Run an industry engagement
- Every industry engagement should comprise 9 steps.
- You should record all material and findings from the engagement in the Procurement Knowledge Bank (PKB).
- The PKB should be a resource for future engagements.
9 steps of an industry engagement
Every industry engagement should consist of 9 key steps. You should take 5 of these steps before you contact industry and 4 afterwards.
Before contact with industry
1. Define the procurement grouping
Define what group or subgroup of goods or services you’re targeting. What sets it apart from similar groups or subgroups?
2. Define the users
Consider which agencies and functions within agencies will be the end-users of the products or services you’re buying.
3. Understand the need and existing procurement approach
Analyse the histories, characteristics and features of the end-users’ needs. What’s their current approach to procurement and how do they specify procurement outcomes? Which suppliers do they use?
What opportunities and important features do the end-users identify in the industry? What strengths and weaknesses do they see in their current procurement approaches?
4. Analyse the industry
Consider the industry’s structural, economic, financial and competitive characteristics. Where and how does it add value? How do costs and prices behave? What are the sources of profits? Where are assets committed?
Who are the key competitors and what competitive forces are at work? Do SMEs have a competitive position? If so, how do they compete?
What are the points of competitive leverage and vulnerability? What are the key risks and who carries them?
5. Assess significant industry development and trends
Identify the significant trends in steps 3 and 4. What are the implications for the industry and your agency? How innovative is the industry and what nature does that innovation take? Could there be unexplored opportunities for innovation?
Add this information to the agency’s Procurement Knowledge Bank
Contact with industry
6. Meet face-to-face with suppliers
Meet face-to-face with existing and potential suppliers to explore steps 3-to-5 above. Approach them individually and ask them to share their knowledge with you.
Use simple questions and don’t display a lot of existing knowledge. Make sure you respect the suppliers’ confidential information and intellectual property and follow our probity and confidentiality protocols.
7. Update the Procurement Knowledge Bank
Now re-assess the information you added earlier in light of step 6.
8. Assess the potential for innovation
Consider whether you should change the agency’s needs in light of everything you’ve learned. What would be involved in getting that change accepted?
Is there potential for innovation in the product or service’s structuring, or in the scope of the outcome? How is the industry likely to respond to the innovation? What is the risk profile and how should risk be allocated? How will the parties involved react to the time frame and uncertainty involved in exploring the potential innovation?
9. Decide the procurement strategy
Consider whether you should you base the procurement strategy on a traditional ‘specification driven’ tender.
If so, what is the most appropriate structure for any tender? Could you change any elements of the tendering invitation, request, conditions or documents to make the procurement more cost-effective?
Could you use an outcomes-based procurement strategy?
The Procurement Knowledge Bank (PKB)
You should use the Procurement Knowledge Bank (PKB) as a record of all the material and knowledge you gather in an industry engagement. Creating a PKB takes time and resources, but you should find it relatively easy to update it if it's been well prepared.
The cumulative knowledge in a PKB can provide important insights for all your future procurement activities.
Your agency can determine the manner and form its PKB. Your Chief Procurement Officer or person in charge of the procurement function should be responsible for developing and maintaining it.
Be mindful that the PKB contains commercially-sensitive information and is an important resource in the procurement audit trail.