Agile Procurement Redefined

By now you've probably heard the term 'Agile Procurement'. It's mainly used to describe the flexibility of Procurement organisations when it comes to uncertainties in the supplier market. It’s focused on limiting potential risk and responding to trends and developments.

So what’s wrong with this definition?

Well, to be honest, a lot. I noticed in my conversations with more than 25 Procurement executives in the last 6 months that the key factor that determines the role and focus of Procurement is not the external world of suppliers; it’s the internal business. Their priorities, their strategy and their constantly changing expectations for Procurement is what drives the need for Procurement to reinvent themselves time after time. Agile Procurement in that sense should be focused on how to be adaptive to internal changes and continuously deliver value to the organisation. Of course we cannot forget the external focus, it’s one of the reasons the Procurement function exists, but just focusing on the supplier market is not enough to truly become an agile Procurement organisation.

Where to start?

It begins with realising that a perfect organisational model for Procurement does not exist. Once you’ve implemented your perfect model, it’s probably already outdated by the changed expectations or priorities in the business. It’s also an arrogant approach as to thinking that Procurement itself can determine what its role should be. It’s therefore more important to understand the pillars that will provide you the flexibility to change your organisation when needed, and the system that you put in place to validate what you’re doing, with your key business stakeholders.

What do those pillars look like?

We believe there are 4 key areas that truly define an 'Agile Procurement Organisation'

1. Strategic Alignment: A process to continuously align Procurements’ role and responsibilities with business strategy and priorities. Understanding what's on the agenda of the board in term of key strategic initiatives and M&A activities and how Procurement can best contribute in the mid to long run.
2. Balanced Structure: A Procurement structure, balancing a central need for information, opportunity identification and control of risk with local service delivery. Building a hybrid structure that serves the business, while managing risk, efficiency and information at a central level.
3. Digital Backbone: A set of cloud based 3rd party tools to provide insights, control and compliance, and drive efficiency. Leveraging technology and data to drive savings and performance improvement, and understand potential areas of risk.
4. Flexible Workforce: A flexible and highly skilled workforce of internal and external resources, driving exchange of knowledge and skills between business and Procurement. Understanding where you need what kind of skillset, both internal and external, to drive value. A talent development process to drive exchange of resources and knowledge with your business counterparts, creating strong relationships and mutual understanding of roles and added value.

The exact configuration is depending on an organisations’ specific industry and operating model, Procurements' role in the organisation and the geographical mandate. Identifying and optimising these areas will help organisations to build a business driven future-proof function that can manage change, build strong business relationships and drive tangible value. If you want to discuss the details in the 4 key areas of Agile Procurement, feel free to reach out to me.

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About the author: 

Dirk Spijkers is Managing Partner at SOLVINT Supply Management, one of Europe's leading consulting firms in Procurement, Supply Chain & Operations.

If you want to learn more about Agile Procurement, reach out to Dirk at: 41 44 562 0330 or [email protected]