forward commitment procurement know how programme part 3 market engagement khp 3a: market sounding...

Forward Commitment Procurement

Know How Programme Part 3

Market Engagement

KHP 3A: Market Sounding and Stimulation

These materials remain the property of BIS. They constitute part of a ‘learning by doing’ programme and are unsuitable for stand alone use. They must not be used or passed to other individuals or organisations without

the express and written permission of BIS

2

Forward Commitment Procurement Know How Programme Part 3

Part 3: Market engagement phase • By the end of this module you will have implemented a

market engagement process.

Overview• KHP 3A Market sounding and stimulation• KHP 3B Market consultation

Activities and resources• Work through the PowerPoint slides.• Complete tasks and project activities.• Arrange a coaching and project review session.

3

FCP Process Overview

• Forward - Commitment - Procurement: all the words are significant:

• Success of your FCP project will involve

– changes in the way procurement is planned and implemented

– strengthening links between policy / operations and procurement

– being a demanding and credible customer

– actively creating the market conditions needed to deliver a solution

– tenacious project management

FORWARDAnticipate future needs and let the market know what, when and how much

COMMITMENTDemonstrate a genuine intention to purchase a solution

PROCUREMENTProcure a way that supports the supply chain deliver and buy the solution when it becomes available

4

IntroductionFCP Process Stage 2: Market Engagement

Market Engagement Phase

What?• The Market Engagement stage is the first step in actively creating the market

conditions necessary support the delivery of a solution. • This stage of the FCP process involves:

– communicating your unmet needs and requirements to the supply chain – in a way that supports and stimulates innovation, and – enabling and stimulating a response.

Why?• To provide the supply chain with a credible articulated demand. • Providing the demand pull that will stimulate the supply chain to deliver what

you need, when you need it, at a price you are willing to pay.“The overarching theme of early market engagement is the organisation stating the outcomes it needs to bring about, and suppliers giving feedback on how they might be achieved”.

5

FCP ProcessMarket Engagement Phase

• This stage of the FCP process involves making the unmet need visible and credible to the supply chain.

• It also involves providing a framework for potential suppliers to engage and respond to your requirement ahead of the procurement phase.

• Practically this involves:– communicating the outcome based requirement to the supply chain in a way that

maintains a level playing field and is open and transparent;– actively inviting (& stimulating where necessary) the supply chain to respond;– facilitating new connections in the supply chain; – actively consulting with the supply chain about how this might be delivered

technically and commercially, and about perceived barriers to delivery.

• How? The market engagement phase can be divided into 3 steps:• A formal Market Sounding process.• A review of the findings of the Market Sounding exercise.• Market Consultation activities.

• Timeframes? The Market engagement phase typically requires a period of 8-12 months.

6

FCP Process OverviewThis part of the KHP programme focuses on the second stage of the FCP process: Market Engagement

Establish outcome based

requirement

Could FCP help deliver a solution?

Recognise problems and unmet needs

Market sounding

Market sounding

review

Procurement strategy and specification

Implement procurement

strategy

Purchase goods or services

Identification Market Engagement Procurement

FCP Process Stage 1

Market consultation

FCP Process Stage 2

FCP Process Stage 3


requirement








requirement




requirement




requirement


requirement




requirement

FCP Process Stage 1




requirement

Outcomes

7

FCP ProcessMarket Engagement stage overview

The market engagement stage can be broken down intoThree stages:

1. Communicating your requirement to the supply chain.

2. Assessing the state of the market and the ability of the market to respond to the requirement.

3. Consulting with the market to discover the market conditions that are necessary to deliver the requirement.

• The process needs to carried out in a way that

demonstrates credibility and convinces the market that you are serious about buying a solution.

• Your task as project manager is to maintain momentum and manage the production and sign off of key documents.

• On a more subtle level, the process also provides a way to develop commitment internally.

Market Sounding

Market Sounding

review

Market Engagement

Market Consultation

FCP Process Stage 2

8

Market Engagement Phase

What outcomes can you expect from the FCP market engagement phase?

• The supply chain has advance notice of your requirement and the wider market opportunity it represents and has time and opportunity to actively engage in delivering a solution.

• You have a good understanding of what the supply chain is able to deliver, and the timeframes and costs involved.

• You have a better understanding of the market conditions required to deliver the unmet need, the risks that need to be managed and potential barriers that need to be addressed.

• Together this gives you a wealth of information and insights into the market place that you can use to write an effective procurement strategy - making the subsequent procurement process more focused, efficient and ultimately more effective.

• You have begun the process of transforming the marketplace to support the sustainable commercialisation of new products and services.

9

FCP Process Stage 2Market Engagement Phase

Contents

KHP 3A: Market Sounding• By the end of this module you will be able to carry out an FCP market

sounding exercise.

This module will cover:• Preparing a Market Sounding Prospectus.• Designing a response format.• Communication with the supply chain.

10

FCP Process: Market Engagement PhaseMarket Sounding

What do we mean by market sounding?

• Market sounding focuses on suppliers as a whole, rather than the merits of individual suppliers - at no point does it involve supplier selection or evaluation.

• The manner in which the market sounding is carried out is particularly important in FCP projects – the process needs to support the development of trust and credibility with the supply chain.

• As with all public procurement projects:– It is vital to ensure that the market sounding process remains open, and that

the suppliers involved are treated with fairness and equality. – All possible efforts should be made to preserve a 'level playing field' and the

process should be formally documented.

RECAP Definitions: Market sounding “Market sounding is the process of assessing the reaction of the market to a proposed requirement. Market sounding should begin at the earliest possible stage in the procurement process”.

11

FCP Process: Market Engagement PhaseMarket Sounding Prospectus

What needs to be in place to get the market sounding underway?Three things:1. A Market Sounding Prospectus setting out:

– your unmet need (the problem or issue you are addressing);– the requirement (in outcome terms);– the context (current situation, why innovation, drivers etc);– the procurement opportunity (scale and timeframe);– the wider market (who else has this unmet need).

2. A Response Form – to standardise the supply chain’s response.

3. A Communication Plan– sets out how your will inform the supply chain that the market sounding

is underway and how to stimulate a response.

12

FCP Process: Market Engagement Phase Market Sounding Prospectus

Putting together a Market Sounding Prospectus

• A market sounding prospectus is a formal document that will communicate your ‘credible, articulated, demand’ to the supply chain.

• Writing down what you want, why, and when in a formal document provides a useful focus for the FCP project team, and Project Manager.

• It helps to: – clarify and refine thinking on the requirement, drivers etc;– highlight any inconsistencies; – draw together information, often from different parts of the organisation;– brings concerns and barriers to the fore so they can be addressed; – confirms commitment from staff and managers.

13

FCP Process Market EngagementMarket Sounding Prospectus

Putting together a Market Sounding Prospectus• The Prospectus needs to:

– Provide the supply chain with the information it needs to understand the demand i.e:

• your specific requirement • the market opportunity that it represents in terms of direct sales, and• the scale of the wider public sector market opportunity.

– Convince the supply chain that you are a serious and credible procurer.– Provide the information needed for respondents to provide a meaningful

and considered response.– Explain the market sounding process, how the results will be used and

how this relates to future procurement. • (bear in mind that public procurement processes perplex many

suppliers).

14


• The market sounding stage is the first step in demonstrating to the supply chain that you have a genuine intention to buy an innovative solution and are a credible procurer.

• This credibility is essential if you are to convince the supply chain that to take you seriously and to stimulate a response to your requirement.

• To support this both the documentation and market sounding process needs to be formal and professional and focussed on a specific, time-bound procurement opportunity.

• This serves two purposes, as well as building credibility with the supply chain, a formal document and process reinforces the organisation’s intention to procure an innovative solution and provides a focus around which to build the commitment and buy-in.

RECAP“To use FCP as a tool you need to know what you want to achieve, be committed to achieving it and be able to convince the market that you really want it.” Jack Frost, EIAG Chairman

15


The Market Sounding Prospectus• What information do you need to include in the

prospectus?– Your requirement

• what do you need? – The context

• why is this important? what are the drivers?– Your timeframes

• when is the solution needed?– The opportunity

• what is the scale of the specific procurement?

• what is the nature and scale of the wider market?

• what are the routes to this wider market?– The process

• why you are sounding out the market, the process, and how it will be managed

“Flexibility over the content of the requirement at this stage provides the opportunity for unforeseen, innovative solutions to be proposed. A key to success is that discussions should centre on means rather than ends: you stay focused on the desired outcomes, while suppliers explain how they could help you achieve it.” Taken from: “Early Market Engagement” published 2006.

16


FCP Resources: Market Sounding Prospectus Template– This template is based on experience of previous FCP

market sounding exercises– It gives suggestions on structure and content.

Market Sounding Prospectus Example

• Rotherham NHS Foundation Trust Market Sounding Prospectus.

• ‘Future Ward Lighting Project’.

• A copy can be obtained by request.

Reading• Look through the document and consider how the document

would appear to a potential supplier.– What impression does it give?– Is this a credible procurer?

17

FCP Process Market Engagement Market Sounding Prospectus

The process of writing a Market Sounding Prospectus

• A typical approach to developing the Prospectus: – One person – normally the FCP Project Manager - drafts a ‘straw man’,

based on the unmet needs process and other discussions. – This is a draft document to provoke discussion and highlights where

information and input is needed from other people.– This draft document then provides the basis for other FCP Project Team

members to contribute and comment by email.– Meetings of the FCP Team provide a forum to discuss issues raised and

maintain engagement. – The final draft is signed off at an appropriate level.

• Before it is published it is essential that the organisation verifies it’s commitment to the content of the Prospectus at a senior level.

18

FCP Process Market Engagement Market Sounding

Project management

It is important for the FCP Project Manager to maintain momentum and keep to

the agreed schedule.

– This can mean chasing people for information and comments.

– Maintaining regular contact with the FCP Team, by phone email and one-to-ones helps keep everyone engaged.

– Keeping the project sponsor engaged and informed of progress makes the sign off process easier and makes sure that any issues that need to be referred up are done so in good time.

Remember

– One of the key success factors for an FCP project is tenacious project management.

19

Market SoundingFCP Process: Market Engagement Phase

Remember that there are three things you need before market soundingcan begin:

• Market Sounding Prospectus – Once you have completed the first draft you can begin work on

the other two supporting documents:

• The Response Form – to standardise the supply chain’s response.

• The Communication Plan– sets out how your will inform the supply chain that the market

sounding is underway and – how you will stimulate a response.

20

FCP Process: Market Engagement PhaseMarket Sounding Response Form

Designing a Response Form

• The response form provides a framework for :– the questions and requests for information you have about your

requirement; – focussing the supply chain on providing the information you are looking

for, rather than the information they are keen to provide;– standardising the supply chains response to make reviewing the

responses quicker and simpler.

• The response form may take the form of:– a list of questions included in the Prospectus; – a separate form to be completed and returned by email; – a web-based form.

21


• There are 6 key areas of information about the market as a whole that Market Sounding is commonly used to assess:

– Maturity: is the market ready to deliver what's required? – Feasibility: will the market be technically capable of meeting the requirement? – Competition: how many suppliers provide what is required; will procurement be

sufficiently competitive? – Capacity: are there enough suppliers, with sufficient capacity, to meet the requirement? – Working together: will the requirement bring suppliers from different sub-sectors

together in a new way? how will this work? – Traditions and prevailing attitudes: what are they in this market? how will they affect the

project?

• These are not questions you can ask suppliers directly rather you need to gather the information you need by careful formulation of questions in the response format.

• The themes can be explored further in the subsequent Market Consultation dialogue with suppliers.

22

FCP Process: Market EngagementMarket Sounding Response Form

Designing a Response Form

• A response form structure typically asks questions about:– the respondent and their place in the supply chain;– views on the ability of the supply chain to deliver a solution and meet the

requirements in the specified timeframe;– perceived barriers to delivery of a solution;– the market conditions required to bring the solution to market / be

commercially available, e.g. level of Forward Commitment required.

FCP Project Activity– Look through the different ‘response forms’ listed on the following slide.– Make a note of any comments or questions for your review session.

23


Response Form Examples

– Hydrogen Bus Alliance Market Fuel Cell Bus Consultation

– Rotherham NHS Foundation Trust ‘Future Ward Lighting Project’

– HMPS Zero Waste Mattress project– New Swindon Company Low Carbon

CCHP

• A copy of the examples can be obtained by request.

Demonstration Hydrogen Fuel Cell Bus in London

24

FCP Process: Market EngagementMarket Sounding Communication Plan

Writing a Communication Plan

• All the good work you have done in getting an FCP project developed to this point is wasted unless the supply chain (in its widest sense) is aware that a market sounding exercise is underway and knows how to respond.

• As a public sector organisation you will need to make sure, and be able to demonstrate, that the market sounding is carried out in a way that is open and transparent.

• A communication plan provides: – a focus for the Project Manager and FCP team to consider how they will

maximise the level and quality of the supply chain response, and – provides a record of your communication approach, showing that you

made every effort to be comprehensive and inclusive, open and transparent etc. and maintain a fair playing field.

25

FCP Process Market EngagementMarket Sounding Communication Plan

Communication plan

• A typical strategy involves:– Publish a Prior information Notice in the Official Journal of the

European Union (OJEU)– Engage and support supply chain intermediaries in

communicating to their networks that the market sounding is underway and let them know how to respond.

• Intermediaries are organisations that have links and networks in place to communicate to the supply chain(s) in question.

– Targeted communication to key supply chain members and integrators.

– Keeping key stakeholders informed and engaged.

26


Using Prior Information Notices

• PINs (Prior Information Notice) are an effective communication tool. • Many large and medium sized companies are linked to an OJEU alert

system.• This is perhaps less true for smaller companies and you may need to

pay particular attention to how this (important) sector can be reached.• PINs include details of the customer organisation, contact details and

a brief overview of the requirement including background, type of service, timescales etc.

• The content needs to be broad enough to allow for flexibility later. • The CPV codes you select should be broad and inclusive at this

stage to help reach all parts of the supply chain.• A copy of an example PIN can be obtained by request.

27


Writing a Communication PlanA typical structure for a communication plan:• Introduction

– purpose, responsibilities, implementation, timeframes.• Overview of the communication plan.• Communication to Stakeholders

– who, why and how– (including any existing suppliers).

• Summary of the supply chain components and communication routes.• Dissemination routes.

– Supply chain• targeted dissemination to individual companies.

– Dissemination via intermediaries.– Trade Press

• articles in trade magazines• formal advertising.

– Dissemination via relevant websites.

28


Developing a Communication Plan• The communication activities need to be proactive and find ways to get the message out to

the whole supply chain.• Think laterally and be inclusive in your thinking – innovation may involve new supply chains

being formed and links being established between previously un-related sectors.• Use of intermediaries is key to an effective communication strategy as they will have good

access to the supply chain and established communication routes.• Intermediaries include:

– Knowledge Transfer Networks– Trade bodies and Professional Bodies– Business Support Organisations – NGOs and interest groups– Regional Development Agencies

• The key with intermediaries is to interest them and point out the opportunity to their customer base and networks, simply sending them an email to circulate will not be as effective - speak to them and establish links with someone in the organisation.

• Make their job easy for them by providing a core text for them to adapt and send out to their network.

• Provide advance information to give them a chance to foreworn their members and include articles in newsletters, publications, e-newsletters etc.

29

FCP Process: Market Engagement PhaseMarket Sounding Process

Timeframes

• Typically, the market engagement phase takes 10 -12 months.• The market sounding phase typically takes in the order of 6 months.

– Market sounding documentation and planning: 8 weeks.– Market sounding period: 2-3 months (more can be helpful in some cases).

• This can be shorter - for example if your thinking on the unmet need and requirement is already well developed, and connections with the supply chain are well established.

• Beware of trying to rush this stage of the process as this will undermine the success and credibility of the FCP process.

• You need to allow a suitable length of time for the supply chain to hear about the opportunity and then to respond.

30

FCP Process: Market Engagement PhaseMarket Sounding

FCP Project Management• Project Schedule

– If you haven’t already agreed a project schedule, now would be a good to time to agree this with other project team members.

– Work back from the date that you need to have the solution available, or by when a decision on a solution needs to be made.

– Allow enough time for the market engagement and procurement phases.

– The procurement phase can take anything from 6-24 months, this can be longer depending on the nature of the technology, length of trials etc.

• FCP Project Activity– Think about your next steps and timeframes and draft an outline

project schedule with key milestones for discussion in your next review session.

forward commitment procurement know how programme part 3 market engagement khp 3a: market sounding...

Documents

market engagement process

market engagement stage

market engagement khp

fcp process market engagement

market engagement phase

supply chain

market sounding exercise

formal market sounding