Agile procurement – and the use of agile methodology in procurement decision-making – doesn’t get talked about enough. It’s time we took a closer look at what, why, and where it can be leveraged.
Picture this: your organisation needs a complex new technology solution. Nobody can quite agree on exactly what it should look like.
The requirements keep shifting. Stakeholders have different priorities. The traditional procurement process feels like trying to nail jelly to a wall.
Sound familiar?
This is where agile methodology might just be the answer you’ve been looking for.
What is Agile Methodology?
The Agile project management methodology emerged in the software development world in the early 2000s. It was a response to the failures of traditional “waterfall” project management.
Instead of spending months planning every detail upfront, agile focuses on short cycles of work. It emphasises constant feedback and adapting as you learn. The Agile Manifesto, published in 2001, prioritised “individuals and interactions over processes and tools” and “responding to change over following a plan.”
What started as a rebellion against rigid software development practices quickly became the gold standard.
Today, most successful tech companies swear by agile methods. They use short “sprints” to deliver working software incrementally whilst continuously refining their approach based on user feedback.
But here’s the question: if agile works so well for software development, can it also work for procurement? Can it assist us to get things done faster and more effectively?
Why Agile Procurement Isn’t as Straightforward as Agile Software Development
Procurement faces unique challenges that make agile adoption more complex than in software development:
- Regulatory compliance – Procurement teams operate within strict legal frameworks requiring fairness and transparency. You can’t simply change evaluation criteria mid-process like software teams can pivot approaches.
- External supplier dependencies – Software teams control their own code and systems. Procurement professionals must coordinate with external suppliers who have their own processes and timelines. Unlike software, physical products involve tangible materials, manufacturing processes, and supply chains that can’t be easily changed mid-project.
- Higher stakes – A software bug gets fixed in the next sprint. A poorly structured contract locks your organisation into suboptimal arrangements for years.
- Measurement challenges – Software development has clear progress measures (features delivered, bugs fixed). Procurement success is more subjective and harder to measure in short cycles.
- Longer feedback cycles – Agile thrives on rapid feedback from users, but many non-software projects have much longer feedback cycles. Clinical trials for new medicines take years, construction projects may not reveal structural issues until much later, and consumer products might only get meaningful market feedback after launch.
- Hierarchical organisational structures – Many traditional industries have deeply embedded hierarchical structures and formal approval processes that conflict with Agile’s emphasis on cross-functional teams and rapid decision-making. Getting buy-in for Agile’s collaborative approach can be extremely difficult in organisations with entrenched command-and-control cultures.
- Different definition of “working product” – In software, you can have a basic working version quite early and improve it incrementally. But with physical products or many service projects, there’s often a minimum viable threshold that’s much higher before anything meaningful can be demonstrated or tested.
Where Agile Methods Actually Make Sense in Procurement
Despite these challenges, there are specific procurement scenarios where agile principles can add real value.
For straightforward purchases with clear specifications, traditional methods work brilliantly.
If you need 500 office chairs that meet specific ergonomic standards, a traditional auction approach will serve you well. The same applies to steel beams manufactured to precise engineering drawings.
- The requirements are clear.
- The evaluation criteria are objective.
There’s little need for iteration or discovery.
Agile methodology becomes invaluable when dealing with complex requirements.
This is especially true where the specification itself is part of the challenge.
Consider scenarios like:
- Digital transformation projects
- Organisational restructuring initiatives
- Strategic supplier relationships across several continents and cultures.
These situations share several characteristics that make them perfect candidates for agile approaches. The end goal is clear, but the path to get there isn’t.
Stakeholder requirements evolve as they learn more about what’s possible. The solution needs to be discovered through experimentation rather than specified upfront.
Take a multinational company trying to standardise its procurement systems across different countries. Each region has unique regulatory requirements. They have cultural preferences and existing supplier relationships. A rigid specification written at the start of the project would inevitably miss crucial details. These details only emerge through dialogue with local teams and suppliers.
This is exactly the type of complex, uncertain environment where agile methodology thrives.
Advantages of Agile Methodology in Procurement
When applied appropriately, agile methodology can deliver significant improvements to procurement processes.
This is particularly true around decision-making speed and data quality.
Traditional procurement often suffers from “analysis paralysis”. Teams spend months perfecting specifications and evaluation criteria before engaging with the market. Agile approaches encourage earlier market engagement and iterative refinement. This leads to faster time-to-decision and better outcomes.
The regular feedback loops inherent in agile methodology also drive dramatic improvements in procurement data quality. Instead of discovering data gaps or specification issues at the end of a long process, agile approaches surface these problems early. This is when they’re easier and cheaper to fix.
Consider how agile’s emphasis on cross-functional collaboration can break down traditional silos. It brings together procurement, finance, legal, and end-user teams. Regular sprint reviews and retrospectives ensure everyone stays aligned. Issues are addressed quickly rather than festering until they become major blockers.
The transparency that comes with agile methodology is particularly valuable in procurement. Trust and fairness are paramount in this field. Regular check-ins and visible progress tracking help build confidence with both internal stakeholders and external suppliers.
Why rigidity drives sub-optimal RFP results
The traditional Request for Proposal (RFP) process embodies everything that agile methodology was designed to replace:
- Rigid upfront planning
- Limited flexibility
- Focus on following the process rather than achieving the best outcome
There is a straightforward, fundamental flaw with most RFPs. They ask suppliers to provide a proposal against a specific specification rather than asking them to help solve a business problem.
This approach assumes that the buying organisation already knows the best solution. It assumes they just need someone to deliver it. In reality, suppliers often have valuable insights and alternative approaches. These could deliver better outcomes at lower cost.
When cost isn’t the primary determining factor, RFPs become even more problematic.
How do you objectively evaluate creativity, cultural fit, or innovative thinking through a standardised scoring matrix? These qualitative factors often matter more than the technical specifications.
Yet traditional RFP processes struggle to capture and evaluate them effectively.
The RFP process also creates an adversarial dynamic between buyer and supplier. Suppliers are incentivised to interpret requirements in the most favourable light. They hide potential issues until after contract signature.
This isn’t malicious; it’s a rational response to a process that doesn’t reward transparency and collaboration.
Introducing the Request for Solution (RFS)
Instead of rigid RFPs, consider adopting a Request for Solution (RFS) approach. This incorporates agile principles once you’ve narrowed the field to your final candidates.
The RFS starts with a clear problem statement and desired outcomes. It focuses on these rather than detailed specifications.
You’re telling suppliers:
“Here’s our challenge and here’s what success looks like. Show us how you’d solve it.”
Once you’ve identified your preferred supplier, adopt sprint methodology to co-create the solution. Use collaborative working sessions where both parties contribute. Each sprint lasts one to two weeks and focuses on a specific aspect. This might be understanding current pain points, exploring alternatives, or developing implementation plans.
Each sprint ends with a review session. Progress is evaluated and the next sprint is planned. This time-boxed approach maintains momentum and enables rapid progress. It works through focused collaboration rather than months of back-and-forth emails.
Agile as a Catalyst for Organisational Alignment
Agile methodology drives organisational alignment before project delivery begins. The collaborative nature ensures everyone is “rowing in the same direction” from day one.
Traditional procurement often leaves implementation details for later. This creates disconnect between deal negotiators and implementation teams. Agile procurement’s focus on outcomes over process cuts through organisational politics and competing priorities.
Regular sprint reviews create natural checkpoints for alignment. Stakeholders help co-create the solution, so they understand the reasoning behind decisions. This leads to smoother implementations and fewer surprises.
Conclusion: So, does Agile Procurement have its place?
Agile methodology isn’t a silver bullet for all procurement challenges.
However, it’s a valuable tool that can deliver significant benefits in the right situations. The key is recognising when agile approaches add value and when traditional methods remain the better choice.
Use agile methodology when you’re dealing with complex requirements or uncertain specifications. It’s also valuable in situations where collaboration and innovation are more important than strict process compliance. Stick with traditional approaches for straightforward purchases with clear specifications and objective evaluation criteria.
The ultimate goal should be using agile principles to speed up processes. This enables more efficient responses during times of crisis or change. Being able to adapt quickly, whilst maintaining quality and compliance isn’t just nice to have. It’s essential for competitive advantage in today’s business environment.
The organisations that master agile procurement will find themselves better positioned to navigate uncertainty. They’ll build stronger supplier relationships and deliver better outcomes for their stakeholders.
In a world where change is the only constant, the ability to adapt on the fly isn’t just a procurement skill; it’s a business imperative.
