July 16, 2019

Building Agile Partnerships - Lean Agile Procurement

TL;DR

Traditional procurement can be slow and challenging – with the procurement cycle often delaying work starting. With traditional contracts the scope of work can become fixed and may prevent the Product Owner using the Product Backlog to focus on value and respond to feedback. Lean Agile Procurement is designed to reduce delay in establishing the partnerships, and providing clear constraints on the business relationship.

The traditional approach of RFI – RFP – Review – LOI is neither lean or agile. The Lean Agile Procurement approach reduces the sourcing cycle time to days, with collaborative clarification of the product with prospective partners while reducing the risk of a poor partner and company evaluation.

The Challenge

Tendering is hard. There are times that even becoming recognised with a company as a registered supplier is a complex process that could have been modelled on a Kafka novel, or part of the Catch-22 script.

Finding suppliers who understand your needs is challenging. Establishing the trust to discuss what it is that you need the suppliers support with can be opaque.

Snakes and Ladders

The procurement process sometimes looks like a game of snakes and ladders, moving through a series of gates and checks. These checks are critical, to ensure that what is being supplied is the right fit, meets agreed quality criteria and standards. This often creates a protracted and unpredictable process from the supplier and purchaser. Any delay in establishing the people and equipment to work on a product will delay the time to market.

Where will it fit?

Like all frameworks, you can use it anywhere 😊. But where does it fit the best?

This framework fits particularly well when you are looking to find a solution that has elements of complexity. Knowledge work in particular fits well with this approach. By using an iterative and incremental approach to get to an offer, the grey areas are discussed early and a strategy is co-developed to solve.

Lean Agile Procurement will be less suitable for straightforward purchases of materials, such as securing contracts for consumables.

Aligned to the Agile Manifesto

The Lean Agile Procurement model is designed by people who live the Agile Manifesto, and is aligned to it.

Individuals and interactions over processes and tools

The lightweight nature of the procurement canvas highlights having cross functional, empowered people engaged in the process from all parties. The canvas provides a structure for the right conversations to be held to achieve an agreement.

Working software product over comprehensive documentation

As with a lot of organisations that are using the manifesto to guide their work, the product is not software! The product is the agreement to partner between organisations in order to solve a particular problem or build a particular product. At the end of the process there will be an offer.

Customer collaboration over contract negotiation

This is the game changing aspect of this approach. The finished canvas is a contract, that has been built collaboratively! The emphasis of the workshop approach is to create a meaningful dialogue between all prospective partners and the company, who collaboratively shape the contract.

Responding to change over following a plan

Using this approach there is an opportunity to learn in an iterative, incremental and collaborative way. What may have taken weeks before is now reduced to days – with less space for misunderstanding.

The LAP Approach

Definition

Using the preferred definition tool, the Company would define the problem that they are working on to solve. Any valid product management strategy can work. This may include some or all of: Business Model Canvas, Lean Canvas, User Personas, Story Mapping, Road Map, or may others.

Initialisation

Establish the empowered cross functional team that has the competencies to be able to make an informed choice.

Customer Needs Design

The LAP team will develop any materials that they think will assist any prospective partners in making the most informed choices. Potential partners are invited to attend the Big Room Evaluation, with any designs, materials, and most importantly key people they would like to work on the product. This way both sides have people who will be working together on the product.

Big Room Evaluation

This event has a duration no longer than 1 day per vendor. Within this time the LAP Canvas is completed and any necessary artefacts needed to clarify the canvas are created. This is an iterative and incremental process with feedback from the Company and other vendors. The canvas is completed, and at the end of the Evaluation an offer is made.

The Canvas

 

Lean Agile Procurement Canvas

The Lean Agile Procurement canvas is designed to guide all parties through the discussion around commercials to focus on how the specific problem will be solved.

As a group each section is discussed and the combined parties work together to build answers for each of the boxes. Each vendor is able to work up a solution that will differentiate their offering, they then present back to the room in an iterative and incremental fashion. During the process it is possible for vendors to develop a joint proposal, or the company to request a joint proposal.

It might also be the most sensible option to start with a couple of partners, in order to commence delivery. The canvas is updated as required throughout, and is the key instrument of managing partners.

Delivery

The purpose of engaging other organisations is to bring some product to the market, and the Lean Agile Procurement approach is intended to reduce the time to start delivery. Through the product lifecycle, the LAP canvas is updated as and when there needs to be changes to arrangements between the partner companies.

Working in this way

There have been successes using this approach, and the canvas has been tested under Swiss law.

The proven adopters include CKW, a Swiss electricity provider; BNP Paribas and Amnesty International.

If you would like to learn how to use this process, the next UK workshop is in London 28-29 November. Register here, or contact us.