Agile in Procurement - Low on adoption
....But, here is how you can implement it in your own team without worrying about getting the organisation to change their ways.
👋Hey, it’s Ashokk. Welcome to Procurement Superheroes newsletter where we decode proven strategies to excel in procurement and fast-track your career.
In this week’s newsletter, we’ll cover:
How to implement Agile methodologies in procurement teams, even without organizational-wide adoption.
The key challenges faced by executives, practical implementation steps, and solutions to common roadblocks.
Whether you're new to Agile or looking to enhance your team's agility, this guide offers actionable insights from 25 years of procurement and supply chain experience.
Also, [🎁 Free Resource Inside] don’t miss your copy of proven email templates for driving stakeholder engagement and results, at the end.
Read time: 6 minutes
A while go on a McKinsey survey, 92% of CXOs indicated that going agile is critical to their business strategy. The resultant improvements (see graphic below) experienced by early adopters from a McKinsey study are impressive too!
Agile's ability to improve results are proven for many years and not restricted to just IT.
With the volatility in the current environment, companies are looking beyond the traditional models to accelerate and deliver a high P&L impact.
The agile difference vs traditional models -
A high focus on collaboration and transparency - a focus on individuals and interactions and having the difficult conversations upfront
Competency based teaming - bringing in diverse skill sets
Focus on failing fast - working in sprints and rapid iterations and reduced time to market
Reduce waste - reduce efforts upfront and through the process until
Focus on non linearity over traditional linear processes
A truly agile procurement/supply chain function can deliver a high P&L impact through solving complex problems concurrently in a short period of time, typically far less time than a traditional waterfall method.
Throughputs increase 1.3 to 3x!
There are several well document cases of organisations that have adopted agile e.g. Spotify, Lego, Sony, ING Bank, Panera Bread, PayPal, BT largely for driving innovation, improving operational efficiency, customer focus, enhancing software development cycles and product delivery speed.
Within Procurement, most examples published relate to IT sourcing, re-organising the ways of working to drive improved execution, streamlining procure to pay process.
There are other organisations that have completely adopted Agile as a way of working but the jury is still out on its effectiveness.
The Traditional Mindset and Approach
The most common objection to adopting agile from leaders and teams is that, “agile” is good but not always applicable to longer term strategic activities.
Companies have moved to Agile procurement setups replace their existing matrix style procurement organisations as the pace of change required is higher and that pace needs to be sustained over a period of time compared to their existing ways of working.
There is a definitely a case for agile procurement but it needs to be pushed as the opportunity that agile brings far outweighs the cost of a change in mindset of the new age procurement professional.
Traditionally people prefer to throw bodies at problems, with a very strong assumption that people with reasonable skill and motivation will solve the problem.
However, if the problem is not well understood and the resources do not have either of the skill or the motivation to do so, the problem is far from solved.
There is the cost of recruiters fees, salary, overheads, training the resources, opportunity cost of time of resource ramp up, managing them, benefits that need to be paid, etc. goes far beyond the salary i.e. the investment that was put into the business case.
So where do you start
Driving change is hard work, and trying to get the organisation to embrace a new way of working is all the more challenging.
Wouldn't it be better to focus on what you can influence? You and your team.
Better still just focus on one project at a time.
The idea here is to change the way you engage with the organisation vs expecting the organisation to change.
What I mean is, start with these two elements -
Focus and prioritise collaboration and interactions between procurement, finance, operations, marketing and other functional teams and even customers - to determine the strategy to reach agreements, clear roadblocks and arrive at agreements and decisions. The quality and quantum of these interactions will cement your team’s value addition to the organisation. High engagement, decisions and strong outcome orientation per interaction.
To deploy the agile framework, these start with -
Strategic Planning - A robust procurement/category plan and strategy to deliver on the internal customer (functional stakeholder) goals with a link to the C Suite plan. It needs to be backed with strong internal marketing and sales activity to elicit maximum engagement and support for execution.
Sprint Planning - Set clear objectives, understand “value” from your customer's perspective, collaboration and have the hard conversations upfront. It helps prioritise work upfront, resourcing, implementation issues, legal and risk compliance, supplier issues
Sprinting - Developing and executing activities where everyone is accountable and working toward the same measurable timelines and goals.
Execution Pulse check - Schedule 15-20 minute stand-up meetings with the project team and extended stakeholders to discuss progress, approach adaptation, refinements and improvements, and blocks to the progress pathway. Get outcomes than excuses and refine along the way to ensure maximum execution impact.
Sprint Reviews - Review completed tasks, provide feedback, decisions and sign off
What stops executives from adopting agile
I have been experimenting with “agile” in the last 10 years of my 25 years in procurement, executing multi-country regional projects, sourcing and strategy development, and M&A synergy extraction projects across industries.
Agile is a great pattern interrupt to overcome these hurdles. It is not a silver bullet but definitely does speed up execution. It solves the rapid time-to-value aspect of value creation.
But, I have found that five things stop motivated executives from helping their organisations and teams
Lack of clarity and awareness on the pathway - The sprint planning element is key here, knowing what needs to be done to get to the answer in the shortest amount of time. Even if you know the “what”, “how to get there” becomes the next challenge.
Capacity and Capability to execute - Most organisations have teams but like all 5 fingers they will not have the kind of capacity and capability at the time it is required. Aligning around capability sets or Agile Plug and Play solutions solve these resourcing and sourcing tech challenges
Budgets - In the current scenario, most organisations are constrained by budgets (no additional headcount, short or long-term contractors. Some large consulting firms are charging $0.5M just to help you find the opportunities, a bit ridiculous in my opinion. But, there is always some cash available, but it needs to be spent judiciously.
Ineffective commercial models when engaging externals - Contractors, Consultants and Employees, want tenure, the longer the better. But your budgets do not support that, nor is the ROI justified. In most instances, executives assume that if they throw more resources to work on a problem it will be resolved but it is generally counter-productive. Apart from the consulting firms, no one will agree to some sort of a performance-based remuneration model that partners will you effectively.
Inability to scale capability and capacity across the team through augmentation - Training programs are the least helpful, putting people on online programs does not effectively translate to outcomes in time for your FY results. Resource augmentation also may not be an active option. There may not be any budget available for the short or longer-term augmentation, finding the right fit for capability may take time, and ramping up the external’s capability and understanding of the business and supporting them to deliver will take time.
Some practical solutions
If you are faced with the challenges I mention above, here are some solutions that may work for you.
1. Lack of clarity and awareness on the pathway
Solution: Get a quick expert perspective or insights (on demand) from someone who has lived on both sides of the fence i.e. industry and consulting. Simple and effective, but few companies leverage this.
2. Capacity and Capability to execute
Solution: Build your team around required capability sets or get plug and play support to execute one piece of analysis, research or project activity or a series of analyses, research or activities.
3. Budgets and commercial models
Solution: Set budgets and commercial models that are fit for purpose and aligned with the outcomes you intend to achieve. Remuneration geared to outcomes - Pay only for outputs and outcomes, not time and materials-based services.
4. Inability to scale capability and capacity across the team through augmentation
Solution: Have your people coached, mentored and supported to deliver over their project life cycle (4, 6, 12 months) where the coach augments the manager and is focused on extracting the most value out of the team through bringing in a mix of consulting and industry rigour to solve problems and driving your team forward.
The key thing here is to adopt the mindset of a mixed martial artist, and agile services as a good platform to adapt to the situation, manoeuvre, execute and bank the result.
I hope this helps in understanding the plug-and-play proposition and the ease with which it can attack critical bottlenecks preventing you from achieving your goals, some of them within days or within the week.
May the Source be with you!
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