Why You Need To Engage The Market Early In The Procurement Process
Engaging the market early in the procurement process is important if you want to maximise its effectiveness. Early engagement allows you to properly align your tender with the offerings and capacity of the market, as well as give suppliers time to prepare and increase the competition and responses for your actual tender.
What does it mean to 'engage the market'?
Unlike the early desktop analysis you should do before developing a procurement strategy, engaging the market involves contacting suppliers directly. Conducting interviews, questionnaires and site visits with suppliers is all part of market engagement. The intention is to learn more about what's available - such as any innovations or efficiencies the supplier can offer - before developing any strategies or tenders. It's an open dialogue with suppliers, a back and forth through which both parties have something to gain.
Market engagement is the next level of analysis above basic industry research, which while important and vital, can only tell you so much. No one really knows the services better than the suppliers themselves. Engagement with them gets you the intel about what local suppliers can provide, how their services are evolving and how they can supply to your specific requirements. Suppliers will also know if there's going to be a shortage of labour in that specific field, or if there's going to be material supply issues; basically, any problems that can have an impact on your procurement goals.
It's important for this engagement to always be done through a fair process - you don't want to give one supplier an advantage or a perceived advantage. Not only is it unfair, it can also damage your reputation with others in the market.
Engagement should be early…
Oftentimes market engagement pays most dividends when it's done early in the process. Doing so gives a full understanding of the market prior to developing a strategy or a tender. It's easy to go too far down the path of thinking you know exactly what you want and how you want it delivered. Yet without a discussion on the market's capabilities, there's a chance you could be going in the wrong direction - for instance, in asking the market for something it can't provide or that's outdated.
Another benefit to early market engagement is that it gives the market advanced knowledge of the opportunity, so they can plan to have capacity to respond to the tender. Too often you can throw something into the market and suppliers are simply too busy to respond, so they have no choice but to let the chance pass them by. Too many suppliers doing this results in a tender response with too few suppliers and, as a consequence, limited competition. Once again, it's important this process is done in accordance with probity - it's not fair for one supplier in a pool of many to get advanced warning while the others don't.
...but only if your strategy calls for it
While the benefits of early engagement are numerous, in some cases it doesn't need to happen until later in the process. Doing all your market analysis and engagement before you create a strategy makes it more informed. But in other circumstances where you need that next level of intelligence, market engagement can become a part of the tender, similar to requesting an expression of interest or running a multi-stage procurement. A supplier providing feedback as part of the formal process can give you just as much information as engaging them earlier via other methods.
What's critical, however, is understanding when to engage the market early or when to delay it to a formal process during the tender. Either way, an early decision needs to be made as to what timing works best for the specific project at hand. Decisions of this kind are something the team at Procurement Co can help your business get right. To learn more, get in touch with a member of our team today.