Lean Procurement Case Study

Because the above challenges slowed the process to a crawl, a set of problems that happen almost uniquely to slow-moving work often made the procurement go even slower.   Following are some problems that happen to 3-to-5-month-old files that do not typically happen to 3-week-old files:

• Client has time to reconsider, so changes mind on scope and details = redrafting, re-approving documentation.
• Overtaken by events – the client’s situation and requirements change = the RFx needs to be significantly re-written and re-approved, or cancelled, wasting the effort invested to date.
• Turnover in clients – clients leave and are replaced = Procurement spends time briefing new clients/stakeholders to get them up to speed. 
• “Where’s My Stuff?” / Progress-Chasing – A 3-week file requires virtually no status updating or progress reporting. The slower the file, the more effort Procurement spends responding to status inquiries, and providing progress reporting = Procurement spends time on status updating and responding to inquiries instead of doing the work that is the subject of the status update/inquiry.  

• The Improvement Approach

The team and its leaders engaged Lean Agility to guide them through a multi-step 20-day improvement project.  They chose this approach to maximize the buy-in and to ensure that the analysis and solutions would increase their chances of success compared to a superficial, hasty exercise that provides solutions that don’t solve the key issues, and don’t get implemented.  

1. Project Charter:
   1. Define the problems to be solved, objectives, constraints (e.g., can’t spend money on a new digital system, or hire more people – solve the process issues first). Create a project plan and protect the core project team from daily work so that they can focus on the project and get quick results.
   2. Identify a small group of knowledgeable Procurement Specialists and clients to engage with as a core project team. In this case, the IT department was the biggest, most-motivated client – they signed on to this journey with two key Procurement Specialists and their manager.
2. Map the Process:
   1. Gather data on the current process – how long do different types of files typically take from start to end? At each major process phase? What types of errors do clients most often make? Which months are the highest intake months? Why? How can high seasons be managed/influenced?
   2. Create a value stream map of the current process, for a specific, important type of file. In this case, focusing on the path taken by a $100k+ Cloud Software competitive purchase process was the one that the sponsors expected would teach the organization the most about its procurement processes in general.
3. Analyze the Process:
   1. Seek to deeply understand the root causes of why the process underperforms.  For example:
      1. Why are peak months so busy? What can be done to level out the work? [Hint: poor or no planning] 
      2. Why do clients submit documents that are unclear and that require so much back and forth [Hint: the forms and tools are designed by Procurement experts using expert language, not for busy, distracted managers who might only use the process once per year] 
      3. Why do the document reviews take so long and consume so much effort?  [Hint: they’re done in slow motion, and rarely do the stakeholders get together face to face to collaborate in a “one-and-done” fashion.]
4. Create and Quickly Try Out Solution Experiments that are likely to solve the key issues:
   1. Treat solutions as “experiments”, by trying the new idea out on a handful of files, then doing a quick retrospective to learn what works and what does not, and then quickly trying another iteration, creates an evidence-driven, fast, way to improve a process.  Plus, getting senior management approval to try an “experiment” on a handful of files is often 80% faster than asking for the green light to completely change a process (without providing any evidence that it will work) – requiring less governance to negotiate resulting in faster implementation.
   2. Create psychological safety – treating the solutions as experiments means that the emphasis is put on learning what works, and stumbling, but then adjusting/fine tuning to quickly solve the problem.  This helps create a culture where it is comfortable, and even expected, to try new ways of working.
   3. Create a visible project plan and regular improvement meetings.  Carving the time out of the daily work to do this is critical to implement improvements that work, and to build a culture where improvement is part of how the work is done.
5. Ongoing Continuous Improvement
   1. Create a simple dashboard that measures the health of the process and continue running regular improvement huddles so that the team adjusts to new challenges. It is hard to manage what you cannot see. Some examples of what a dashboard might show:
      1. Where is the work piling up? 
      2. Who is overloaded? 
      3. What kind of errors are we seeing? 
      4. What new work will be coming into the pipeline?

This Procurement team, once they had improved their process, continued to solve problems at a tempo of 4-5 per week, while also celebrating their wins.  Less heroics and more appreciation.

• Improvement Principles and Solutions

The improvements that led to a much faster, less frustrating process were centred around three principles: Clarity, Calendar and Collaboration.

COLLABORATION

• Structured “one-and-done” kickoff meeting right after request is received by Procurement to get everyone on the same page, to create a project plan, assign roles and responsibilities.  Book dates into calendar during this meeting to avoid schedule chasing later.
• Half-day, structured, RFx writing workshop and working session where the Procurement Specialist arrives with relevant examples from previous similar procurements in hand.  Put the document on the screen and get it done, together, in one sitting instead of going through many cycles of back and forth by email. 
• Legal review (if required) at very start – involved early in kickoff – signal check to create alignment and to signal potential legal issues.  Clarify role of Legal and other reviewers to ensure that they only address issues in their respective lanes.
• Regular (weekly) meetings with Legal and high-volume clients to maintain alignment (what’s coming down the pipeline, what’s coming outside of the pipeline)
• Weekly Continuous Improvement huddle with the other major stakeholders in the process (e.g. Legal Services, IT, etc.) to check in on the health and flow of the end-to-end process and answer the questions: what’s working well, what isn’t, what should we do differently?  

• Conclusion

With a faster-moving process based on “one-and-done” face-to-face meetings between Procurement and their internal stakeholders/clients, this group virtually eliminated status inquiries from clients (e.g., “Do you know when this will be ready?”) and were able to focus on high-value collaboration and advice work. 

Further, freeing up their capacity allowed them to continue to improve their tools and services, and to cross-train and finally build Procurement into the annual business planning exercise – flattening out demand during the year and avoiding year-end rushes.  This experience proved the concept and next the Agency improved their Contract Administration process.