How Agile Procurement Operating Model Could be a Game Changer

When it comes to procurement, the old ways of doing things just don't cut it anymore. A fresh approach — the agile procurement operating model — that's shaking things up could be the game-changer businesses need. Let's dive in and see why.

What is an Agile Procurement Operating Model?

Before we get down to the details, let's break down what is an agile procurement operating model. In simple words, it's a way of carrying out procurement that is flexible, responsive and focused on delivering value quickly. Instead of following rigid, long-term plans, the agile procurement model is geared toward adapting to changing needs and market conditions on the run — in short, quick improvisation as and when required. That's agile procurement in a nutshell.

Why Traditional Procurement Models Fall Short

Traditional procurement models are struggling, and the following facts are the reasons why enterprises look forward to implementing agile procurement.

They're too slow. Global market conditions have been changing on the fly in recent years, and taking months to arrive at a consensus or decision is a sure way to being a laggard.

They're inflexible. Long-term contracts and rigid processes make it hard for enterprises to adapt when things change.

They're siloed. Traditional procurement often operates in isolation from the rest of the business, leading to misalignment and missed opportunities.

They're focused on cost, not value. While saving dollars is important, it shouldn't be at the expense of quality, innovation and long-term value.

How Agile Procurement Changes the Game

An agile procurement operating model can not only address the aforementioned issues, but it can also equip enterprises with the required fire power to surge ahead with the following benefits:

Speed and Responsiveness

In an agile model, procurement moves at the speed of the business. Leaving behind lengthy processes, it involves quick sprints and iterative decision-making. This gives enterprises the ability to:

• Respond quickly to changing market conditions
• Grab prospects before the competition
• Get products and services to market faster

Flexibility and Adaptability

Agile procurement is all about being nimble, which can prove to be quite an advantage. For enterprises, this can translate into:

• Shorter, flexible contracts that they can adjust according to requirements
• Ability to turn strategies quickly based on new information
• A company culture of constant improvement and learning

Cross-Functional Collaboration

The first thing that agile procurement does is to break down silos, bringing together teams such as finance, legal, IT, and business units to work together on procurement decisions, leading to:

• Better alignment between procurement and business goals
• More innovative solutions that consider multiple perspectives
• Faster decision-making with stakeholders involved from the onset

Focus on Value Creation

While cost savings goals are still important, agile procurement shifts the focus to overall value creation. This enables enterprises to:

• Consider factors such as innovation, sustainability and partnership potential alongside cost
• Work collaboratively with suppliers to drive mutual value
• Use data and analytics to make more informed decisions

Implementing an Agile Procurement Operating Model

Implementing an agile procurement operating model requires enterprises to typically follow the below-mentioned steps. Although the depth of understanding may differ from one business to another, the approach remains more or less the same.

1. Start small, start with a pilot.

2. Build cross-functional teams.

3. Invest in technology.

4. Invest in training and development of teams.

5. Engage your suppliers, bringing key suppliers onboard with your new approach.

6. Measure and adapt, setting clear metrics for success; and adapt as you progress.

Challenges and How to Overcome Them

Implementing an agile procurement operating model isn't without its challenges. Let’s take a quick look at the few common ones and how enterprises can address them:

Resistance to Change

Some people might be comfortable with the old way of doing things. Address this through clear communication, training, and by demonstrating early wins. Change management is critical.

Regulatory Constraints

In some industries, regulations can limit flexibility. Work closely with your legal team to find ways to be agile while remaining compliant.

Supplier Readiness

Not all suppliers will be ready for an agile approach. Start with those who are most enthusiastic, and cite their success to encourage others.

The Future of Procurement

It is clear that agile procurement is more than just a passing trend. It's a fundamental shift in how businesses approach the buying of goods and services. Those who embrace it are going to be better positioned to navigate an increasingly uncertain and volatile business environment. Moving beyond cost savings, enterprises can drive innovation and at the same time build stronger relationships with stakeholders.

In short, implementing and moving forward with an agile procurement operating model could be the game-changer that can propel a business from playing catch-up to leading the pack.

Conclusion

Procurement is key to survival for businesses, but it needs to keep pace with evolving business ecosystems — and an agile procurement operating model offers a way to do just that. By focusing on speed, flexibility, collaboration, and value creation, it transforms procurement from a business function into a strategic driver of business success.

Agile procurement is not easy to implement and requires a significant shift in mindset and ways of working — but those that are willing to take the leap will reap the rewards.