept, if not the name. So, in no particular order, here are eight interpretations of agile procurement as it exists today.
Agile Procurement means…
Achieving the Agile Ideal.
Agile procurement is the ability to satisfy all of the objectives of strategic spend management (savings, resource efficiency, risk management, supplier performance/relationship management) without the rigidity of being tied to any of the typical ways we achieve those things (strategic sourcing, category management, etc.). A procurement professional working in alignment with the ‘agile ideal’ should be able to join or advise a cross-functional project team and improve how they spend money and select supply partners even without falling back on a single traditional process or technology.
Finding the best way to solve a problem.
Agile procurement is the art and science of finding a solution to the sourcing problem by looking for ways to meet a business need (or organizational goal) instead of simply being reactive and buying according to predefined product specs. That requires procurement professionals to have a good understanding of the supply market place in which the organization operates, as well as truly understanding their stakeholders and what they want to achieve — not just what they want to buy.
This proactive approach requires support from the business so that procurement professionals have the freedom to offer solutions that may not be prescriptive or just a “repeat buy” of what met that same business need before. Agile procurement teams need to be aware of market disruptors that offer another (better) way to solve the same problems, and do it collaboratively and more cost effectively.
Having ears to the ground, eyes on the ball.
The capability for a purchasing organization to quickly serve any request from their internal users, to adapt to any company change (strategy, M&A, new location, regulations, etc.) and to be able to promptly react to any supplier or supply chain disruption. Agile procurement needs real time visibility and collaboration tools.
Being smart and proactive.
Agility in procurement is about being a cheetah and not an elephant. It’s about understanding the market, knowing when to buy, keeping up with the fast pace of change, making smart decisions and pivoting as necessary. Business Process Management (BPM) enables flexibility for stakeholders in aligning goals and collaborating; it helps procurement be proactive instead of reactive in order to deliver the ultimate business results.
Tapping collective wisdom.
Typically, agile procurement is a team that is collaboratively leveraging their market knowledge to be able to move quickly to exploit an opportunity. By way of example, in casual dining, it would be a team that leverages their knowledge of ingredient markets and pricing — e.g., beef, carrots, lettuce, etc. — to influence menu prices of the dishes at their locations. Again, the ability to do this quickly and collaboratively is key.
Seeing solutions, not roadblocks.
Within a company, agile procurement as a function is able to adapt quickly and efficiently to what is asked of themselves by the business. For example, finding a new supplier, responding to the needs of the internal clients (requestors). Agile procurement is a function that always tries to find a solution and doesn’t get stuck with an issue or in a process. If you’re talking about procurement software, then it’s a tool that the procurement team can easily adjust/configure/adapt to their needs; it’s an enabler of business.
Aligned with broader business goals…always.
Agile procurement is the iterative approach to managing strategic sourcing and the procurement of indirect goods. It focuses on incorporating business objectives and feedback with every iteration. It’s the ability to be dynamic vs. reactive, but if reactive is needed the department can pivot quickly to the needs of a business.
Procurement is getting more agile, regardless of the name.
Collaborative, proactive, smart, goal oriented and aligned with broader organizational objectives are the consistent definitions of “agile” from all these procurement professionals. But, the exact meaning varies depending on where you sit in the business, and how long you’ve been sitting there. It was an interesting exercise for sure, and the interpretations of agile procurement will continue to evolve, no doubt, right along with the practice of it.
If you’d like to submit your own definition of What Agile Procurement Means, we’d love to hear what you have to say. If you’d like to see what agile procurement looks like, schedule a personalized demonstration of our modular procurement solution on the Determine Cloud Platform.