Six Definitions of Lean Procurement

“Lean Procurement” has well and truly entered the lexicon of the profession. Like many emerging trends, everyone wants it, but not many understand what it actually entails. Part of the problem is that there is not yet a single, agreed-upon definition of what “Lean” means in procurement. This article will summarise some of the interpretations of Lean that are currently doing the rounds.

“Lean” according to Womack and Jones

In 1990 James Womack and Daniel Jones first introduced the concept of “Lean” through their book, “The Machine That changed the world”. This book described the benefits of a new Japanese production methodology used by Toyota, and the concepts of  Lean Thinking  and Lean Production subsequently became extremely popular.

Six Sigma describes Lean Management as “The method which creates an efficient process flow by eliminating non-value adding activities (or waste). Lean Management is a methodology to ensure value adding activities run smooth and quickly through the process. Process speed or the efficient flow of a process is the essence of Lean Management.”

Non-value-adding activities (or waste) include transportation, stock, motion, waiting, processing, overproduction and defects. While eliminating these elements is unrealistic, Lean Management focuses on minimising waste to an achievable level.

Lean Procurement according to Mirko Kleiner.

Mirko Kleiner, the creator of Lean-Agile Procurement, embraces the values of Lean by incorporating waste reduction into his innovative lean-agile procurement methodology. Essentially, his new way of working which can slash complex sourcing times from six months to six weeks reduces waste by:

• reducing preparation efforts as much as possible
• improving time to market dramatically
• reducing lengthy custom proposals to one-page documents
• reducing the number of procurement team members involved in the sourcing process.

Read about Mirko Kleiner’s upcoming PASA workshop below. 

Four other definitions of Lean Procurement

1. “The principles of lean supply are based on those of lean production, with the focus being on the customer and efficiency of the operation. Lean supply is part of continuous improvement and aims to streamline processes within the supply chain to eliminate waste and non-value added activities. Waste can be defined as time, costs or inventory. Lean procurement can be described as a supplier having one point of contact across a buying organisation, one contract and offers one price for all locations.” From CIPS.
2. “Thinking Lean often involves utilising suppliers as often as possible (without paying too much of a premium) in order to free up internal resources to execute in core areas of the business. Striking the right balance between value-added services and the cost of goods and services can generate huge savings, in terms of both costs and time.” From ThomasNet.  
3. “Often Lean Procurement is viewed primarily as an inventory reduction method where a customer reduces its own inventory exposure by just-in-time material shipments from suppliers or by arbitrary reduction of inventory in the supply chain. Others see Lean Procurement as implementation of procurement and supply  management automation software. Or, some companies think that the “lean and mean” approach — staff cuts — will make procurement Lean.” From ValueChainGroup.
4. “Lean in Procurement and Supply Management can be viewed as a way to: improve the procurement process and workflows, reducing time and eliminating waste; reduce/lower costs while improving the quality of products and services; improve the performance and responsiveness of suppliers; increase the focus on those activities that add value to the firm; and enhance procurement’s strategic rather than transactional focus.” From Ivalua.

Join PASA’s Competitive Advantage Via Lean-Agile Procurement workshop, a two-day certification workshop (LAP1) taking place from 18-19 September 2019 in the Sydney CBD.

The workshop will be facilitated by Lean-Agile Procurement’s Mirko Kleiner, Thought Leader in Lean-Agile Procurement, CIPS Award Winner 2018, international Speaker, Author, President of LAP Alliance, co-founder Flowdays, Agile Enterprise Coach, Certified Scrum@Scale Trainer. Register here.