When is Lean Agile procurement a great idea for an organisation to explore?

13 Jul 2023

Unleashing the power of structure and opportunity

However, should you be on the lookout for a complex product or service, or you’re planning to forge a collaboration with a future partner, Lean Agile Procurement provides a twofold advantage: A structure for navigating complexity and a valuable opportunity to explore how you will work together with your potential future partners.

The essence of this method lies in the exploration of potential partnerships and the cooperative work dynamics you can establish with your partners. The Lean Agile Procurement framework, techniques and processes empower you to define the shared vision of your collaboration.

Fast-track partner identification and decision making

This system facilitates efficient identification of partners, as they effectively self-select themselves out of the process if they choose not to participate in the comprehensive evaluation process.

It encourages decision-makers to break the mould of traditional hierarchical decision chains, accelerating the decision-making process and avoiding unnecessary delays that could run into weeks or months when a hierarchical chain of command dictates decisions.

The efficiency of Lean Agile procurement

When wrestling with the procurement of a complex product, service, or equipment, Lean Agile Procurement is the ace up your sleeve. One of the most common pain points in purchasing is the cost of delay – the time to find potential partners and close the contract, getting people on-site and delivering. This can typically take months when using traditional procurement processes. Lean Agile Procurement, in stark contrast, can expedite this process, reducing it to a matter of days and significantly diminishing the cost of delay.

Agile payments for Agile operations

Lean Agile Procurement also challenges the standard protocol of contract payments. Typical procurement contracts are very predictive: Payment is based on milestones and those milestones are aligned to the traditional project management delivery process.

So, the first payment milestone is typically that the requirements are signed off. But, when working in the Agile framework, we know that requirements are constantly evolving because we’re using an iterative and incremental approach. It therefore doesn’t make any sense to have a payment milestone based on requirement sign-off because of this iterative nature.

The honest purchasing paradigm

By navigating away from this potential obstacle, Lean Agile Procurement prevents potential partners from being stuck in a situation where they can’t achieve the requirements milestone and, therefore, aren’t paid for an extended period. Moreover, it eliminates the hidden costs often seen with lowest price tendering, where potential partners offer unbelievably low initial tenders, then recoup their money (and make profit) through punitive change request clauses hidden deep in the contract.

What Lean Agile Procurement propagates is honest purchasing, seeking a win-win scenario between potential partners and the company. This approach supports paying a reasonable price for a reasonable service, ruling out hidden costs, and fostering a collaborative approach that cuts out the constant squabbles whether something is a bug, a defect or a change request.

The future is Agile

Lean Agile Procurement champions a new paradigm of working that encourages collaboration, agility and fair pricing.

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If you have identified Lean Agile Procurement as a great opportunity to enhance #agility within your organization, visit our Lean Agile Procurement page on https://www.apd.coach/training-courses/lean-agile-...

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