Procurement will always be about three things: getting the right product or service in a timely fashion for the lowest price. The best way of achieving this, however, changes with the times. Over the last couple of years, supply chains have been buffeted by geopolitical instability, natural disasters and a stubborn pandemic.
Because of this, there’s a battle taking place within procurement right now between the status quo and a new contender: traditional procurement versus agile procurement.
The former represents unresponsive and rigid frameworks along with standardised approaches to markets and suppliers. The latter refers to a collaborative approach to procurement and projects conducted in stages with in-built opportunities to review and revise along the way.
In this blog, we’ll take a look at both styles and look at what advantages agile procurement can bring to your organisation.
What is traditional procurement?
Traditional procurement is the status quo, a time-tested approach, hinging on meticulous upfront planning and structured processes. It’s a method that relies on comprehensive Request for Proposal (RFP) or Request for Quotation (RFQ) documents, fixed-price contracts and competitive bidding.
It champions adherence to the initial project blueprint, offering a sense of predictability and control. While it may appear rigid in today’s dynamic business realm, traditional procurement retains its relevance, particularly in projects where requirements are stable and disciplined execution is paramount.
What is agile procurement?
Agile procurement represents a dynamic approach that can transform the traditional processes. It stands out with its nimble, adaptive nature, which embraces flexibility, collaboration and real-time adjustments.
It aligns with the rapidly evolving business climate, acknowledging that project requirements can shift unpredictably. By fostering strong supplier relationships, utilising agile project management and delivering value at a faster pace, agile procurement positions organisations to thrive in the contemporary, high-velocity business environment, unlocking the keys to resilience, efficiency and success in a world that never stands still.
3 ways in which agile procurement takes a different approach to traditional procurement
The best way to illustrate the key differences between the two is to take a look at different elements of the procurement function.
Supplier Selection
Traditional Procurement: Traditional procurement typically involves selecting a supplier through a competitive bidding process, where the lowest bidder who meets the defined specifications is awarded the contract.
Agile Procurement: Agile procurement may prioritise selecting suppliers based on their ability to collaborate, adapt and deliver in an iterative, responsive manner. The emphasis is on finding partners who can work closely with the buyer to achieve the desired outcomes.
Project Management
Traditional Procurement: Traditional procurement often relies on a strict project management approach, where project plans are developed at the outset, and adherence to the plan is expected.
Agile Procurement: Agile procurement is closely aligned with agile project management methodologies such as Scrum or Kanban. It allows for iterative development, with frequent review and adaptation of plans. This allows for a more responsive approach to procurement. Not only does it anticipate obstacles, it’s better able to deal with them and the keep the project on track.
Stakeholder Involvement
Traditional Procurement: Stakeholder involvement is often limited to defining initial requirements and approving the final deliverables.
Agile Procurement: Agile procurement promotes ongoing stakeholder involvement and feedback throughout the project, allowing for course corrections and adjustments based on stakeholder input.
Real world example of agile stakeholder involvement
Consider a retail chain specialising in organic and sustainable products that aims to introduce a new line of eco-friendly clothing to meet the growing demand for sustainable fashion. In a traditional procurement setup, stakeholders, which may include senior management, buyers and external suppliers, would typically define the product requirements and specifications at the project’s outset. These specifications could include the materials to be used, product design and anticipated quantities.
However, in an agile procurement approach, stakeholder involvement takes a more active and iterative form. Throughout the project, stakeholders such as store managers, sales associates, sustainability experts and even customers are included. For instance, the retail chain chooses agile procurement for its sustainable clothing line and organises regular feedback sessions and focus groups involving these stakeholders.
In this real-world scenario, store managers can provide insights into customer preferences and trends, sales associates can offer feedback on the practicality and appeal of the clothing, sustainability experts can guide on ethical sourcing and environmental practices, and customers can participate in product testing and surveys. This continuous engagement ensures that the sustainable clothing line evolves to better align with changing consumer preferences, ensuring its market relevance and success. This illustrates how agile procurement supports adaptability and responsiveness through sustained stakeholder involvement in ongoing retail product development.
We can help you adopt agile procurement principles
Change is hard, and for good reason; it can be expensive, it usually requires extra knowledge, and there’s always the risk that the change may be worse than the status quo.
But we’re here to argue the case for the affirmative, that change is good, that change doesn’t have to cost more (and can actually save tons) and the knowledge you need to execute it isn’t hard to acquire. In this case, the change we’re talking about is a shift from traditional procurement to agile procurement. This doesn’t have to mean wholesale change; it could simply involve the adoption of certain agile principles, such as that outlined in the real-world example above.
We’ve helped many organisations review and revise their procurement function. From overhauls to minor facelifts, we recognise the weak spots and the opportunities, and know how to implement an appropriate level of transformation. If you think agile procurement has something to offer your organisation, get in touch with the team at Comprara today.
