5 Reasons Early Market Engagement Will Land You a Better Deal
Getting the best deal doesn’t start and end at the negotiation table. Early market engagement can really help land you a better outcome.
Getting the best deal happens at the negotiation table right? Wrong.
There are simple steps you can take at the outset of a contract opportunity that will help you well before you pull up your chair at the negotiation table.
Defining Market Engagement
Market engagement can occur at many different points throughout the procurement process:
- Pre-procurement (engagement before the process) = early market engagement
- During the procurement = supplier briefings and managing questions & answers
- Post procurement = supplier debriefs and feedback
Early market engagement occurs in the pre-procurement phase and is defined by the Australian Victorian Government as “a strategic exchange of information with the market… that is focused on the collective market as whole (not individual supplier offerings and is conducted prior to formal procurement process.”
Early Market Engagement is a Gold Mine
While it might seem that Early Market Engagement is something of a no-brainer for procurement, it can be a hard sell sometimes for other areas of the business. Or even getting the support of your own management. The key is to get them onside with the reasons why it’s a good choice.
- Build market intel that helps you be a better buyer
Having your ear to the ground for the latest market trends, challenges and innovations can be lifesaver when it comes to that dreaded last minute tender requirement. Make sure you’re not only subscribed to procurement content like Procurious but also relevant market information as well, if you look after a transport category for example then follow transport news. Putting yourself in the shoes of your supplier and demonstrating empathy can help you build rapport, learn more about the little things that affect supplier relationships
- Test your specifications and scope
As you begin to learn about suppliers’ capability and unique selling points you can start to understand the different sub-sectors or specialisms within the category you are buying in. For suppliers to be successful they need to stand out and provide a service that is better than their competitor. Understanding the different sub-sectors can help you to sharpen up your specifications or scope and make sure you are speaking the markets language, not your own.
- Build relationships and increase your attractiveness to the market.
Early market engagement can be a great way to get to know the suppliers in the category you are buying in. With an early lead time you can get to know different sized suppliers, not just the big names. As suppliers get to know you, you can start to build trust and this helps to increase your attractiveness as a client. You want to be a client of choice so that you get the best quality responses. And always make sure you are nurturing your supplier relationships.
- More likely to receive higher quality bids
Suppliers are able to plan their workforce availability and ensure that their best people are free in time for your project. There is nothing worse from a supplier point of view than having a last minute tender bid and not having the internal expert available. You may also receive higher costs if suppliers are unable to undertake proper cost modeling and they may have to build the uncertainty into the risk profile and thus bump the pricing up.
- Less likely to fall into the trap of prescribing the “how”
When buyers operate in a vacuum with limited engagement with their supply partners, they can run the risk of not only identifying the need or requirement but also the solution. Early engagement with suppliers can help to shape your approach to the market without giving too much away. You can refine the language you use to suit the goods / services you are buying and you can ensure that you’re leaving the door for methodology wide open. If you want to hear what solutions the market can offer then let them tell you.
‘ Targeted opportunities that are not prescriptive, speak the language of the market and are released with time for the bidders to prepare – will lead to a better deal at the end of the process.’
Speed Date your Market
Why wait for an opportunity or requirement to come up to engage with people? Why not host an event where interested suppliers can meet the relevant prospective buyers. It gives the buyers a chance to talk at a high level about what may be coming down the pipeline and suppliers can showcase their expertise. It’s also a great chance to check in and see what innovations have taken place in the industry and what solutions they may have to outcomes or problems you’re seeking to solve.
These events don’t have to be large scale, you can achieve success with small scale events!
Tips for Getting Started
Loving the sound of hosting a meet the buyer event but not sure where to start? Don’t worry we’ve got you covered.
- Pipeline
Try firm up a pipeline of opportunities with anticipated dates that you’ll be ready. Get approval to release these and talk to suppliers.
- Undertake market research (Google companies)
Go through your top supplier list and undertake market research to see what type of suppliers you’ve used for these products / goods / services in the past and who else is out there. What innovations are happening in the sector that you could learn about?
- Alert people of the event
Post a notice on a tender platform for any interested suppliers to get in touch.
- Have the right people in the room
Organise internal experts and stakeholders to be available and make sure they are briefed for what the event is about and they are the right type of person (engaging, passionate, good with people).
- Keep it brief!
Keep the sessions to 30 minutes max and give the attendees an idea of what to prepare before they attend.
- Save their details
Add any attendees to your CRM or database and next time there is an opportunity be sure to send them a courtesy email to alert them.
Sound like too much? Go small…
Does organising an event sound like too much work? Supplier engagement can be as easy as picking up the phone or reaching out through email. Read these top tips for putting the love back into your supplier relationships
Looking to learn more about Supplier Relationship Management, then access this free training from Procurious on how ensure successful relationships in SRM.
