Thank you, Shannon. In addition, welcome to everyone joining from around the world. It’s a pleasure to talk with you about our new disruptive approach to Lean Procurement. I brought with me a real-world application from the field, and it was interesting to hear what Tim was predicting—because we have already done it.
In my 15-minute talk, I will cover two main topics. First, I will share a real case from the energy sector where we believe we set a new world record for sourcing a complex project. Second, I will provide a brief introduction to Lean Procurement so you can connect the dots and understand why we approached it this way.
Current Contracting Challenges
Let’s start with how we typically approach contracting today. The traditional Request for Proposal (RFP) process presents significant challenges, especially for sourcing complex projects like professional services, software development, IT, and other organizational complexities. In such cases, it is ineffective to attempt to describe a complex problem in full detail.
Additionally, the traditional procurement process involves numerous handovers, and even if we have an Agile contract in place, it still takes significant time to assemble an Agile team. This results in high costs and inefficiencies. While this process works well for simple or complicated projects, it is not suitable for complex sourcing projects.
The Need for an Upgrade
We believe procurement needs a major upgrade, as the current process is over 20 years old. What if we could make a decision in just one day? Agile methodologies emphasize cross-functional teams, and we apply this concept to procurement as well. However, our definition of a cross-functional team goes beyond what traditional buyers are familiar with—it includes the actual team that will develop the product or service, ensuring end-to-end responsibility.
Even with Agile, uncertainty remains a challenge. In business development, companies face similar uncertainties, and they have addressed this issue using tools like the Business Model Canvas. Inspired by this, we developed the Lean Procurement Canvas, which we introduced over two years ago.
Introducing the Lean Procurement Canvas
The Lean Procurement Canvas consists of three key areas:
- The "Why": Why do we need this project, initiative, or vendor?
- The Buyer Section: Who are our customers, and what are their needs?
- The Supplier Section: What are the supplier’s capabilities, products, and services to address customer needs?
At the beginning of the procurement process, we leverage existing business case information and refine additional buyer-side details. The cross-functional team then engages in a sequence of workshops with vendors, either in parallel or sequentially, depending on the context. Through these workshops, we collaboratively complete the Lean Procurement Canvas, make a decision, and immediately begin working together.
Applying Lean Procurement in a Real Case
Let me share how we applied this approach to a real-world case. An energy company in Switzerland, with around 2,000 stakeholders, needed a new intranet solution provider. Although this may sound trivial, the organizational complexity was significant. They were already experienced in Agile development, but this was their first attempt at applying Agile principles to procurement.
The Lean Procurement Canvas served as a powerful guide. We started by defining the vision—why the company needed an intranet solution and what strategic goals they aimed to achieve. We identified key stakeholders and customer personas to understand their needs. However, we recognized that these were still assumptions that required validation.
Within a week, we invited representatives from each persona group and conducted a preparatory workshop with approximately 50 people. In just four hours, we gained a clear picture of their true priorities and needs—without creating lengthy documentation. This allowed us to quickly shortlist potential vendors.
Innovative Vendor Selection Process
For the vendor invitation, we provided only essential information—enough to communicate the approach, expectations, and goals without prescribing unnecessary details. We then conducted a two-day vendor workshop with two key objectives:
- To collaboratively complete the Lean Procurement Canvas, summarizing the vendor’s offer and refining the Agile contract.
- To facilitate direct collaboration between vendors and stakeholders, ensuring that those who would actually do the work were present.
Similar to Agile PI Planning, the workshop brought together sales representatives, legal teams, developers, and decision-makers. Since developers were present, not just senior executives, we could also conduct proof-of-concept exercises. This ensured that technical discussions and feasibility assessments happened in real time.
Real-Time Feedback and Transparency
The CFO kicked off the workshop by presenting the company’s vision and explaining the project’s importance. Vendors then worked through the details collaboratively, preparing a formal offer, estimating costs, and defining high-level goals and key results. Rather than agreeing on rigid user stories, we co-created flexible objectives and established KPIs to measure success.
Throughout the workshop, we maintained transparency. While financial details and HR contracts remained confidential, all vendors had access to the same project information. This fostered a competitive yet collaborative environment where vendors could see each other’s approaches and adjust accordingly.
We also conducted breakout sessions on the cooperation model, giving vendors feedback on their approach. If a vendor excelled in a certain area, we acknowledged it; if improvements were needed, we scheduled follow-ups.
Proof-of-Concept Testing
Each morning, vendors planned what they could deliver by the evening. Every evening, we held a public review where real users tested the prototypes and provided feedback. This direct interaction helped stakeholders see exactly what they would receive and allowed vendors to refine their solutions in real time.
Contract Finalization and Results
By the end of the workshop, we had a fully completed Lean Procurement Canvas, providing a concise summary for the Agile contract. While corporate policies required a formal written contract, it was quickly updated and approved within 45 minutes—covering all legal aspects at both business and corporate levels.
Key Results
- Time Savings: The entire process took just five weeks, with two days of vendor workshops.
- Reduced Workload: The buyer’s investment was only two FTEs, significantly lower than in traditional processes.
- Speed to Market: Compared to a similar project within the same company, this approach was four times faster.
- Higher Quality Information: Although customer involvement was lower, the information gathered was of much higher quality.
- Instant Decision-Making: The contract was signed on the second day of the workshop, and work continued immediately on the third day.
Conclusions and Challenges
Procurement often focuses on cost savings, but we achieved efficiency by eliminating unnecessary work and prioritizing only the most critical elements. The high level of collaboration fostered alignment and commitment, while real-time discussions ensured a shared understanding of risks, warranties, and potential delays.
However, we faced challenges as well. Many procurement professionals were unfamiliar with Agile, requiring additional training. Managing capacity constraints and facilitating three vendors simultaneously was complex. Additionally, legal teams needed to be involved early in the process to ensure alignment with corporate policies.
Best Practices
- Start with "Why" to align on vision and goals.
- Invest in Agile knowledge and secure management buy-in.
- Provide clear supplier briefings to set expectations.
- Involve legal teams early to streamline contract approval.
- Empower teams to find their own way—each implementation will be unique.
Final Thoughts
Thank you very much. There is a community website where we share all information, and the Lean Procurement Canvas is open-source. I look forward to your questions.