Take Control of Your Sourcing With These Three Agile Procurement Strategies
Introduction
Imagine this: Your biggest supplier falls behind on their deliveries, and you’re suddenly faced with a shortage. You scramble to find a new supplier, but you can’t find a suitable replacement in time to meet your deadline. What do you do?
This is just one example of how agile procurement can help your business take control of its supply chain. Agile procurement is a strategic approach to purchasing that allows businesses to be more responsive to changes in the market.
Post-pandemic and in the midst of a looming recession, supply chains remain delicate and easily-disrupted, which can mean lost profitability. According to Ardent Research, the number of CPOs prioritizing cost-savings has almost doubled from 2021 to 2022.
Let’s take a deeper look at agile procurement and how implementing it can significantly increase cost and time-savings for your company.
What Is Agile Procurement?
Agile procurement is a sourcing and procurement strategy that enables businesses to be more responsive to the ever-changing market. It’s a way for companies to be more flexible in order to meet the needs of their customers.
Put simply, agile procurement is all about being able to move quickly and make decisions on the fly. It’s about being able to adapt as new information comes in and reacting quickly to changes in the market. This can be done by implementing certain tools and processes, such as contract management software, supplier management software and RFQs/ RFIs.
Agile procurement is often discussed in opposition to traditional procurement. Traditional procurement tends to be a much slower process, where lots of time is taken in each procurement stage. Decisions aren’t hurried, and oftentimes have to go through the hands of numerous people in numerous departments before being approved.
Agile procurement oftentimes takes multiple procurement steps and deals with them simultaneously. For instance, supplier onboarding and RFP responses often happen concurrently. Contract negotiations may also happen during the supplier sourcing process.
Setting the Right Objectives and Goals for Agile Procurement
When implementing agile procurement into your procurement processes, setting the right objectives and goals is imperative. What is your company looking to achieve with this new way of working?
Agile procurement is not about cutting corners or taking short-cuts. It’s about being able to move quickly and effectively in order to get the best results for your business.
Your goals should directly reflect areas in your procurement process that need improvement.
Questions you may want to consider:
- What are our biggest challenges when it comes to procurement?
- What are our biggest pain points in the supply chain?
- What areas of procurement would benefit from being more agile?
- What can we do to improve communication between buyers and suppliers?
- How can we speed up the process of getting new products to market?
Three Different Agile Procurement Strategies
There are several different theories behind agile procurement strategies that can be used in your business. These three are the most commonly used approaches:
- Planning for the Unknown. This type of strategy is used when you don’t know what you’re going to need or when you’re not sure what the supplier landscape looks like. In this case, you’ll want to have a well-defined plan that outlines what product/service you’re looking for and how you’ll go about finding it. You’ll also want to be prepared to make quick decisions when you find the right supplier.
- Fast and Furious/Just-in-Time. This option is great when you need to get something quickly, but it’s not a long-term solution. This type of strategy relies on suppliers who are able to meet your deadlines and who have a proven track record of success. You’ll also need robust systems in place so you can make quick decisions and get the products or services you need delivered on time.
- Slow and Steady. The preferred option for long-term sourcing and supplier relationships. With this approach, you’ll want to take your time to build a relationship with each supplier and develop a clear understanding of their capabilities. This will help ensure that you select the right supplier for your business and that you’re able to get the best value for your money.
Other agile procurement methods that are often part of the above strategies are multi-sourcing and strategic sourcing. Learn more about multi-sourcing as well as strategic sourcing.
Implementing an Agile Procurement Approach in Your Organization
It can be hard to know where to start with implementing an agile procurement approach in your organization, but there are lots of tools out there to help. The most important part is to set up the right system that connects all your stakeholders and makes it easy for them to collaborate.
Start by creating a strategic framework that outlines the key steps in your procurement process. This will give you a clear roadmap for taking action, as well as helping you identify potential risks and opportunities.
Next, look into tools and software that integrate supplier management, onboarding and procurement. The Enterprise Supplier Data Management Suite from SupplierGATEWAY powers an agile procurement system by integrating supplier data management and supplier relationship management into one collaborative environment. It helps automate processes like supplier onboarding, purchasing and analytics. Plus, it’s simple for all stakeholders to use, so it makes it easier for everyone to collaborate smoothly on large-scale projects.
Common Challenges Faced With Implementing an Agile Procurement Strategy
While there are many benefits to agile procurement strategies, there are some common challenges you should be aware of.
The implementation of an agile procurement strategy can be a daunting task. This is because it involves changing the way your procurement team works and how they interact with suppliers. You may also need to make adjustments to your systems and processes, which can be time consuming.
You’ll also need to consider the cost associated with implementing an agile procurement strategy. New tools, systems and processes may require upfront investments in order for them to be effective.
One of the most challenging aspects of implementing agility into your procurement strategy is ensuring that suppliers are on board. To ensure a successful implementation, it’s important that both buyers and suppliers understand what is expected from them during the process and are committed to making a transition to agile procurement work.
Conclusion
When it comes to agility in procurement, remember that it’s not a one-size-fits-all solution. You’ll need to tailor it to fit the specific needs of your business. By taking the time to implement agile procurement strategies, you’ll be able to take control of your business, reduce your costs and procurement-related risks, and get the most out of your supplier relationships.
If you’re looking for more procurement agility in your business, SupplierGATEWAY can help. We offer a range of dynamic solutions that make managing supplier data and relationships easy and affordable. Contact us today to request your demo.