10 Baby Steps to Procurement Agility

Spend Matters welcomes this guest post from Sergii Dovgalenko FCIPS, Chief Procurement Officer at JSC Ukrainian Railway.

‘While cost savings once again remains the top focus for 2019, agility enters as the key priority for 2020 – showing CPOs intend to shift their focus to more value-adding exercises’ (Procurement Leaders, 2019).

‘Agile’ has become a buzzword across many professions. Advisors, analysts and random strangers are telling us what it takes to become agile. Quite expectedly, this hype covers up the lack of generally accepted definitions and standard concepts, so for some advisors ‘agile’ means ‘resilient,’ for others – ‘flexible.’ Some advisors suggest differentiating ‘agile’ and ‘Agile’ (the adjective vs the one following the Agile Manifesto), but most of them provide explanations along the lines of ‘to be agile … procurement organisations need to have the knowledge and ability to move quickly.’

Let us increase the entropy by suggesting yet another definition of agility – the shortest sustainable lead time between the business requirement formulation and benefits realisation. Intuitively, this is the spot-on formulation of the key competitive advantage of any business – to be able to turn time and money into value ASAP.

There is no single path to agility. Therefore, I propose a custom view of 10 simple steps to start this journey:

  1. Agile is not a panacea. It is one of the operating modes, which complements (not replaces) the legacy ‘waterfall’ one. Core business functions and systems would still require the traditional approach based on stability, quality and reliability. Therefore, your control panel must allow switching modes depending on the nature of the business requirement.
  2. The path to agility may start with horizontal alignment. One cannot be agile within their cubicle only. One weak link breaks the entire value chain. Agility is a fluid that freely flows through the inter-functional and departmental borders.
  3. Agility means incremental value delivery. Every iteration must have a measurable outcome. Define the project roadmap, split it onto equal increments, and request deliverables at the end of each. Do not start a new cycle before assessing the outcome of the predecessor.
  4. Do not think technical terms, think business requirements. Agility does not favor specifications, as there are different ways to deliver the value. Whenever you want to buy something, think of what is the value of it, rather than how does it have to work or look. Let suppliers suggest the realisation of what your business demands and let the value be the measure of success.
  5. Trust and collaboration. These need to be nurtured at all times, both internally and externally. There is no agility in the corporate red tape or twisting the supplier’s arms for endless discounts.
  6. Agile is the time-to-market. Once you have rushed for another round of negotiations, extra scrutiny of supplier’s offer, a new cycle of legal reviews - think about the cost of delay of a new product market entry. You need to weigh the additional discount value at stake or the magnitude of a risk not fully mitigated vs. delayed revenue.
  7. Agile means unconventional. Think and act differently, be creative, find unusual methods to resolve typical problems.
  8. Agile is not afraid of failures. The faster you failed, the cheaper it is for the business, as long as you have made the right conclusions and set your team for success.
  9. Agile is an open relationship, not a marriage contract. Boilerplate contracts, precise specifications, all-purpose RFPs are not suited for agility.
  10. You cannot exercise agility; you have to live by it.

These proposed steps hopefully will persuade you that becoming ‘agile’ is possible. Our existing processes already contain the means for agility, and you do not need to wait for the corporate big-bang change management programme to run your first sprints. Try to apply the agile methodology to the process of becoming agile. Create a vision, specify a roadmap, and identify an MVP – the best level of agility you can reach without major changes to corporate processes – and start reaching out increment-by-increment. You would not believe how much it is possible to achieve with a will, method and consistency.

Editor's note: Sergii Dovgalenko is an experienced procurement strategy and transformation executive and licensed tutor. He is also a published author and his book "The Technology Procurement Handbook: A Practical Guide to Digital Buying" (2020) is available through Kogan Page.

 

Disclaimer: the opinions expressed are those of the author and are not necessarily those of Spend Matters.

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