Agile Procurement

In a changing and challenging world, it is essential to find innovative ways to manage organizations. An important solution might come from their increased agility in facing continuous changes in the environment. This chapter stresses the role of procurement in such a strategy. It defines how procurement should go well beyond the traditional role of providing support to organizations in their relationships with vendors by also acting as a business in the business. It should aim to add value to the customers and to the organization. To reach this objective it is essential that procurement becomes more agile. The chapter describes how procurement can acquire flexibility by becoming leaner and more digital in its processes.

A central concept in the agile procurement approach is the relationship with the customers. Both the end customers of the organization and the internal customers of the procurement function play a central role in procurement.

This chapter argues that in order for procurement to add value for customers, it needs to innovate. Change becomes an important vision and hence a mission for this function. Changes must be made in the “product” of the procurement (that is, in the services provided by procurement), but also in their processes, their internal organization, and their business models.

The latter aspect is particularly important. This chapter considers in particular Ostwalder and Pigneur’s business model canvas to understand the components of procurement on which to act and innovate.

This chapter analyzes in detail the applications that can support the digital transformation of agile procurement. It starts out by analyzing “classical” ICT solutions, such as the ERP and its main components, which can help procurement mainly from an administrative and accounting point of view. Next it analyzes in detail e-procurement and its components, which can help in both operational activities and interfaces with vendors. The chapter considers the barriers and the benefits of e-procurement and the challenges in its implementation. The approach is based on an innovative architecture that allows for analysis of the components already available and the ones that are not yet available.

This chapter analyzes the channels which allow procurement to communicate with customers, both internal to the organization or end customers.

The chapter analyzes the new channels in detail, considering mobility and its applications in the procurement process. It then analyzes cloud computing and the innovative ways in which the cloud can be used to communicate and interact with the customers of the procurement. For each of these channels, the chapter analyzes the components and the potential applications. It also highlights the pros and cons of each. In the case of cloud computing, the chapter presents an innovative business case considering all the costs and benefits of this solution.

This chapter analyzes the partnerships that procurement can set up. It presents an innovative model based on the Kraljic matrix. Partnerships are important for critical suppliers. This chapter also considers the critical factors that make them successful.

Documentation is an important aspect of procurement. In this respect, the chapter presents a comprehensive model of the way procurement should communicate with vendors. This aspect has become more important as documentation has become dematerialized and in need of control. Partnerships also present risks. The chapter analyzes these in detail and presents a model that can support the decisions and management of risks in partnerships. Agile procurement requires lean processes and digital support. To reach this target, procurement needs to change. Change requires projects. The chapter analyzes in detail the project management for digitally transforming procurement processes once they have been made lean.

The thesis of this volume is that procurement is not a support function but one of the main contributors to an organization’s margins. Under this vision, this chapter analyzes how agile procurement can contribute to the revenues of the organization. It devotes particular attention to defining the critical success factors of a project for agile procurement. The last part of the chapter presents a model for the implementation of e-procurement. Such a project requires special attention to defining a business case, taking care of relationships with numerous stakeholders, and managing the project in the proper way.

This chapter presents a real case of agile procurement. It considers in detail procurement in a financial institution. In banking, procurement is becoming increasingly important as information and communication solutions become essential for the success of the financial institution. In the past, banks spent mainly on buildings and branches. Now, more and more, financial institutions are investing in information and communication technology solutions. This requires a complete change also in procurement, which becomes even more critical to the success of the financial institution’s digital transformation towards agile procurement.

The future of procurement is extremely interesting. Industry 4.0 is at the basis of the fourth industrial revolution. It is indeed a revolution also for procurement. This chapter presents an innovative and comprehensive model for Procurement 4.0. In comparison with traditional approaches, for instance for e-procurement, Procurement 4.0 represents a real revolution. For this reason, the analysis and use of the model is essential to substantiate Industry 4.0. This initiative until now has been very much a vision and an experiment rather that a solution to be approached in a scientific way. The innovative model presented could be of use to academicians studying Industry 4.0 and to procurement practitioners in organizations. A new solution is particularly important to support Procurement 4.0. It is named blockchain and it is already successful in supporting Bitcoins. The chapter presents the characteristics of this solution and its possible applications. Two uses of blockchain are particularly important: procurement finance and smart contracts. The chapter presents their characteristics and their potential uses.

This chapter draws the conclusions of this second volume on agile procurement but also of the entire book. Agile procurement is essential for the future of organizations. In order to be successful, it must be properly introduced and managed. This book’s objective is to present a vision, but also the components and the actions to be taken. Many theoretical models have been presented here, as well as real cases where the models have been successfully applied. A detailed glossary has also been provided as a handy reference when reading of the book, but it is also useful for defining some solutions which for reasons of brevity have not been presented in the book. A reference list recalls the several books and article that have prompted the author to present the models in this book. It can be a useful tool for going deeper on certain subjects. A list of some interesting websites completes the volume.