April 22, 2019 | Procurement Strategy
Companies now operate in an environment that requires them to be adaptable to changes and make the best use of opportunities. Agile procurement is positioned to be the driver of this adaptability, comprising a team that is forward-thinking, collaborative, data-driven and action-oriented. It refers to the method of purchasing outcome-based solutions from potential providers rather than considering a single solution, which results in cost savings for organizations. An agile approach provides specific solutions aimed at solving intended problems and helps to maintain a cordial vendor-client relationship.
Agile procurement caters to big picture business needs, resulting in the selection and implementation of a solution different from the one adopted in the past, yet fulfilling the same objectives. It takes into consideration the cost pressures and opportunities of the supplier market before collaborating with vendors. This method of procurement tries to align the interests of the organization with those of the suppliers and values the importance of speed as well as savings. A recent research study shows that organizations have a 70 percent chance of being in the top quartile of organizational health, which is the best indicator of long-term performance. Agile responds to changes positively and provides increased visibility of a project’s progress.
Agile procurement results in a transparent organizational structure that gives importance to skills over experience, encourages an open flow of information and communication, and elicits a fluid resource allocation by employing people who are adaptable and responsive to changes.
Multiple factors are taken into consideration while operating in an agile environment, as the one-size-fits-all solutions are no longer suitable in a fast-changing world. Some of these factors are project conditions, an organization’s risk appetite and contract phasing. Nevertheless, the one thing that remains constant in a traditional as well as an agile organization is the focus on customer collaboration over contract negotiation.
Companies that successfully scale up agile see major changes in their businesses, as they are better able to comprehend changing conditions and priorities, develop adaptive solutions and avoid crises that frequently hit the traditional organizational hierarchy. Adoption of agile is an ambitious and step-by-step process. It acts as a path of progress even when the future is uncertain.
Agile procurement methodology is a process that tries to align the interests of the organization with those of the suppliers and values the importance of speed and savings by considering the cost pressures and opportunities of the supplier market before collaborating with vendors.
The agile procurement process utilizes independent and networked employees, teams, flatter hierarchies, and greater decentralization. The ability to switch between the two organizational states, at least in some areas, is known as agile procurement consulting.
While there are several differences between traditional procurement and agile procurement, one of the key differences is that traditional procurement involves fixed deliverables, extensive documentation, and a comprehensive project plan. In comparison, agile procurement is based on analyzing the working functionality at the end of each sprint rather than on fixed deliverables.