In the rapidly changing landscape of business and technology, and the need to move quickly to meet customer needs within a competitive marketplace, traditional sourcing, and procurement processes face challenges to keep pace with evolving needs. Lean Agile Procurement (LAP) has emerged as a transformative approach, incorporating principles from Lean and Agile methodologies to bring flexibility, adaptability, and efficiency to the procurement domain, elevating strategic sourcing as a value adding and necessary function to increase commercial value.

This article explores the key reasons why Agile sourcing works and how it is reshaping the way organisations acquire goods and services.

Lean-Agile Procurement (LAP) is a methodology that focuses on maximising value, reducing waste, and increasing efficiency in sourcing processes. Created by Mirko Kleiner, LAP is designed to bring traditional sourcing and procurement practices into the 21st century, to meet the demands of the digital world. LAP links the principles of Agile delivery with sourcing and procurement process resulting in speed to market, delivering a process that is significantly shorter, customer focussed (to achieve ‘needs’ not ‘wants’) and building supplier partnerships (not relationships) leading to capturing business benefits earlier than traditional methods.

Why it Matters

Satisfying client demands in a digital world where meeting quick to market, flexible and cost-efficient metrics is critical – means having a sourcing process that is fit-for-purpose. Traditional sourcing does not meet these modern demands as invariably:

  • Time-to-market is slow with the initial objective becoming obsolete.
  • They typically involve highly complex processes that are inflexible and follow a rigid structure.
  • They are expensive to run for the company and the supplier.
  • They are largely focused on cost, not business needs.
  • The result is a transactional relationship with suppliers not partnerships.
  • People who work on the proposal are not the same as those responsible for the service delivery.

As organisations strive to keep up with technological advancements and changing business paradigms, it is increasingly evident that traditional sourcing approaches are often ill-suited in meeting the demands of the modern age.

  • Traditional procurement lacks agility and adaptability and is often characterised by rigid, linear approaches that involve extensive planning upfront. Where market conditions and technology are in a constant state of flux, this lack of agility becomes a hindrance. Projects may be outdated or misaligned by the time they are executed, leading to suboptimal outcomes.
  • Time-consuming processes and extensive requirements documentation and approval stages often result in missed opportunities and increased costs. Where speed is a competitive advantage, lengthy cycles tend to contribute to delays in acquiring goods and services, delaying the delivery of commercial value.
  • Traditional sourcing tends to operate in silos, with limited collaboration between sourcing teams, finance, end-users, and suppliers. Where seamless communication and collaboration is essential, this lack of interaction can lead to interpretation challenges, delays, and suboptimal solutions.
  • Digital projects often evolve rapidly, and user requirements tend to change during the course of the project. Traditional sourcing struggle to accommodate these changes due to its fixed and linear nature. This inflexibility can result in the delivery of products or services that do not fully meet the current needs of the project and organisation.
  • Lengthy sourcing cycles may lead to the acquisition of outdated technology. Traditional sourcing’s focus on stability and predictability may inadvertently hinder the adoption of innovative solutions.
  • Digital transformation relies heavily on data-driven insights whereas traditional sourcing processes often lack robust data analytics capabilities, making it challenging to make informed decisions based on real-time data. This limitation can result in missed opportunities for optimisation and cost savings.
  • Traditional procurement processes are deeply ingrained in many organizations, and there can be resistance to adopting new, more innovative approaches. The reluctance to embrace change hampers the organization’s ability to leverage emerging technologies and methodologies that could enhance the procurement process.
  • In the digital age, regulatory and compliance requirements are constantly evolving. Traditional procurement processes may struggle to keep up with these changes, leading to potential legal and regulatory risks.

It is important to note that the success of Lean Agile procurement depends on the commitment of the organisation to embrace a cultural shift and adapt its processes accordingly. Additionally, it may not be suitable for all types of procurement, so organisations should carefully assess whether it aligns with their specific needs and objectives.

When and Why use LAP?

Agile procurement is not a replacement for a traditional procurement approach in every event. Where requirements are clear and well defined, LAP is limited.

Agile procurement works best in complex procurement engagements where the business requirements are uncertain, where early collaboration with potential partners can resolve complexity early, and where co-design of appropriate solutions can occur prior to the commitment of a contract.

Some of the best aspects of Lean Agile Procurement include:

  • Faster Time-to-Market: Lean Agile procurement streamlines the process, reducing the time it takes to go from identification of a need to the actual delivery of a product or service.
  • Flexibility: The methodology is designed to be adaptable to changing needs, which is particularly important in dynamic environments, where needs and priorities can evolve rapidly.
  • Collaboration: Lean Agile Procurement emphasises closer collaboration between stakeholders including end-users, which promotes transparency and trust, leading to better outcomes.
  • Cost-Effectiveness: By focusing on reducing waste and maximising value, Lean Agile Procurement can lead to cost savings and increased efficiency in sourcing processes.
  • Continuous Improvement: Lean Agile Procurement encourages an iterative approach, incorporating continuous improvement through feedback loops and data-driven decision-making. This helps organisations to stay agile and responsive to changing needs.
  • Risk Mitigation: By engaging with suppliers early in the procurement process, Lean Agile Procurement can help identify, assess and mitigate risks, particularly business continuity and supply chain risk, leading to better outcomes and reduced costs over the long term. This proactive approach can prevent major issues from arising later in the sourcing process.

CDRU Support

As the digital age continues to redefine business landscapes, traditional procurement faces formidable challenges that necessitate a radical rethinking of processes. Embracing digital transformation in procurement is not just a matter of adopting new technologies; it is a strategic imperative that organisations are looking for to remain competitive and agile in an ever-changing environment. Recognising the limitations of traditional procurement is the first step toward a more responsive, efficient, and digitally savvy sourcing approach.

The CDRU unique Strategic Sourcing Framework “USP” (Understanding; Solutioning; Proposing) methodology is an iterative and flexible sourcing process offering speed to market, early solutioning sessions and outcome driven results. All key elements of Lean-Agile Procurement.

The USP framework is a sophisticated and integrated set of sourcing processes designed to ensure that the specific customer requirements and objectives are precisely matched to the best available options within the marketplace. Additionally, our approach outlines clear and practical steps to define and identify internal and external requirements to then match to a vendor solution and mitigate supplier risks.

USP at its core has a ‘Solutions focus’, with regular supplier collaboration to known and stated future state client services, and technical and commercial outcomes conducted throughout the USP lifecycle.

CDRU’s USP process comprises the following stages and activities:

Organisations that embrace this shift will position themselves for success in the digital age, leveraging innovation and adaptability to thrive in an era of constant change.

To uncover how CDRU use their strategic sourcing expertise to achieve your organisations optimisation goals, get in touch now.

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