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Lean-Agile Procurement (LAP) in NZ – Darling, Dog, or Dancer?

Lean-Agile Procurement is taking the world by storm, we’re told. It’s said to be a clever, fast-paced, supremely efficient model for procurement, which slashes the time and effort of selecting the best supplier. It’s simple, fun and exciting, say its fans. And it sets up a collaborative framework with suppliers from the first engagement.

Lean-Agile Procurement

There’s certainly a need for a game-breaker in procurement. Agencies and supplier communities are equally disaffected with the messy, confusing, time-consuming and often irrelevant traditional tendering methods.

It sounds enticing to be able to select a supplier “in days rather than months”, and have fun in the process. So we asked a few Kiwi suppliers, some agencies and a procurement probity expert about their experiences with LAP. 

But first, where did Lean-Agile Procurement come from, and how does it work?

‘Agile’ is not a new concept. In fact, most see that flexibility and rapid adaptation to change is critical for doing business successfully today. Yes – even in government! ‘Lean-agile’ philosophy also centres on efficiency – minimising unproductive time and costs, streamlining activities to the bare essentials and focusing on what’s critical to get the job done. That’s got to be good.

Lean-Agile Procurement, takes these concepts further – to embed them into a framework that’s designed to be customized. Quite correctly, they note that every procurement context is different, there’s no ‘one size fits all’ in this. But there are some core elements that are wholly different from tradition procurement practices.

Critical to the LAP method is the concept of ‘big room events’. These introduce a range of identified customer needs into a ‘swarm’ or ‘scrum’ – which includes cross-functional teams from the buyer as well as some short-listed supplier companies. Like a beehive, the atmosphere is busy, electric, and collaborative. 

Suppliers are presented with the clients’ needs, and asked to come up with their best and brightest solutions, as well as their suggestions for improvements to the contract (challenges to assumptions, smart ideas to minimise risks, etc.). They’re also asked to challenge the ideas that their competitors come up with – and if possible, collaborate and improve on them. In some situations, traditional competitors even form alliances to solve the client’s issues together.

The mood is highly charged, full of promise and energy. This is truly exciting stuff.

OK, so what’s the feedback from Kiwi LAP explorers?

When we asked some brave agencies who had trialed LAP techniques for supplier selection in NZ contexts, we had some interesting feedback. While all were enthusiastic about the philosophy that sits behind the LAP methodology, it was clear that there are a few qualifiers.

“Doing LAP right means you have to invest significantly into planning” said one procurement professional. “Although the word is that the sourcing process takes “days rather than months” –in reality, there’s no substitute for the effort that needs to go in upfront. You still need to work out what outcomes you need your suppliers to achieve; what risks and opportunities are under their control during delivery; and therefore, what qualities you must focus on in your supplier selection.”

That planning for LAP should be done efficiently of course – as it should be for any procurement. 

There’s also no way to avoid understanding your market – even if it’s only to work out how you’ll get the right suppliers into the room. How will you short-list – will you run an REOI? Design preconditions to exclude unsuitable suppliers? Or are there only a few who are likely to respond?

Then, there’s the content of your workshops to plan, as well as the all-important task of how you’ll score or otherwise the best suppliers. Or will you just rely on ‘gut feel’ on which supplier presents best on the day?

What do Suppliers think?

Interesting feedback came from some suppliers who had engaged in a LAP process led by a New Zealand Council: 

“We absolutely loved the informality and energy of the approach, and the real connections we were able to make with the decision-makers” was a common theme. “But – partly because we were nervous and this method is new to us – we spent almost as much amount of time and effort prepping for the big event, as we would for a written tender response”.

“We found it weird to be judged up against our competitors in the same room. In our industry in New Zealand, we are both proud and protective of the IP that our company has developed – such as the smarts we apply to our contract methodologies. No way would we share those with the our hungry competitors breathing down our necks, ready to rubbish them in front of our potential client, or even steal our great ideas and adopt them, themselves. 

“What’s more, we didn’t really trust the client not to take our innovations and pass them on to another supplier. So naturally we were not as open as I think they hoped. Neither were our competitors, I noticed!”

Recognising that their scores depended on them demonstrating collaboration and social skills in this setting, some suppliers had to make tough calls on who attended the ‘scrum’ workshops. Said one “we knew that our Project Manager – who’s a brilliant problem-solver and action man onsite – would be really uncomfortable in an environment where he had to “perform”. He’d hate the ra-ra expectation and would be sure to clam up if faced with an audience of both clients and competitors. 

So, we schooled up a very articulate alternative member of our team. We knew she would instantly impress through her vivacious, confident and outgoing nature – but in reality it felt like a fraud. She won’t be that close to the project, but as a smart and articulate presenter, she’ll knock their socks off.”

How does Lean-Agile Procurement shape up on the Probity Spectrum? 

We also asked a Probity Auditor on their views on the LAP technique. They had huge praise for any methods that make sourcing fast, simple and effective – as long as they don’t compromise the fairness of the process. Are you clear what qualities you need on your contract, and have you put in place selection tools that give you solid evidence of your suppliers’ capabilities in those areas? 

“For sure, don’t waste time on irrelevant activities”, they said. “But make sure you give clear indications of the qualities you are looking for to your suppliers; and have a detailed scoring system that’s based on something more substantial than your gut feel on the day. That’s essentially what we did back in the days of “jobs for the boys”. It’s not enough accountability, transparency or justification for spending significant public money on a supplier’s products or services in today’s world”

Overall, where does the jury sit on Lean-Agile Procurement?
Some key pointers:

Our view is that LAP really lends itself to situations where collaborative problem-solving is what everyone’s looking for, and those methods don’t jeopardise your suppliers’ IP. If LAP saves time or makes procurement processes more attractive to your suppliers – go for it! But keep your eyes open.

Here are our recommendations for using LAP principles on your procurements:

  1. Choose your context for using this method carefully. It may well work like a charm in open-ended, think-tank environments like IT problem solving or some other professional service contexts.
    In sensitive situations, however, consider employing Lap techniques without competitors eyeballing each other. Feedback from kiwi companies is that they’ll be far more open in a one-on-one forum with the client (only) present.
  2. Don’t underestimate the groundwork needed to make LAP work properly. LAP addressed only a tiny part of the procurement lifecycle, and although we all can see good ways to streamline procurement, every one of them requires solid planning. There is no substitute for thought put into knowing what outcomes you need, understanding your market, analysing the risks and opportunities that guide your choice of what qualities the best suppliers will need to deliver.
    Workshops don’t just happen. A common rule of thumb is that you need to invest at least six times the workshop’s duration time into planning, to be sure they achieve what they set out to.
  3. Get your scoring system nailed, communicated and agreed. If you choose any form of dialogue or interview process to form all or part of your selection process, make sure you have a predetermined, robust and agreed scoring system. 
    The supplier that will do the best job in the field may not be the best presented or the most articulate. You may easily be called on to justify in detail what qualities you scored, and how they were communicated and benchmarked to demonstrate a fair and transparent process that appropriately reflects the competencies that will drive best value for the project.

There’s exciting stuff emerging as we test and adjust new procurement methods like LAP. This method is certainly a breath of fresh air, and it’s worth investigating and potentially tailoring this exciting development to your procurement projects. Anything that makes procurement more efficient, easier, fairer and more targeted has to be a bonus.

We’ve built information about Lean-Agile Procurement, and other interesting emerging procurement practices, into the refreshed learning materials for the Diploma in NZ Public Sector Procurement . This qualification and its well-known Clever Buying course is NZ’s most popular programme to train and assess procurement practitioners as Qualified Proposal Evaluators for Waka Kotahi/ NZTA and other government organisations.

We’d love to hear more about your experiences of LAP, or other emerging procurement practices. Please share your insights by contacting us at info@cleverbuying.com or phone 0800 225 005.

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