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“Internationally, product life cycles are shortening,” said one procurement executive. “If procurement sticks to its long, drawn-out processes, it’ll be redundant.”
This procurement executive was speaking at a recent Procurement Leaders summit, where the community had gathered at the offices of Air New Zealand to talk about how agile procurement offers an alternative pathway to accelerate processes and help solve business problems faster.
Here, at the third such event Procurement Leaders has hosted in Asia-Pacific recently, it became clear the agile procurement concept is taking hold throughout the region.
Air New Zealand spoke about using digital platforms, as well as implementing project management and cross-functional collaboration techniques to build agility and better meet customer needs.
In Australia, the Commonwealth Bank of Australia is pioneering agile methodologies, meanwhile, a number of businesses in Singapore are pushing the boundaries of what is possible with agility.
Even so, Procurement Leaders learned three specific lessons during our conversations in New Zealand.
There are some business practices that require the quality of nimbleness or responsiveness. Business leaders generally regard these as ‘agile’ – with a small a. Aside from this characteristic sits a formal project management methodology, which many functions use to fast-track the procurement process. This is referred to as Agile.
This definition underlined the intended outcome, as well as the means of projects. Building an agile culture often involves a suite of less prescribed measures whereas Agile project management techniques require the team to understand the correct methodology within the team.
Many participants agreed organisations cannot apply Agile correctly unless they possess an underlying culture of agility. Staff must be willing to work responsively to meet customer needs before using Agile project management tools. In contrast, others said Agile frameworks themselves helped create a more nimble, customer-centric culture. Formalising a cross-functional process, for example, can help flag the importance of this way of working within the organisation and encourage collaborative behaviours among buyers.
Attendees at the summit said a lot of confusion exists around the practice of Agile in business and the procurement function, in particular.
“Agile is not an excuse to run wild tenders,” said one executive. It is a separate process subject to its own rigours. To undergo an activity through the Agile process, buyers must transit through predefined steps and document any inputs. Procurement teams should aim to add value quickly – not recklessly lurch into ill-advised tenders.
Once again, this misperception stemmed largely from a confusion between agile and Agile. Agile project management techniques require tried-and-tested procurement processes and staff to be accountable for their decisions. When building more agile structures, it is important for procurement executives to both emphasise the need for speed and the continued importance of being rigorous in negotiation and risk mitigation.
“Agile requires trust and empowerment,” said one attendee. “People have been screaming out for this for years.”
Many of the tenents of Agile (as well as agile) procurement align neatly with the precepts of team engagement. Procurement has long struggled to attract the best talent. The function’s unwelcome reputation as a process-follower, unfortunately, discourages many from applying and spending their career in procurement. Embracing Agile thinking offers procurement executives a means to entice more ambitious managers into the function.
Agile also encourages buyers to reach outside their immediate team, outside their categories, and beyond the confines of the function. Almost all organisations pay lip-service to cross-functional working, but the comforting habits of working in a silo often prove difficult to shake off. Both Agile and agile methods offer procurement chiefs the chance to build a function that can better collaborate with others and create more commercial value.
We were lucky to gain a real insight into agile – and Agile – procurement in New Zealand and we look forward to our next summit in Hong Kong.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.