Sourcing of a group intranet solution via Lean-Agile Procurement

CKW Group, Switzerland: CKW has written a piece of Swiss electricity history. It has been supplying Central Switzerland with electricity for over 120 years - from turbines to sockets. What began with a hydroelectric power plant near Lucerne is now a company with more than 1,700 employees on it‘s digital journey.

• Headquarter: Lucerne, Switzerland
• Industry: Electricity Supply
• Employees: ~ 1´700
• Revenue: ~ 850 Mio. CHF

Procurement so far has shown that CKW must move faster and closer to customers in order to better meet their needs. The standard purchasing process (RfI/RfP) did not lead to the desired outcome for this kind of projects. As such CKW needed to rethink their procurement approach, from the perspective of decision makers, employees, and service providers, including everything from processes to roles. So they decided to try Lean Agile Procurement (LAP) for the first time in order to procure a group intranet solution

Case Study originally published by flowdays. 

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Goals

• Shorten go-to market from 6-12 months to 1-2 months
• Find a new product / partnership / approach to solve current and acute costumer needs in an interactive and incremental way
• Test collaborations and products / services with the potential partners before signing the contract
• Employees should become more self-organized and empowered to make decisions.

"Lean-Agile Procurement is a great method if the target is clear but the solution depends on the supplier you chose. Instead of defining all details yourself and expect the supplier will deliver, you ask the supplier to develop the concept of the solution in front of you. Hence you also see how they work, which adds confidence to the right selection." - Daniel Wahler, CFO at CKW Group

Approach & Timing

The core format for the implementation of lean-agile procurement, was based on a 2-day workshop, where CKW co-created an agile contract with three vendors. The workshop actually created working product increments at the end of each day, that was presented publicly to customers.

Business Outcomes

• Time to Market: 400% Faster (6 Weeks instead of 6 Months)
• Customer Alignment: 2800% Faster (3 Days Instead of 3 Months)
• Decision to Contract: 1000% Faster (Same Day instead of 1-2 Months)
• Effort: 50% Less (2.1 FTE instead of 4-5 FTE)
• Happiness: 9 of 10 Recommendation Rate (Buyer & Supplier liked lean-agile Procurement as a new sourcing approach)
• Business value increased as the customers were involved constantly, e.g. during the big group workshop and public reviews.
• Staffing and empowerment of the x-functional team that resulted in significantly reduced lead time to do the job. The team had end-to-end competencies for the whole product lifecycle that enabled them to make the sourcing decision as well.
• The workshop also provided an opportunity to greatly reduce for social and technical risks, in that it provided an opportunity to validate product, service, cooperation, and the competencies of the vendors people to complete their respective tasks during the 2-day period.
• Based on customer-driven needs, the team jointly designed appropriate solutions that would dovetail within the business goals and cost roof. This significantly reduced financial risk, costs, and people time required to complete the job.
• Time to market was substantially faster as the new agile team - consisting of the buyer & vendor - could just continue working on the 3rd day.
• Contractual risks were substantially reduced as all critical co-created aspects of the of the Agile contract were made transparent and updated immediately. In addition, the agile contract ensured the needed flexibility on all the details.

Author

(c) 2018, CKW Group(c)
2018, Mirko Kleiner, Co-Founder flowdays, Creator lean-agile Procurement

Hi, I’m Mirko Kleiner the creator of lean-agile procurement (short LAP). Begin of 2016 I asked myself if procurement couldn’t be more fun and lean, in other words just pure agile?-It’s my personal pleasure to tell you, that LAP is a promising new option for procurement!

To give you some insights about myself, I’m co-founder of flowdays and owner of WAI.O.BLUE and work as an independent agile coach and ad interim manager. I’ve long been an avowed Agilist (Agile Evangelist), but also flexible if necessary to adopt to the given surrounding conditions. After over 17 years of professional experience in various positions in distributed organizations, large-scaled projects and different cultures (India, Russia, Serbia, Romania, West-EU), I’m a known expert in setting up and management of distributed agile organizations and solving their challenges. As agile coach on enterprise level I’m currently engaged in agile transformations in companies of all sizes. In practice I saw, that sales/procurement organizations still miss an approach to catch up with increased market demands like e.g. time-to-market, innovation, complexity, etc. Lean-agile procurement (LAP) fills this gap and became a global movement with many success stories. LAP isn’t just an improvement of current practices, it’s more kind of a disruption: What used to take MONTHS needs just DAYS NOW!- I do predict to businesses with adaptive partner ecosystems will have a competitive advantage and therefore a new, more agile approach for sales/procurement is essential.