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
• KHP 3B
Market sounding and stimulation
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:
FORWARD
COMMITMENT
PROCUREMENT
Anticipate future needs and
let the market know what,
when and how much
Demonstrate a
genuine intention to
purchase a solution
Procure a way that supports the supply
chain deliver and buy the solution when
it becomes available
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
4
Introduction
FCP 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”.
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FCP Process
Market 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.
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FCP Process Overview
This part of the KHP programme focuses on the second stage of the FCP process: Market Engagement
Identification
Market Engagement
Procurement
Recognise
problems and
unmet needs
Market
sounding
Procurement
strategy and
specification
Could FCP help
deliver a
solution?
Market
sounding
review
Implement
procurement
strategy
Establish
outcome based
requirement
Market
consultation
Purchase
goods or
services
FCP Process
Stage 1
FCP Process
Stage 2
FCP Process
Stage 3
Outcome
s
7
FCP Process
Market Engagement stage overview
Market Engagement
Market
Sounding
The market engagement stage can be broken down into
Three stages:
1.
2.
Market
Sounding
review
3.
•
Market
Consultation
FCP Process
Stage 2
•
•
Communicating your requirement to the supply
chain.
Assessing the state of the market and the ability of
the market to respond to the requirement.
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.
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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.
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FCP Process Stage 2
Market 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.
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FCP Process: Market Engagement Phase
Market Sounding
What do we mean by market sounding?
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”.
•
•
•
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.
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FCP Process: Market Engagement Phase
Market 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.
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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.
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FCP Process Market Engagement
Market 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).
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FCP Process Market Engagement
Market Sounding Prospectus
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
•
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.
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FCP Process Market Engagement
Market Sounding Prospectus
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.
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FCP Process Market Engagement
Market Sounding Prospectus
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?
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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.
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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 oneto-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.
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Market Sounding
FCP Process: Market Engagement Phase
Remember that there are three things you need before market sounding
can 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.
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FCP Process: Market Engagement Phase
Market 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.
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FCP Process: Market Engagement Phase
Market Sounding Response Form
•
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.
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FCP Process: Market Engagement
Market 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.
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FCP Process: Market Engagement Phase
Market Sounding Response Form
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
Demonstration Hydrogen Fuel Cell Bus in London
• A copy of the examples can be obtained
by request.
24
FCP Process: Market Engagement
Market 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.
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FCP Process Market Engagement
Market 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.
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FCP Process: Market Engagement
Market Sounding Communication Plan
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.
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FCP Process: Market Engagement
Market Sounding Communication Plan
Writing a Communication Plan
A 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.
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FCP Process: Market Engagement
Market Sounding Communication Plan
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.
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FCP Process: Market Engagement Phase
Market 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.
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FCP Process: Market Engagement Phase
Market 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.