When we think of “agility”, we think of “proactivity”, “transversality” and “adaptability”. But what does this mean in practical terms for a procurement department? How can you be agile when there are established rules and processes? Find out what agile procurement is, its characteristics and practical examples.
Definition of agile procurement
The purchasing function is directly linked to the acquisition of the company’s products and services. The procurement team guarantees that they are compliant and that the expected quality is met.
The products delivered at the request of procurement must match the company’s specifications. It is therefore a question of taking measures to ensure that the purchasing policy contributes not only to the company’s profitability but also to its competitiveness.
A good rapport and arrangement with suppliers are essential to maximise profits and to achieve an optimal customer satisfaction rate. As a cornerstone of the company, this department can go one step further by implementing a responsible procurement policy.
When a company integrates the concept of agility into its procurement department, the results can sometimes exceed the defined objectives. Agile procurement makes it possible to deal with various issues in an innovative and reliable way.
The Oxford English Dictionary defines the word “agile” as follows:
- Able to move quickly and easily;
- Able to think quickly and in an intelligent way;
- Relating to a project management method, particularly used in software development, which is characterised by a division of tasks into several short work phases and frequent re-evaluation and adaptation of plans.
To adapt this concept to procurement, it is worth referring to the definition shared by Ardent Partners at CPO Rising 2015: “The procurement teams that adeptly connect their tools, resources, and expertise to support the evolving needs of the business will succeed above all others. Agility will define the next wave of procurement success.”
What are the operations performed by an agile procurement department and what are its characteristics?
A traditional procurement department carries out three types of day-to-day operations on behalf of a company. In addition to ensuring optimal collaboration with all suppliers, it also seeks to reduce procurement costs. It is responsible as well for improving product selection by targeting quality.
A procurement department that combines these skills with agility enables a company to become more efficient while maximising profits and customer satisfaction. To achieve this, an agile procurement department must be proactive, flexible and team orientated.
The members of this department must therefore be able to solve problems by tackling the source while focusing on the needs of the company. They are proactive rather than reactive. This requires a perfect understanding of the market and the needs of stakeholders.
An agile procurement department must also be flexible. It knows how to respond to changes, whatever they may be (strategy, location, regulations, etc.), and adapts to them quickly. To do this, it needs real-time visibility and collaborative tools.
Finally, an agile procurement department relies on teamwork: it is made up of a team that fully harnesses the strengths of each individual to improve efficiency and identify new opportunities. For example, a procurement department can influence the price of a product by taking advantage of the knowledge acquired by its team members in a given market.
Who are the members of a procurement function?
A strategic asset in a company’s activity, the procurement department brings together several professional profiles that are experts in their field.
Also known as the procurement manager, the chief procurement officer is responsible for managing the department. Their team consists of buyers, many of whom are specialists.
In some cases, the procurement department also has a quality manager, who ensures product control and audits.
How can you organise an agile procurement department? 4 practical examples
While the procurement function is constantly evolving, its objective remains to improve the profitability of the company and the level of customer satisfaction. Here are four best practices, two of which were shared by the Procurement Leaders network that can be implemented to enable procurement departments to become more agile.
Negotiate a contract during the sourcing process
When procurement departments select their suppliers, they may well discuss the terms and conditions of a possible contract beforehand. This makes it possible to anticipate needs and to avoid any delays or unpleasant surprises.
Eliminate anything that won’t impact the outcome
Each step of the procurement process should be questioned to focus on the essentials. Agility requires common sense and sensitivity to the context. Less is more! Indeed, speed and the “Lean[1]” method are more closely aligned with agility than standardised processes or completeness.
Cultivate a good relationship
The procurement manager or buyer must maintain good relationships with the company’s internal employees as well as with external service providers such as suppliers. To develop optimal relationships, professionals in the procurement function must become real business partners.
Opt for digitalisation and the use of artificial intelligence in procurement
The integration of digital tools offers efficient management of the procurement process. This gives buyers a 360° view of the market and its developments, which results in a significant gain in responsiveness. A fully digitised procurement department can monitor price changes and other changes that affect the company’s profitability in real time.
Becoming “agile” means, above all, becoming more flexible. It is not a question of replacing all processes and methodologies with “agile” equivalents, but rather of knowing how to question the current operation when necessary, to be more efficient and effective.
[1] A management technique that aims to achieve more profitable and qualitative production
