From luxury to necessity: Will market engagement become the new normal?
First published in in UnSplash
Those of us who trumpet the benefits of pre-procurement market engagement often get told: “I’d love to, but this tender has to be published tomorrow/next week and there’s no time,” or “we don’t have the staff/resources/expertise to do it properly.”
While many public bodies do engage with suppliers on a regular basis, the quality of engagement varies widely. With normal procurement rules temporarily relaxed by the COVID-19 pandemic, there is a chance to rethink this, along with other aspects of procurement.
Ironically, when we’re under pressure we sometimes find time to do things we normally feel we don’t have time for, and even do them well. The rush to buy face masks, gloves, testing kits, ventilators — as well as all of the less obvious needs driven by the pandemic such as enhanced ICT capacity and contact-free public services — has highlighted the importance of understanding suppliers’ capacity, constraints and motivations, and the pitfalls of failing to do so.
So how should public bodies engage with suppliers both now and in the (hopefully ‘normal’) future?
Many procurers think they have a reasonably good understanding of their existing suppliers’ capacity.
Not only do we get told all about it in tenders, but over time we learn what they can and can’t do, and what gets done by subcontractors instead. But this is almost always conditioned by the contract we have with them, and by the relationship built up during the contract award process and early implementation stages — which is often a slightly sour one. Just as procurers may discover they have capacity to do things in a crisis that they normally think they can’t, the same is true of suppliers.
Can companies with no prior experience of manufacturing medical devices build ventilators? Can distilleries make hand sanitiser? It seems they can, and will, in the right circumstances. Now think about the capacity not only of your existing suppliers, but of the entire market — including those without specific experience in the category of product or service you’re buying. Being able to tap into this outside of a crisis situation could increase innovation and reduce costs. It could also reduce reliance on a single supplier in strategic spend categories.
Formal approaches to market engagement, such as supplier events or questionnaires, can sometimes be less useful than informal ones: phone calls, e-mail exchanges or meetings on specific topics with individual suppliers.
You may find that you get a more candid account of bidders’ capacity and constraints using this approach — particularly if you speak to the people who will actually be involved in delivering the contract
As long as the same information is made available to everybody to ensure equal treatment, there is nothing to prevent public bodies from doing this. You may find that you get a more candid account of bidders’ capacity and constraints using this approach — particularly if you speak to the people who will actually be involved in delivering the contract. Market engagement should not be a one-way street. Sharing detailed information about your needs and aspirations as a public body is equally important. This means you may need to write a blog or article, use social media or speak at industry events about the specific challenges facing you in the public sector to get the word out there.
Tenders are also unlikely to give you an understanding of the constraints facing a particular company or consortium. In a society-wide crisis, companies are more open about their financial, technical, logistic and human resources limitations. Outside of this situation, such details are often closely guarded secrets.
As collapses of major outsourcing companies such as Carillion show, procurers are sometimes unaware of the serious strain a company is under — or feel unable to act on this information. So how do you get a true sense of whether a potential bidder is overstretched, or where their weak points may lie? One technique that can be adapted from the world of software development is planning poker, where suppliers are invited to estimate the resources needed to complete specific tasks that will form part of a contract.
By comparing estimates from different companies, you gain a realistic idea of the costs and time needed — which can avoid under- or over-resourcing a contract.
Just as people have different motivations to do things, the same is true of companies. For companies bidding for public contracts, reputational gain may be a key factor, i.e. being able to include you in their client list or promotional materials. In other cases, the motivation will be more strictly financial.
Behind corporate motivations lie many different individual motivations — and these can be even more influential in determining how well a contract will be performed. Understanding these motivations should be part of market engagement, as has been discovered by procurers left disappointed by suppliers of masks or emergency equipment who responded to better offers.
Ideally you should talk to a range of people in the sector. Their answers may surprise you
While trust and loyalty take time to build up, from the beginning you can build a picture of promotion and pay structures (including bonuses), as well as typical career paths in the industry you’re buying from. What do people value about their jobs, and how long do they tend to stay in a role before moving on? This will vary depending on whether you’re buying cleaning services, web design or vehicles. Online research can be a start, but ideally you should talk to a range of people in the sector. Their answers may surprise you — for example, flexibility in working arrangements and even the satisfaction of being involved in meaningful public sector projects may be key motivations.
By applying some of the lessons learned from procurement during a pandemic, public bodies can put themselves in a stronger position vis-a-vis their supply chains and avoid over-reliance on sole suppliers, unexpected market failures and poor performance. — Abby Semple
(Picture Credit: Unsplash)