Agility in Procurement by Oliver Engelbrecht

Procurement agility – make it happen!

In technological as well as methodological sense, digitization, data intelligence, and agility are the central business enablers of our time. However, many organizations still have difficulties implementing them. While willingness and extensive expertise remain as highly important success factors, procurement plays one of the key roles.

Agility has become indispensable in today’s business environment. Organizations have to face its challenges in order to remain sustainable. During this process, procurement has a significant impact. By bringing the outside-in perspective to the company, it’s enabling agile transformation in a variety of ways.

The most important agile topics in procurement are

  • contract drafting
  • organizational development

Furthermore, supplier contracts and contract templates are to be optimized for agile service provision. Otherwise, hardships will be paid rather than creating added value or making savings.

This means that the transformational role of the sourcing specialist is now challenged. In cooperation with the business function, they are the ones who will determine and coordinate the best possible step-by-step agile approach and map it in the contracts with their partners.

There must be a willingness to change

Agile transformation has to be started by the executive management team. Its implementation should ideally be carried out as a multi-year company-wide program, monitored with the help of an agile maturity framework similar to CMMi (Capability Maturity Model Integration). Therefore, the evolutionary approach is not recommended. Its essential elements are organizational culture, leadership, talents, and, of course, processes and methods on an operational level. Today’s main focus is more about “how”, rather than “why”. “Learning” from others has gained significant importance and the outside-in perspective of procurement was challenged again.

Best Practices for Procurement

Current scenery of Swiss companies shows us that agility is already widespread in IT engineering, that it has arrived to a certain extent in quality assurance, while the operation departments are slowly catching up. In the classic business (biz) areas, however, the progress is still proving to be very slow.

In this regard, procurement is assigned to operations in the company. Its first optimization activities should focus on the following core issues:

  • revising procurement strategy
  • adapting the structure of the procurement organization
  • promoting process digitization
  • adjusting HR issues and instruments (such as intensification)

A project-driven approach to transformation is highly recommended. Don’t forget, your employees are the greatest asset and the most important guarantee of success for an agile transformation. Education and training, new job profiles, and reorganization usually play a central role.

The change of our time

The role of procurement and its importance to the company has shifted drastically in the past two decades. Today, procurement is completely global and digital, while solutions have become more specialized, transaction-based, and affordable. Some of the most noticeable ones that today’s small and medium-sized companies can implement and use with ease are Real-time Market Visibility and Continuous Risk Forecasting. Taking advantage of future developments, as well as the Ecosystem of Software Solutions is also possible.

Some procurement organizations have shown significant signs of development, from procurement to their (digital) supply chain management departments. Next logical steps, such as corporate business development and advisory, are now within a reach. How far they will go, depends solely on the size and the respective mandate of the procurement organization within the company.

Start now, don’t wait!

Key factors for agile development are always open-minded and proactive employees. Including yourself. It relies on innovation, cooperation, and constant movement towards milestones that have been set.

The path goes like this:

  • approach your senior management
  • win the executive sponsor
  • define the project manager and his team
  • implement

Agility is the journey and the journey itself is the goal. You will be surprised about its possibilities and what you can actually achieve for your business by embracing it.

I wish you the best and good luck!

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