In the Vendor management in the Disciplined Agile enterprise blog post, we overviewed a Disciplined Agile (DA) approach to vendor management, including procurement. In this post, we look closer at how to use lean and agile techniques to procure goods and services in complex situations.
Context counts, also in procurement
One of the DA principles is that context counts. This principle is also applicable to the area of vendor management. Table 1 overviews three common types of procurement situations.
Table 1. Common procurement situations
Figure 1 depicts the goal diagram for Vendor management (click here to view a larger version of the diagram) and table 2 maps the situations summarized in table 1 to the choices and strategies from the goal diagram. How we work matters and it has a dramatic impact on the result of our work. Matching our way of working to the context we face is the cornerstone of success at work.
Figure 1. The vendor management goal diagram
Table 2. Mapping common procurement situations to potential procurement strategies
When it comes to developing a complex product or service, we have learned that working in an agile and lean way brings better results faster, more reliably, and with higher quality. The agile and lean way of working (WoW) takes an incremental approach with short feedback loops. The short loops act as learning points where we can adjust to new information and changes that inherently are a part of doing complex work.
It turns out that the same is true for procuring goods and services. When we set out to procure complex goods or services, or are faced with a complex situation, applying agile and lean techniques is more successful than using traditional procurement approaches.
How do you apply agile and lean practices to procurement?
Generically speaking, procurement follows the flow of: Initialize, Analyze & prepare, Select & sign, and Execute & beyond as shown in figure 2.
Figure 2. Generic procurement flow
Lean Agile Procurement (LAP) follows the same flow and takes advantage of agile and lean practices along the way to deliver more successful results in a complex procurement situation. Table 3 summarizes some of the agile and lean techniques that LAP applies in procurement.
Table 3. Lean Agile Procurement Flow Steps
In summary, context counts and the DA tool kit for vendor management guide you in tailoring your WoW (way of working) to better match your situation increasing your chances of success. When faced with a complex procurement situation, Lean Agile Procurement (LAP) is a more successful approach.