When contracting authorities are considering their procurement needs, it can be difficult for them to understand what they should do preparing for their tender. If their needs have not evolved significantly and the good/service is stable and unlikely to evolve significantly it is practical to stick to known approaches and methods for running a tender.
What can be a little more challenging for contracting authorities is where they believe things may have moved on since they last visited the market but they are not fully sure how. Alternatively, they may be buying something for the first time. Where this is the case, there are novel challenges they need to consider. Contracting Authorities should consider some form of market consultation where this is identified as a matter of potential benefit to them.
We define a market consultation as a method for formally speaking with potential suppliers using a structure designed to help an organisation move to the procurement stage with greater confidence.
Why should you bother with market consultation?
Well, obviously this argument is making the case that buying authorities should use them. For those for whom this sounds like extra work for the same output, I will make a few simple points as a prelude to the rest of the article:
- Materiality of consultation – think about how much engagement you might need to do to get a better sense of what a tender document needs to reflect. A tender for a new hospital or a fleet of submarines will have a level of complexity that buying cleaning supplies or boiler maintenance will not. You may need extensive consultation or none at all.
- Importance of contract – think about the importance of the contract. The contract doesn’t have to be high in complexity or value for you to need to understand the requirement. It could be something very specialised. For instance, we sourced a software developer that was an expert in the development of psychometric tests for educators. His task was to develop software for the development of psychometric tests by other people (open source). To say that this was a niche area is to put it mildly. Two hands covered the world. It wasn’t very high value either (less than EUR500k in lifecycle value).
- Foreseeability and planning – when do you need to go to market. If you know, and you think speaking to the market is going to be important, you need to plan the time for this and go out early enough to ensure you can run the process based on the latest information and insights.
- Being your own 10th man – this principle which is a feature of critical thinking and decision making in Israel is based on the following premise. If nine people agree on something in a group of 10, the tenth person must act as the devil’s advocate (even if they also agree) to poke holes in the consensus. How does this apply to procurement? Go beyond the usual suspects. Do your research, speak to people in the market, talk to other buyers, use data.
The difference between a good student and a great one is that a good student is concerned about the outcome while a great one is fascinated by the process of learning.
Professor Richard Feynman
I have always thought Feynman’s quote applies well to learning about market segments in advance of a tender process. The best buyers are curious and endeavour to understand the category they are dealing with as it applies to their specific needs.
How do you prepare for the running of a market engagement process?
Running a market consultation helps you gather valuable insights, understand market capabilities, and build strong relationships with potential suppliers. Below we lay out the key steps to running a market consultation.
- Define success: You need to clearly articulate the objectives of the market engagement. This could include understanding market trends, assessing supplier capabilities, identifying potential risks and gathering feedback on your requirements.
- Undertake market research: Conduct thorough market research to understand current trends, key players, and market dynamics. This will help you ask informed questions during the consultation and select who you want to speak to / invite to participate.
- Identify the relevant stakeholders: Identify internal stakeholders who will be involved in the process and external stakeholders such as potential suppliers and industry experts that you will invite to participate. Consider what you are asking of these people and be efficient in your demands and respectful of their time. One should always be careful with respect to vested interests like incumbent or well established suppliers. Organisations do not always see your interests as being aligned with their interests.
- Develop the documentation to support the exercise: Develop a comprehensive information pack that includes background information, project requirements, timelines, and evaluation criteria. If necessary, have NDAs in place to protect sensitive information. This will always apply in the case of defence and security procurement. It will often apply in other sensitive areas like IT projects involving large amounts of personal data.
Running the consultation
The market needs to know the market consultation is happening so the word needs to get out and reach your intended participants.
- Communication: It is best to announce the engagement to potential suppliers through various channels. This can include an organisation’s website, through industry publications, via social media channels (especially LinkedIn) and via dedicated procurement platforms for state tenders. Some contracting authorities complement this approach with briefing sessions to explain the procurement process, the objectives, and expectations from potential suppliers.
- Engagement Platforms: Tender platforms are usually used for communication and document sharing. This streamlines the process and ensures transparency. You can schedule question and answer sessions to address any queries from potential suppliers or deal with these through the platform where it has messaging functionality built in.
- Feedback Mechanism: Where structured documents are used, they form the basis for obtaining feedback from suppliers. The feedback is structured and used to obtain their understanding of requirements, proposed solutions, and potential challenges.
- One-on-One Meetings: Sometimes face to face meetings are more effective than using structured questionnaires. This is especially the case where a requirement is new or the market needs to be shaped in some way. The agenda is similar to what is covered in a structured questionnaire approach but personal engagement is often more effective in eliciting supplier inputs.
- Site Visits: In some cases, it may be necessary to undertake site visits to supplier facilities to better understand their capabilities. It can also be sensible to perform product testing / sampling.
Drawing conclusions and using what you have learned
Once the process is complete, the aim is to use the information garnered through the process to run a tender process. To do this on your own or with colleagues, analyse the gathered information and feedback. It is useful to distil this into a comprehensive report summarising the findings, key insights, and recommendations.
The next stage is to use the information gathered in the tender itself. For transparency reasons, it may be necessary to publish some information on the consultation and what was learned from the process.
We have additional insights elsewhere on the Keystone site including this piece on how to increase supplier participation in tender processes.
