Enerkem boosts their procurement process with Lean Agile Procurement for the EcoPlanta project

Enerkem, a clean technology company headquartered in Montreal, is the global pioneer in the production of renewable methanol and ethanol from solid waste.

Their agile and innovative approach reflects also in their ways of working.

Faced with a critical three-month deadline to select a strategic partner for the design of their new European plant, EcoPlanta, Enerkem adopted an innovative approach with Lean Agile Procurement (LAP) to ensure efficient and rapid collaboration.

In the petrochemical industry, selecting a partner of this magnitude generally takes a minimum of six months.

How did Enerkem manage to select a supplier while accurately assessing the cultural and business alignment between its team and the partner's, thus ensuring a smooth and effective collaboration, all within a timeframe half as long as the standard ?

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Case Study: Enerkem uses LAP to source their Engineering & Procurement Partener

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This case study was also published in the Swiss Magazine Professional association for Purchasing and Supply Management in German & French

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3D-Printed Aircraft Engine - Is your Procurement as agile?

This week GE released this great GIF of its 1,300-horsepower advanced turboprop (ATP) engine in which more than one-third of the components have been built through additive manufacturing, or 3D printing. The company is showing off its creation in real life at this week's big air show in Oshkosh, WI. In other words hardware development is getting more and more agile, is your procurement as agile?

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Background

Already in 2016 GE reported the first 3D printed jet engine. They made a simple 3D-printed mini jet engine that roared at 33,000 rotations per minute.

In contrast to traditional machining methods that typically cut parts out of larger pieces to get to a finished shape, additive manufacturing uses lasers to fuse thin layers of metal on top of each other to build parts from the ground up. This advanced technique means less material waste and more complex parts that can be built precisely to optimize how they work inside a machine.

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“This is not a matter of simply replacing one production method with another, but of reinventing the way aviation engines are conceived and designed”

— Giorgio Abrate, engineering lead at Avio Aero, the GE subsidiary that developed the ATP.

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"There are really a lot of benefits to building things through additive,” says Matt Benvie, spokesman for GE Aviation. “You get speed because there’s less need for tooling and you go right from a model or idea to making a part. You can also get geometries that just can’t be made any other way.“

As Joe Justice, creator of Scrum@Hardware, Scrum Inc. recently mentioned: „Thanks to the new technics it’s no problem any more in hardware development to build an engine (working increment) within one iteration!“. One iteration is by definition of scrum less than 4 weeks, modern teams usually use 1-week sprints. 

Conclusions

If hardware development is getting that fast and flexible procurement has to adapt too. It’s predictable, that we will change our partners in a much more adaptive way as we'll do with the production method depending at the current customer needs. In other words we need to close the gab regarding speed (DAYS instead of MONTHS) and become as innovative in sourcing a new partner as the product development is.

Read more about how you could do that with lean-agile procurement

Sources:

http://www.ge.com/reports/reengineering-elevators-transform-21st-century-cities/
http://www.ge.com/reports/treat-avgeeks-inside-look-ges-3d-printed-aircraft-engine/
GE Made a Real 3D-Printed Plane Engine and Here's a Gorgeous Look at It

Success Story POCathon@CSS Insurance - A Participative Evaluation in just 3 days

If you're wondering how a big room evaluation day (Step 3 + 4 in lean-agile procurement)  could look like read this awesome interview with Konrad and Dominik about their custom implementation at CSS Insurance called "POCathon". CSS is one of the largest health insurers in Switzerland. For there complex evaluation of a software provider they've invited 2 providers and put them all together in one room for 3 days. At the end of these 3 days they were able to decide with whom of the service provider they will continue agile delivery at the next day!

“The POCathon fits perfectly into lean-agile Procurement and we will use both in combination again.”

— Konrad Durrer, Architect & Technology Consultant, CSS Insurance

Who are you guys and what is your job with CSS insurance?

Konrad Durrer: I have been working in IT for 35 years and was always looking forward to learn new things. After writing stock market applications on large systems, I entered the first ETH course of studies in Computer Science. I then worked in industry and for the governance before joining CSS Insurance. I'm now an architect and technology consultant. In leisure time, I run marathons and enjoy life. Konrad was responsible for the evaluation and is co-initiator of the approach POCathon.

Dominik Liebmann: I'm an API management and integration consultant at ipt AG. My focus is on simplifying business processes. Since my first company at the age of 16, I've been working with IT-supported business processes and worked for many companies (SAP, IBM, Bison Schweiz AG) in Germany and abroad (Russia, China). I personally spend my time either at the local stove or go for mountainbike races. Dominik supported CSS as an external consultant and is co-initiator of the approach POCathon.

You are the initiators of pocathon, what is it exactly?

Konrad & Dominik: The "POCathon" is a combination of the words Proof-of-Concept (POC) and Hackathon and is intended to combine the advantages of both approaches. With a POC you want to test the cooperation with a new partner and its services and / or products. With a Hackathon it is very quickly possible to achieve many learnings by simply putting the right people together and try things out by implementing them. The POCathon starts, when the customer needs and possible providers are already known. It allows to evaluate them jointly in a participative process with an ultimate decision. We see the application area of POCathon independent of the industry and the topic, as long as this has a certain complexity.

Image: (c) 2013 by Sebastiaan ter Burg (Amsterdam Hackathon)

This sounds very extraordinary, even disruptive. How did you get it?

Konrad: Classical POCs are intransparent, partially unfair and and it is not easy to differentiate between product, service and partner. Also, the lead time is incredibly high (weeks & months) and thus the investment massive. We were looking for a faster, more lean way of a competitive evaluation and got inspired by lean-agile procurement (LAP).

Dominik: In LAP, we particularly liked the participative idea, so the people, who are also concerned about it, are placed in the center and get empowered to decide for themselves. This has the advantage that not only the product, but also the partner (soft / hard skills), their way of thinking and working, as well as the cooperation and the ability to deliver can be tested. If the stakeholders are able to participate in this short period of time, they also get a deeper insight. Of course the speed, or time-to-market, was also very exciting to us. Beside that I totally agree with Konrad, that classic evaluations and POCs are partially unfair. Especially as these are done sequentially and it's in our nature that we remember the last provider the best and the 1st the worst.

What made you decide to run a POCathon just for this project?

Konrad: On the one hand there was the pressure of time and the complexity of the business needs. On the other hand the project offered itself, it had clear bounding conditions, the procedure was in our decision-making competencies and the evaluated products were roughly comparable. We therefore looked for further criterias and also wanted to involve the users directly in the decision. Furthermore the details for the POC were already well prepared through the preliminary work.

Dominik: Due to the technical background of the project, all stakeholders were from IT and were tangible for us. The fact that we wanted to involve them in the evaluation became mainly beneficial. Likewise, the providers were open to the procedure too.

“What used to take WEEKS & MONTHS now only takes DAYS!”

— Dominik Liebmann, Principal Consultant at IPT AG

How did the pocathon work in practice, can you explain a little bit?

Konrad: First of all the product vision (why) and the business needs (what) of the POCathon were presented to all 2 invited providers. This set the frame, so that the 2 vendors could start implementing their solution (HOW) self-organized, by taking one business need after the other from the prioritized backlog. It was the idea that we have 2 implementations in parallel similar to a competition between the 2 providers. 

Dominik: Therefore we basically had an iteration each day. In the morning we made a planning and at the end of each day the results were presented in a review session to the real users. They assessed the technical integration/solution and gave direct feedback to the vendors. We facilitated the process throughout the day and answered questions instantly. In doing so, we also experienced surprises such as when a vendor was apparently behind the schedule but then catch up and delivered in time until the next demo. In addition to that, the users got to know the products and the providers personally in the day-to-day collaboration and this also formed interpersonal preferences. An important aspect of our approach, where usually is not enough time for.

What do you recommend any followers?

Konrad: We had made the preparation of the requirements and / or the preselection in a classic approach. Today, based on the huge success of the POCathon, we would work this phase in a participative process too using the lean procurement canvas and lean-agile procurement. This would allow us to faster classify the offered solution and its intermediate results faster.

Dominik: The POCathon was an experiment. Accordingly, we could still improve a lot, for example the top management could be invited too, end users should constantly participate during the POCathon (they were just for the demo present), the lean Procurement Canvas incl. an agile roadmap could be developed together with the providers, etc. Furthermore, you shouldn't under-estimated scaling effects the more providers get invited.

Where are you today in the project and did you achieve what you hoped with the pocathon?

Konrad: The selected product is in productive use. The users were very motivated by the participative process. You just can not underestimate this. All-in it was a big success for us from the buyer perspective!

Dominik: From the approach point of view we over-achieved our biggest expectations. We could speed up time-to-market, participation of end users and made finally a decision.

How was the feedback from the organization or the suppliers?

Konrad: From both sides very positive, which has surprised us. Due to the daily reviews in the evening, a high identification of the end user with the product could be achieved. We believe this is because they have become part of the evaluation process from the start. We do not recognize the usual discussion that product B would have been better.

By the way, all the providers were paid for their expenses (3 days). This was important to us, since they all delivered business value during the POCathon, one provider contributed already to our current solution and through the others we got important new ideas, learnings and feedbacks. Usually, the winner is willing to provide a special rabat of the amount we invested.

Dominik: I think such an approach is in the interests of all parties. From the point of view of the buyer, all stakeholders as well as the project team members themselves are involved into the decision. From the point of view of the providers this approach gave them the chance to present themself in a completely different quality, with a much less investment of time and ressources. In total, the end user benefits as well, since he gets business value delivered faster, more effective, the procurement process gives room for innovation and becomes less expensive.

Surprisingly the providers even liked the competitive approach being in the same room with their competitors :-) 

How does it go on, will you use lean-agile procurement or the POCathon for further evaluations?

Konrad: We see a mutual value both. LAP can be made with a larger number of providers do workout the WHY/WHAT and a POCathon covers the solution (HOW). The POCathon complements LAP perfectly and we will use this in combination again.

Dominik: Amazing was retrospectively what we have been achieved in only 3 days. Imagine if the preparation work and preselection could become similarly effective by the combination with LAP. This will in our opinion disrupting procurement: What used to take WEEKS & MONTHS now only takes DAYS!

Thanks for the interview and FOR SHARING OF THIS AWESOME STORY!

Source: CSS Insurance AG, Switzerland 2017

Interviewer & Author