GEMS Guide to Effective Market Shaping fairly flexible and helps you to make an assessment on...

Procurement GEMS Guide to Effective Market Shaping

GEMS Guide to Effective Market Shaping

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Guide to Effective Market Shaping

GEMS Guide to Effective Market Shaping

Introduction to GEMS

Welcome to the Guide to Effective Market Shaping (GEMS). This is a set of techniques, processes and lessons learnt from working with public sector procurers and private sector suppliers to improve competition, capacity and the procurement process in three selected government markets.

It identifies issues associated with understanding demand; It compares these with the capability of the supply side to respond appropriately; and It helps to understand identified gaps and develop specific options to shape the market.

A high level dashboard is provided as a tool to help you assess the suitability of a particular market for undertaking a market-shaping project. To assist you, the dashboard is applied to three markets as case studies.

Where there are other authorities better placed to describe an approach used in GEMS, then that is referenced for you to follow up separately. For example, Programme and Project Management will not be described in detail here but links are provided to advice elsewhere on the OGC's website. GEMS, including the case studies, was first developed in 2006 and reviewed in 2009.

Overview GEMS is a tool for helping the public sector to strategically manage its key markets better. GEMS will help you to get to a better solution, but it is not a substitute for longer-term planning and signalling to the market what is coming.

GEMS will be particularly useful to strategic business decision makers in a position to take and influence a whole market perspective, engage suppliers and procurers and work with them. Suppliers will also gain an understanding of how they too can make the market work more effectively for their public sector customers.

By following the ideas and approaches described in GEMS, the following can be obtained:

Outcomes

A more responsive market for the public sector; Adoption of a systematic and strategic approach to markets within which the public sector operates; Greater security of supply and less overall dependency on particular suppliers; Better dialogue with the supply side on demand requirement, leading to improved capacity planning for

bidding and delivery by suppliers; Earlier supplier engagement and improved lead times ensuring a greater likelihood of innovative solutions

from suppliers; Increased capacity and competition, leading to better value for money.

Deliverables

A collective profile of planned and actual public sector demand and spend within the market; An understanding of the market capability to respond to the demand;

2 GEMS Guide to Effective Market Shaping


Clarity on what needs to be done to address the gap between supply and demand - a set of recommendations for market shaping;

A mechanism for better, sustained management of the market, through structures for monitoring and addressing problems;

Opportunities identified for collaboration and better procurement processes; Proposals to reduce barriers to market entry (if relevant).

What problem is being solved?

GEMS is not a panacea for all market ills. GEMS is about one aspect of market design - there are other aspects e.g. how aggressive do you want the competition to be?

However, there are circumstances in which the public sector needs to establish a collective view and understanding of the demands it is placing on the supply-side. A number of factors can influence the decision to undertake market shaping. These include:

Purchasing power. The public sector can have significant purchasing power in a market, whether individually or when considered collectively. Major variations in overall demand by the public sector will impact on the capacity of suppliers to respond appropriately in a market.

Importance to the market. The public sector may be a major customer of key suppliers in the market. Supplier resource constraints. Suppliers' resources required to respond to public sector demand are

non-substitutable, i.e. they are often limited in availability and cannot easily be replicated or transferred from other areas (e.g. bid teams, key technical staff, specialist supplies or equipment). If we can achieve a balancing of demand for the market then smoothing out the load on these resources will enable suppliers

to address a higher proportion of procurements from Central Government and the Wider Public Sector. Forward Plans. Public sector demand is subject to strong peaks and troughs, and political uncertainties.

By sharing information on long-term demand and supply we will enable industry to accommodate changes in demand, and give the public sector notice of the impact of variations on the capacity of suppliers. When sharing information, care should be taken not to facilitate collusion amongst suppliers.

Closed Market. Where there is a lack of competition in the market, improvements in information exchange about demand and supply will provide better and earlier visibility of opportunities in the public sector market place.

If any of the above is prevalent then a strategic approach to market management using GEMS ideas and concepts may be desirable. This can be considered as an exercise in Risk Management.

GEMS Dashboard

The GEMS dashboard provides a visual high-level presentation of the market being considered. It is therefore fairly flexible and helps you to make an assessment on whether a market is suitable for a GEMS intervention.

GEMS Dashboard and Market Shaping

GEMS Guide to Effective Market Shaping 3


What is the GEMS Dashboard?

The dashboard is a high-level pictorial framework for helping you to determine whether GEMS should be applied to your market:

Initiation: Use the dashboard to determine if a market has characteristics that might make it suitable for intervention to improve public sector procurement,

GEMS programme: Use the dashboard to monitor progress as the programme of work investigates and develops its approach to changing the market,

Closure: the dashboard will indicate the degree to which the market will be changed following the successful conclusion of the GEMS programme.

How to use the GEMS Dashboard

There are four main dashboard parameters:

Market: shows whether the market is suitable for GEMS, Approach: shows whether your approach is / will be right for this market, Deliverables: checks that you are focused on achieving the market shaping results, Outcomes: these show the desired results of your market shaping.

Each parameter has suitability criteria, which can be assessed as: highly suitable (GREEN) or unsuitable (RED):

Market Approach Deliverables

Outcomes

Market

Market High Suitability Low Suitability

Public Sector Market size Large (£bn) and/or

PS is a significant customer

Small and/or

PS not a significant customer

Supply capacity A shortage, or,

Supply is acutely sensitive to changes in demand

No shortage

Capacity can absorb changes in the market.

Degree of competition Insufficient competition (in terms of the number and availability of suppliers) to meet the public sector need

Sufficient competition.

Predictability of demand Unpredictable demand,

Demand plans not visible to the market

Predictable demand, less subject to variation

Transparent

Substitutability of skills Specialised skills required, with a long lead-time to develop them

Little specialism required, short lead-time to skill-up

Statutory obligations The government is obliged There is no government



to provide services from this market to citizens.

obligation.

Government Policy Initiatives Government policy initiatives will significantly impact the market

No Government initiatives, or

Would not significantly impact the market.

Implementability Key stakeholders will actively support a review

Key stakeholders will not welcome a review

Approach

Approach High Suitability Low Suitability

Board level support and

ownership of this programme

There is Board authority to proceed

There is subsequent active Board involvement in the process

Little / no visible Board support

No board member participating

The market has synergy with

your business objectives

Compatibility with strategic objectives

Business has the capability to engage with the potential market at operational and tactical level

No discernable business benefits or opportunities

Programme appropriately organised and resourced for this market

Study scope appropriate to size of the problem

Access to knowledge, expertise and skills

Sufficient staff assigned to the programme

"sledge hammer"

"under powered"

Required to establish an

understanding of Demand and Supply and to propose ways to improve competition and capacity in this market

Improving public sector procurement

Improving supplier role in this market

demand plans can be compared with supply capability

Intended for longer-term planning and high-level market design

Deliverables

Deliverables High Suitability Low Suitability



Public sector spend and

demand profile for the supply side

Derived from a comprehensive survey that has generated a good response

Actual expenditure and projected demand plans

Derived from an inadequate survey or low response rate

Extrapolated / interpreted data used

Recommendations for a better market approach

Active support from key stakeholders

Implementation taken forward by (some) key stakeholders

Have not been agreed or taken forward by key stakeholders

Not supported by the underlying research

Structures / groups for taking

forward recommendations

Structure(s) in existence to take forward

Senior people participating

no means to take forward

difficult to gain senior people attention

participants too low level

Outcomes

Outcomes Likely Unlikely

A more responsive market for the

public sector requirements

Market amenable to 2-way exchanges of demand and supply intelligence

market willing to address capacity issues

Levers for change exist

Market not responsive to suggestions for change

No mechanisms apparent for effecting change

Reduction in overall dependency of

public sector on a small number of

suppliers

Potential for additional players

Suppliers from outside the market see cross-over opportunities

Supply-side unwilling to see opportunities for change

Market is highly specialised

No short-term opportunities for new players

Better interworking between key

stakeholders

Better early two-way communications

Process possible for the exchange of requirements with industry

Few opportunities for improvement

Nothing changes

For each criterion, you can assess the key factors that affect suitability; review the criteria for that parameter; or draw an overall judgment about suitability i.e. is this parameter mainly Green or Red? Or if an Amber applies - i.e. there is some ambiguity that needs further understanding prior to making a Green or Red judgement.

You then repeat this process for the other three parameters.



Collect the four "traffic lights" into the high level picture (example overleaf) of whether you have a market to work with. Ideally, they will be all Green before you proceed. A more realistic scenario is that you may decide to proceed if the overall picture is predominately Green.

In the example below, the Amber status applied to the Approach parameter reflects the equal spread of Green and Red after assessment.

Examples of GEMS dashboards

To illustrate this approach, OGC examined three markets and applied the dashboard retrospectively to each one:

Construction Waste Management Independent Sector Treatment Centres

These are illustrated in the following sections


http://www.ogc.gov.uk/guide_to_effective_market_shaping_gems_first_kelly_market_-_construction.asp

http://www.ogc.gov.uk/guide_to_effective_market_shaping_gems_second_kelly_market_-_waste_management.asp

http://www.ogc.gov.uk/gems_dashboard_and_market_shaping_third_kelly_market_-_independent_sector_treatment_centres_istcs.asp


Case Studies

The individual dashboards of the following three case studies above represent the thinking required to be sure that the intended market had been appropriately appreciated and understood.

First Kelly Market - Construction


Public sector market size

Large - £several billion per annum

Public sector is largest single client

at 31% of total

UK wide

N/A

Supply capacity

Pinch points exists in different

regions -Supply is sensitive to

changes in demand

N/A

Degree of competition N/A Considered adequate

Predictability of demand

Wide variations in demand

Demand plans not visible to the

market

Opportunity for demand smoothing

N/A

Substitutability of skills

Critical to project success

Skills UK-based

Long lead-time to develop such

skills

Potential for some substitutability

between projects

Statutory obligations Infrastructure needs N/A

Government policy initiatives Major programmes in place -

N/A



Health, Education, Highways

Several Health policy initiatives

which will significantly impact the

market

Implementability Support from Key suppliers Potential for some Key stakeholders to

oppose work


Board level support and ownership of

this programme

Top of the Office authority to proceed

On-going participation in the process

Ministerial oversight

N/A

The market has synergy with your

business objectives Compatible with strategic objectives

Qualified support from major

departments

Programme appropriately organised and

resourced for this market

Extensive consultation with supply-side

Establishment of Construction forum Non-public sector projects excluded

Required to establish an understanding

of demand and supply and to propose

ways to improve competition and

capacity in this market

Access to demand profiles

Data collection systems established

Non-public sector data excluded

Very large projects may bias findings


Public sector spend and demand profile

for the supply side

Comprehensive survey of major

construction programmes

Actual expenditure and projected

demand plans

N/A

Recommendations for a better market

approach


Implementation taken forward by key

stakeholders

Lack of full appreciation of

characteristics of the market

Structures/groups for taking forward

recommendations

Market management group established


N/A



High market visibility


A more responsive market for the public

sector requirements

Scoped for addressing capacity issues

Levers for change exist Demand /

Capacity model

N/A

Less dependency of public sector on a

small number of suppliers

Improved lead-time planning Innovative

ideas from supply side N/A

Better interchange between key

stakeholders Better early two-way communications N/A



Second Kelly Market - Waste Management


Public sector market size Large - £2.4bn in 2005/6

Public sector is a significant buyer N/A

Supply capacity

Landfill declining in availability

Alternative disposal methods

underdeveloped

Steady increase in demand

Waste disposal acknowledge as biggest

problem

N/A

Degree of competition

Insufficient competition - only a very few

major players

Opportunity to encourage other players

into the market

Imbalance between aspects of the

market

N/A

Predictability of demand

Very predictable demand growth

Demand plans not visible to the market

Flow of information to supply-side poor

N/A

Substitutability of skills Specialised skills required for operational

activities

Construction skills available for

infrastructure work

Statutory obligations

Local Authorities are responsible for local

waste management

Legislation on disposal organisations

EU Regulations binding on LAs

N/A

Government Policy Initiatives

Defra Waste Implementation Programme

initiatives

Also, WRAP

N/A



Implementability

Defra supportive

Strong support from Key stakeholders

Suggestions forthcoming from supply-

side

N/A



this programme



Ministerial awareness

N/A


business objectives

Compatibility with strategic objectives

for policy lead N/A



Team established according to problem

domain

Full set of skills obtained for the work

Excluded non-public sector waste

streams


of Demand and Supply and to propose



To ensure supply improved to meet

demand

Building an improved procurement

approach

N/A



for the supply side

Derived from a comprehensive survey of

71% of Waste Authorities

Actual and projected demand plans

N/A


approach


Implementation taken forward by Defra,

as key stakeholder, as part of new

Waste Infrastructure Development

N/A



Programme

Better advice for Authorities on disposal

methods


recommendations

New Waste Infrastructure Development

Programme (Defra)Senior people

participating

N/A



sector requirements


Levers for change exist N/A



Additional players potentially Cross-over

opportunities N/A

Better interworking between key

stakeholders

Potentially better early two-way

communications N/A



Third Kelly Market - Independent Sector Treatment Centres (ISTCs)


Public sector market size

Large - £2.5bn over 5 yrs

PS is a significant customer

N/A

Supply capacity

A shortage of specific health procedure

delivery

Supply is very sensitive to changes in

demand

N/A

Degree of competition

Insufficient competition (5 major

suppliers only)

Opportunity to encourage other players

into the market

N/A

Predictability of demand Demand plans not visible to the market Predictable demand

Substitutability of skills

Specialised skills required

Need to meet NHS standards

Long lead-time to develop such skills

N/A

Statutory obligations Need to maintain NHS provision to

citizens N/A

Government policy initiatives Several Health policy initiatives will

significantly impact the market N/A

Implementability Mixed support from Key stakeholders Potential for some Key stakeholders to

oppose work





this programme



Ministerial engagement

N/A


business objectives Compatibility with strategic objectives. N/A



Team established according to problem

domain

Full set of skills obtained for the work

N/A


of Demand and Supply and to propose



To ensure supply improved to meet

demand

Building an improved health sector

procurement approach

N/A



for the supply side

Derived from a comprehensive survey

Actual expenditure and projected

demand plans

Data aggregated from many sources

Extrapolated / interpreted data used


approach

Active support from major stakeholders

Implementation taken forward by

(some) key stakeholders

N/A


recommendations

Structure(s) in existence to take forward


Health market has many professional

representative bodies





sector requirements


Levers for change exist

Other political and policy objectives too

Many different levers in different parts of

health market - potential for conflict?



Additional players potentially Cross-over

opportunities

Innovation opportunities

Momentum needs to be maintained -

else retrenchment possible

Better interchange between key

stakeholders Better early two-way communications

Not all pressure groups in support of

market shaping



Getting the best out of GEMS

There are issues that relate to the running of a GEMS programme. Some of these are related directly to the nature of the programme itself. Others are considered to be "cross-cutting" issues i.e. influences sourced from outside the programme that should be considered and integrated into the GEMS management approach.

A GEMS programme will focus its activities on those areas that contribute to the key outcomes of:

Increased competition; A more responsive market; Greater security of supply; Reduced dependency on a limited group of key suppliers.

The GEMS process Get buy-in and commitment to onward involvement from the sponsor; Decide whether you have a programme or project to undertake; The collection of demand and supply data requires careful planning - particularly regarding what, when,

how (collected and stored) and from whom; Issues regarding questionnaire design, data confidentiality and Freedom of Information should be carefully

thought through; The need to consider how, in future, better data can be systematically collected, collated and shared.

Market design

You will have to do some hard thinking about your motives, the nature of the marketplace and what you wish to achieve. There are also high-level market design considerations you may have to take account of:

High-level considerations Market creation Predictable demand Competitive neutrality Innovation through procurement

These are described below.


http://www.ogc.gov.uk/getting_the_best_out_of_gems_high-level_considerations.asp

http://www.ogc.gov.uk/getting_the_best_out_of_gems_market_creation.asp

http://www.ogc.gov.uk/getting_the_best_out_of_gems_predictable_demand.asp

http://www.ogc.gov.uk/getting_the_best_out_of_gems_competitive_neutrality.asp

http://www.ogc.gov.uk/getting_the_best_out_of_gems_innovation_through_procurement.asp


High-level considerations

High-level design issues to be considered include:

The requirements for ensuring adequate competition e.g. specification of outputs or inputs and contract length;

The scale and scope of contracts. The degree of aggregation and/or collaboration appropriate from an economic viewpoint;

The levels of in-house provision - consideration of the positive and negative effects; Whether there is a need for suppliers to have access to key facilities; and Identifying where collusion is more likely, so that it can be prevented.

These issues and further information on how they can be assessed are covered in Assessing the Impact of Public Sector Procurement on Competition - OFT, 2004.

On the next pages, you will find specific areas that have proven both relevant and particular to guiding a market towards responses expected.

Market Creation

At a strategic level, if you wish to create a new market or develop an immature one, you have to know:

What you are trying to achieve, How you are going to communicate that to all market players, The nature of supply and demand in this market,

The constraining factors that make the market under-perform, The opportunities for improvements to the market; and The business risks to both supply and demand side, and have more than an idea on how to address them.

Reference

Further advice and guidance can be found in OGC’s guidance: Market Creation and Development

Predictable Demand

How to improve predictability of Public Sector demand e.g. could earlier engagement between the client and suppliers be improved before planning?

Early two-way communication encourages industry to get ready to meet demand, as public sector initiatives and policies change over time. It also gives industry the opportunity to highlight any possible effects of a policy change on existing markets, allowing you to respond appropriately. Strategic engagement can take several forms including:

Public/Private Reference Groups Horizon scanning Market sounding.

There should be a two-way understanding of the drivers that motivate both sides e.g. key objectives and national and regional strategies.

Reference: Early Market Engagement – Principles and Examples of Good Practice, OGC 2006


http://www.oft.gov.uk/shared_oft/reports/comp_policy/oft742a.pdf

http://www.oft.gov.uk/shared_oft/reports/comp_policy/oft742a.pdf

http://www.ogc.gov.uk/policy_and_standards_framework_market_management.asp

http://www.ogc.gov.uk/policy_and_standards_framework_market_management.asp


Competitive neutrality

How to build and sustain competitive markets in an environment of increased devolution of accountability i.e. ensuring competitive neutrality.

The issue here is that when the public sector creates a mixed economy, by allowing public, private and voluntary organisations to compete, then competitive neutrality policy insists there should be no discrimination against operators with different ownership structures or against public sector providers.

Working jointly with OGC on waste management, the Office of Fair Trading (OFT) found that discrimination, either actual or perceived, could impact on competition. It specifically recommended fair competition between in-house and private sector bidders, in its report referenced below.

Innovation through procurement

What can public sector competition and market competitiveness do for innovation and continuous improvement?

This is not just about 'big bang' high technology change, but also improvements in process and procedure. The following factors, for consideration, may encourage innovation:

Identify the key suppliers and understand the market place, Be aware of forthcoming developments, Early and continuing dialogue with potential suppliers, on their product /service developments and plans,

Signalling demand plans and profiles for known and anticipated requirements, Use outcome specifications to avoid constraining the solution, by detailed specification. Allow the market

to respond with its solutions, Consider developing a formal structure / process to call for and collect new ideas and innovations, Be willing to take and manage risk - your organisation's appetite for risk could limit the potential, Use competitive dialogue to explore the solution with potential suppliers.

Reference: Driving Innovation through Public Procurement (PDF, 3.9MB)


http://www.ogc.gov.uk/documents/OGC09-0679_InnovationBrochure.pdf


The Process Steps

Step 1 – Initiation

Initiation is about establishing a programme of work to effect the strategic shaping of the market. The skills, techniques and approaches of Programme Management will be applied - but these will not be described here, see the OGC website. The dashboard provides a framework within which to gain an understanding of the factors affecting the market, what information is needed, as well as the policy and legislative framework in which the market operates.

A case will be developed for your market-shaping programme. It will set the scope, boundaries, aims and objectives for the market involvement. It is also about identifying key stakeholders, describing their roles in the programme and developing a communications strategy.

Detectives (and auditors!) are advised to "follow the money". Identifying the money flows will provide a useful insight about the market's function and behaviours.

Once a holistic appreciation of the market context is gained, develop a stakeholder strategy with a supporting communications strategy.

Apply the GEMS dashboard

One of the first steps to be taken is to apply the dashboard to determine whether a GEMS programme is appropriate. The initial exercise will address each of the dashboard parameters, to provide a basis for an assessment.



Policy context

Any attempt at market shaping will require a good understanding of the policy context of the market:

Statutory framework with its obligations for the public sector - develop an understanding of the statutory framework in which you and your suppliers operate, to fully understand and appreciate the issues affecting the market and how they interact. It will also provide an insight into private sector behaviour and how to elicit a response appropriate to the direction you may wish to take in market shaping.

Regulatory framework, if one exists, may add further issues for consideration - and the private sector may have self-regulation too.

Various initiatives aimed at public, voluntary or private sector organisations - delivered with intent to influence the market being considered. These could be from several sources - International, EU, UK Parliament, UK departments and national assemblies.

It is important to understand how these various policies, initiatives and obligations interact to shape the market, so when looking at the construction market, OGC was involved in an initiative based approach. On the other hand the waste management market involved all three areas and hence was much more complex.

It could be useful to compare the policy framework in other countries, particularly where there is a healthy level of competition and capacity. By understanding what makes these markets work well, you can apply their lessons learned to your market. For example, when developing a market for the Independent Sector Treatment Centres (ISTCs), the Department of Health examined the approaches of several countries to involve the private sector in public sector healthcare.

Other sources for further information on policies likely to affect the market include:

The lead department for the market - e.g. DfES for education, DCLG for Local Authorities, Defra for

environment. Prime Minster's Strategy Unit - works with government departments and external stakeholders on a

broad range of domestic policy. The Regional Improvement and Efficiency Programme - established to support the implementation of

the National Procurement Strategy and the delivery of council efficiency targets. Further information can be found on the OGC website.

Stakeholder strategy

Strong stakeholder management skills are essential to the success of the market shaping activity. A strategy should be developed to work with the key market players. To do this, establish a good understanding of their role and influence in the market, their aims and objectives, and their ability / desire to support your work.

Establishing a comprehensive stakeholder strategy with a supporting communications plan was critical for the waste management study, given the large number and range of interests of the stakeholders. Information regarding major procurers and suppliers within the market may be obtained from a number of sources:

The procurement function(s) - they should be able to provide details of current suppliers, suppliers previously invited to tender, and other suppliers in the market. This is a starting point for widening knowledge of the market, their competitors, and related markets.

Other government departments - such as the Department for Trade and Industry (BERR), or public sector organisations operating in the same market, can be good sources of information and may deal with different suppliers in the same market.

OGC’s Markets and Collaborative Procurement Team - Collaborative Procurement category teams help the public sector get better value from its spend on goods and services across a wide range of


http://www.strategy.gov.uk/

http://www.idea.gov.uk/idk/core/page.do?pageId=8595264

http://www.ogc.gov.uk/index.asp

http://www.ogc.gov.uk/delivering_value_for_money.asp


categories. Each category team has a pan-Government strategy and is dedicated to finding better deals to help organisations save money. Details of current deals can be found on the OGC Contracts Database

Buying Solutions - operates a number of catalogues and framework arrangements for various products and services; one or more of these may be relevant in the market being investigated.

Trade associations / industry bodies (see Trade Association Forum). Most markets will have at least one industry body and reputable suppliers will usually belong to one or more of these. The Internet and specialist consultancy firms may help in identifying other sources of demand and/or other suppliers in the market.

The media and specialist press can provide additional sources of information.

Suppliers have other customers as well as the public sector. Hence it is important to assess the supply/demand profile created from within the private sector for your market.

Communications plan

Once you understand the spectrum of stakeholders associated with the market, develop a communications strategy and supporting plan. This will cover:

The objectives of the communication strategy; The target audience of the programme; Communication proposals; Evaluation and feedback mechanisms; and Responsibilities within the team for the communications strategy.

Communication and consultation will play an integral part in ensuring the extent to which the

recommendations of the research and analysis phases are implemented and, to some degree, their level of success. You must inform, energise and encourage programme partners and stakeholders in the goals, direction and progress of the programme. Success requires high levels of engagement with all stakeholders - internal and external.

The more complex the demand side in terms of the number and nature of key stakeholders, the more difficult it will be to effect change. This will impact upon how stakeholder management is undertaken and the level of commitment required.

Making the case for market shaping

One key document from the initiation phase is your business case. This will set out the drivers, aims and objectives of the work, define the scope and boundaries of the work and identify measurements of success of the programme.

A GEMS programme will focus its activities on those areas that contribute to the key outcomes of:

Increased competition; A more responsive market; Greater security of supply; and Reduced dependency on a limited group of key suppliers.

Trigger

The trigger for each of the OGC's three Kelly markets was different. However, the basis remains the same - it required a significant "event", for example, regulatory cost impact (Waste), imbalance of demand over


http://www.ogcbuyingsolutions.gov.uk/about/about.asp

http://www.taforum.org/


supply (Construction) or a need to create a new market (Independent Sector Treatment Centres), which attracted the attention of the public sector decision makers.

The trigger for becoming involved will have to be clearly explained with a good set of potential benefits identified.

Scope

The market shaping exercise will need a clear and agreed scope. The boundaries of the programme will be defined and will depend on the market being investigated.

You must also be clear about the nature of the market and your reasons for engaging with it. Is it:

New / emerging? (e.g. the third market that OGC reviewed - Independent Sector Treatment Centres) - there is a need to directly encourage the development, from scratch or small beginnings, of a market.

Established? (e.g. the first market that OGC reviewed - Construction) - a well known and well defined market that you believe will benefit from a "prod" in the right direction to release additional value for money for the public sector.

Evolving? (e.g. the second market that OGC reviewed - Waste Management) - a market not responding in the way required.

Declining? - a perception that the market is tired and needs a boost to secure public sector value for money is maintained.

Agree boundaries and scope

In scoping the market, define the boundaries on the basis of the following key criteria:

Market size - how large is the market (or parts of the market) and is the public sector a major purchaser? Consider limiting scope to those areas of the market where the public sector is a major purchaser, as influencing the market becomes more difficult if the public sector is seen as a smaller client.

Are there any variations in demand within the market, or within specific sectors, and what are their underlying causes? For example, in the waste market, demand was seen as relatively predictable, however, changes in EU legislation (for example, concerning landfill sites for hazardous waste, or, the need to increase recycling facilities over the short term, etc.), coupled with lack of information flow, could create spikes in demand which could catch local authorities and industry by surprise. Priority should be given to areas where demand is most unpredictable.

Are there supplier capacity issues within the market? Are there parts of the market where supplier interest is declining and what are the reasons for this? It may be necessary to look at similar markets further afield if suppliers are being attracted by more lucrative contracts on the continent or worldwide.

Are there parts of the market where bidding is constrained by available resources, leading to cherry picking of contracts by suppliers? Is there a lack of specialist knowledge?

What is the level of competition and is there (as in the case of waste management) a supply chain in which some suppliers provide a completely integrated service (holistic waste management service), whilst others provide only one specific part of the service (for example, waste collection only)? This will have a bearing on the way data is collected and analysed.

Are there regional variations in demand? What is the policy and legislative framework in which the market operates?

Benefits realisation and measurement

This is a programme that will have both hard and soft objectives that are achievable over time and after the investment of resources. You will need to develop measurements that reflect short, medium and long-term benefits.



At the very least you will need to establish measures that reflect:

Why you are entering the market; What you expect out of influencing the market; How the process will work; and What benefit profile is anticipated.

Reference: Business case management in OGC's Document Library.

Step 2 - Research

This stage of market shaping exercise is perhaps the most vital of all areas and will also be the main bulk of the work to be undertaken.

The research phase will establish:

Who: Who you need to contact in public and private sector organisations that are the prime demanders for market services. Also, the suppliers, the main industry bodies, potential new entrants and key public sector policy makers/implementers.

What: What data these contacts will be able to provide. Supply and demand information is relatively self-explanatory information to capture. Other key information that may effect your market could be held by less likely contacts.

Where: Where these contacts will / can be found. Demand and supply contacts can easily be established by contacting relevant public bodies or trade associations. For contacts that are less obvious, asking the question "Is there anyone you believe I should be talking to?" when making contact with demand and supply

stakeholders is a proven method of finding links.

When: What are the regulatory deadlines (e.g. EU Landfill Directive for waste)? Is there planning underway for significant projects with a major impact on the market (e.g. winning the Olympic bid extended the horizons to beyond 2012).

You will also need to undertake further desk research into underlying market issues that will be of importance. These may include legislative impacts and funding issues. Additional issues will arise as you establish contacts in your market.

From your research you will be looking to established the following:

Market shaping activity (demand side) - focuses on developing a baseline of demand side requirements through a data collection exercise with significant public sector demanders as identified in the scoping phase, storage and analysis of this data.

Market shaping activity (supply side) - includes identifying barriers to market entry, market creation and data collection on the existing supply base. In particular it will look at competition issues and include an assessment of the capacity gap in relation to meeting demand side requirements (including those of the private sector).

Demand and supply matching - develop scenarios for better strategic management of the market and demand and supply matching activity. For the construction and waste markets, this will involve workshops with demand side, key industry players and academics. Workshops can help to inform final market shaping


http://www.ogc.gov.uk/delivery_lifecycle_business_case_management_.asp


proposals including opportunities for aggregation, collaboration and intervention. An objective is to publish high- level public sector demand data to inform both the public sector and industry and enable early decision-making and business planning.

Supplier intelligence - obtaining and maintaining supplier intelligence including financial status and market share. This could include one or more industry surveys.

Procurement routes - this will involve identifying any procurement related barriers currently faced by projects and developing a strategy to address these.

Private sector - research into private sector demanders within this market.

Who else has done something similar?

It is imperative that there is an awareness of similar activities being executed or planned by other bodies. Key lessons can be combined with your market shaping if this has already occurred or a joined up initiative can be synchronised if one is planned.

If a combined approach is adopted, other bodies may have input into market issues that could have been overlooked during the scoping of your market. Also, the amount of data requests to key market players can

be significantly reduced by this synchronisation.

Bodies that may have undertaken or are planning work in your market:

Academia: Many universities / colleges etc have specialist schools that focus on particular markets, examples include the University of Bath's Centre for Research in Strategic Purchasing and Supply (Crisps) and the University of Loughborough's European Construction institute. These bodies often undertake independent research that can feed into market shaping. The representatives of academic bodies will also have a good understanding of your chosen market and can provide relevant contacts for your data collection exercise.

Other Public organisations: Be aware of similar activity being undertaken by other public sector bodies, these may include central government, local authorities and the nine Regional Improvement and Efficiency Partnerships.

Consultancies: Consultancies regularly undertake studies, which may relate to your market. Data is recorded and reports are often published that may be able to feed into your study. Consultancies can provide a useful source of experience and may be able to inform your research.

Trade Associations / organisations: Trade associations hold a vast amount of data on key industry figures. They have networks of suppliers and will be able to provide contacts to these companies. They may also be able to inform you of similar activity/ data requests coming from other bodies. Trade associations exist for most markets and many can be found using the Trade Association Forum supported by BIS. Also, Internet searches can provide information on market sectors trade associations if the trade association forum does not hold any information you require.

Other countries: Other countries may have undertaken some market shaping work in your chosen market. Although this information may offer an insight into the processes undertaken, the desired outcomes of the work may differ and should only be considered if you are looking for an international perspective. This approach would be particularly useful if for instance you are viewing other countries activities in response to a European Directive, looking at suppliers capacity to meet public sectors demand levels and in turn meeting targets set by directives.


http://www.rcoe.gov.uk/rce/core/page.do?pageId=1

http://www.rcoe.gov.uk/rce/core/page.do?pageId=1

http://www.taforum.org/


Suppliers' perspective

To only take the public sector view of the market place is to have a very one-sided perspective. Hence, the GEMS process includes involvement of the supply-side as key stakeholders.

Process(es) identification

The market will be characterised by processes that suppliers use to ensure they can meet the demands being placed upon them by their customers. They will also manage their supply-chain through, in some cases, processes that have developed over a number of years. These will not always be optimal. There may exist an opportunity to challenge existing practices and processes and assist in the design of more effective ones.

By obtaining a good understanding of the processes in the market you may see how they can be re- designed and optimised to the benefit of all those involved.

Information gathering

The data gathering process will be a staggered process coinciding with the identification of stakeholders. Once stakeholders have been identified, engaged and relationships are built, the data gathering process can take place. The data that is supplied by your stakeholders will not all be in an identical form. Data can be

standardised and verified by the providers but you must be sure the data you will be collecting is robust and fit for purpose. This means that you need to ensure there is enough information to draw meaningful conclusions. This can be achieved by developing an understanding of the issues surrounding acquisition, provision, collection, interpretation and currency of your data.

Be prepared to justify why you are collecting this data. Refer to benefits realisation section in Making a Case for Market Shaping.

Demand side data

Data will be collected on the current and projected demand for the market's services from predominantly the public sector but also the private sector where this may have an impact on supply levels.

You will need to plan this phase carefully since there are many important factors to consider - who owns the data; how complete, comprehensive and reliable it might be; what use you can make of it; whether it can be made public (in your report); ease of collection; its importance to the study. So, for the Construction market the plan focused on the key major departments' construction plans; for Waste, over 300 local authorities in England were surveyed to establish the capacity shortfall in the context of the landfill targets and hence the potential for fines.

Key information will be over a given number of years (the further ahead the date provider can look the better).

A questionnaire is the principal method for collecting demand profile data. 'Buy-in' to completing the questionnaire should be secured in advance and publicly endorsed from top management.

Qualitative data can also be collected and may include case studies detailing how the procurement was run, lessons learned, changing policy affecting demand, etc.



A questionnaire is the best method for data collection if you are aware of the information you want to collect. If you are unaware of the data available, one to one interviews will help to establish this either face to face or via the telephone.

Once these interviews have been conducted and information is collected in the form it is currently in, all data can be standardised into a set template.

The private sector may also significantly affect the levels of demand for certain industry where the public sector is not the sole customer. Examples include the construction industry where the private sector is using construction companies on large build projects including supermarkets, airport terminals etc all of which may have an impact on the ability to meet the demand levels of the public sector.

To obtain an understanding of where the private sector projects will originate it is recommended you view trade publications but also to engage with the industry on a one to one basis.

Supply side data

The information provided by the supply side will tend to be qualitative and commercially sensitive. It will inform you of suppliers' ability to meet current levels of demand and will include the suppliers public / private sector business levels and the capacity to take on additional business.

There are a number of tools that can be utilised to collect this data with views on the following being sought.

Number and size of suppliers within various market sectors; Market share; Details of current operations within the market, i.e. number of contracts, value, duration, type of financing,

and any other meaningful variables etc; Barriers to entry facing suppliers, including legislative/regulative constraints, capacity issues, process

constraints and bid costs; Typical criteria considered before deciding whether or not to bid - identifying which are the most attractive

opportunities, whether these come from public or private sector customers.

Supplier workshops can be a useful way of teasing out the various issues and considerations that either encourage or dissuade a supplier from bidding in the market. Suppliers often have their own ideas about how the opportunities, processes, legislation and financing processes can be made more attractive and these ideas should be listened to and openly discussed. All three of OGC's markets used these to great effect and these formed the basis for ongoing engagement with suppliers in the design and application of the market shaping approach.

Joint workshops can be very useful. By bringing both suppliers and procurers together they can concentrate on early supplier communications and highlight a variety of issues on both sides that have hindered the procurement of services.

Supplementary one to one interviews with suppliers can help identify issues that may not emerge in the open forum of a workshop. These were particularly useful for the Kelly waste market study.

See the Benefits section to note the selling points that will encourage suppliers to provide the information required for this exercise.

On concluding your data collection from suppliers, be aware of what would be classed as "new entrants". These are established companies that are looking to expand into new markets and will add extra capacity. It will quite often be the case that links exist between two markets.

Step 3 - Analysis

Analysis of research findings

Having collected all of the data, it will need to be analysed to determine:



The overall shape of the market; A collective picture of public sector demand within the market over a defined period; Current capacity available to meet this demand and information on any capacity pinch points; Barriers to the marketplace; Normalising the data - rechecking with sources of data.

Common themes and findings

The analysis should lead on naturally to the development of key findings. The exact nature of the programme team's findings will vary but from the Kelly work there are many common themes that the findings could relate to. For example, there may be:

Dominance of the market by a limited number of suppliers, limited new market entrants, or a tendency for incumbent suppliers to win contracts;

Regional variance in the strength and availability of suppliers- leading to differences in regional competitiveness;

Trends towards market consolidation, or decline, lack of market interest and the underlying reasons why; A perception amongst suppliers that the playing field is uncompetitive; A lack of or inconsistent market intelligence (forward demand plans), which makes the market less

attractive to potential new suppliers; A rapidly changing policy and regulatory environment, which creates market uncertainty and contributes to

contractual complexities; A market perception of too many policies, which are not all mutually reinforcing. This may drive sub-

optimal behaviour in both demanders and industry;

A lack of clarity in communicating the relative priority of different policies creating uncertainty in the market;

A number of communication channels making it difficult for industry to know who to talk to or what to give priority to;

Funding, regulation, planning and advisory sources that are not integrated and therefore create a complex landscape;

Limited bid capacity is driving selective bidding by suppliers; A substantial issue concerning the cost of bidding and failing; Heavy reliance on external advisors in terms of project management and understanding the market; Current public sector financing methods that do not drive the right behaviours; Issues surrounding appropriate deal structures and risk transfer; An issue regarding the length of time a project takes from outline business case to final close; Planning issues; Scope to increase the level of collaborative contracts whilst balanced with encouraging competition.

Scenario planning for analysis

Scenario planning is a proven method of identifying potential solutions in response to complex problems. It involves discussing ideas about what you are trying to achieve in an ideal world unconstrained by current conditions. You may wish to apply this method to the market with the aim of improving competitiveness, reducing dependency on particular suppliers, delivering efficiency savings and proposing workable solutions i.e. what the team would like the market to look like and delivery options. Outcomes from a workshop early in the process can be used to inform the specification requirement for the data collection exercise and also for the subsequent analysis. This first workshop would identify:

The nature of the current market,



The drivers which cause the market to operate in the ways that it does; What changes are imminent or anticipated which will affect the market; and What an "ideal" market might look like.

Your eventual scenarios should each present an imaginable and coherent future, they should also be structurally distinct. None of your scenarios should be confused with predictions.

This technique proved valuable in identifying initial market shaping proposals for the Construction, Waste Management and Independent Sector Treatment Centre markets.

Step 4 - Market Shaping Options

Scenario planning for recommendations

After establishing the findings from the analysis phase, a second workshop could be held to take the scenario planning to a greater level of detail in order to inform the process of change required to improve the market.

One or more workshops of supply side representatives could follow to brainstorm the areas of their concern that need to be addressed in order to improve market capacity and response. One to one meetings with relevant stakeholders should be organised to investigate proposed scenarios further and refine some of the emerging thinking. Detailed case studies could be developed to inform discussion. Further specific meetings around scenario planning should be held to discuss and clarify scenarios by feeding in continuing research

and views. The overall process of scenario planning should consider how to establish the most effective form(s) of market to achieve the intended outcomes.

Once the key findings and scenarios have been identified, the next step is to determine what to do about the issues affecting the market. The options should be about understanding the market before determining the procurement strategy, for example, potential concern of procurers going to the market concurrently. The procurement strategy must not destroy capacity and competition. The programme team will need to consider developing specific proposals for tackling the issues at hand.

However, some issues may require more fundamental changes to legislation and/or policy and the programme team may therefore have to develop both short and longer-term proposals on how to tackle these issues. All the proposals may need to be fed into a market supervisory group that could then refer recommendations into a more senior-level (perhaps ministerial) forum for endorsement and consequent action.

Following the Kelly work in the construction market, the Public Sector Construction Clients Forum (PSCCF) was established to oversee and endorse the next phase of the work, and to champion, lead the implementation of, and promote good practice.

Step 5 - Consultation and Recommendation

Recommendations

You will need to develop clear and complete recommendations to submit to the key stakeholders and gain their approval and commitment through an agreed action plan. The more extensive your findings and recommendations are, the more you will need to ensure appropriate contingency is built into your plan for publication.



The following steps are outlined for this process:

Draw the recommendation together - check for inconsistencies - overlaps - logical errors; Consultation within the project team - final discussion with team experts; Refine the options - reduce to a manageable number; select the strongest; Consult with stakeholders - obtain informal acceptance - ensure no surprises; Consolidation of thinking with stakeholders - road show? workshops? targeted one-to-ones? (all used

during the Kelly work); Create an action plan - getting dates and actions into stakeholders' minds and plans; Obtain programme board approval; Prepare and deliver final presentation to sponsor; and Secure formal approval.

Publishing

Ensure the key stakeholders have an adequate opportunity to comment on 'final' reports before publication. Have an effective publication strategy and plan in place that includes endorsements from the key stakeholders. Publication considerations include:

Decision on what to publish and when - taking into account the wider political environment; Decision on whether to publish data and which data to publish - review the confidentiality issues

associated with the data when it was originally gathered, including matters relating to Freedom of Information;

Review the publication strategy that was included in the communication plan;

Develop the channels for publication; Finalise the publication plan in consultation with corporate public relations, press office and delivery

agents; Secure programme board approval; and Obtain formal sponsor approval.

Step 6 - Implementation

Implementation programme

This is about change in the market and hence will have to be managed as a programme. The following key steps have to occur:

Making the recommendations happen - work closely with the suppliers and public sector colleagues to implement the action plan;

Keeping stakeholders involved - very important that they retain ownership; Implementation process - develop; monitor and review; and Manage the benefits realisation - establish a baseline from which to measure and embed.

Ensure changes are being delivered

This is the reason why you are performing a strategic market shaping activity - without change you will not realise progress, benefits or success in the procurement processes for the market under review. Monitor and report progress to the sponsor and key stakeholders.



Governance

A GEMS project will not even begin, let alone survive, without having won over the hearts and minds of the key senior people in the organisations involved. This will involve a significant amount of consultative legwork by what is likely to be a small team. The team will have spent time approaching key public sector procurers and private sector suppliers within the market to sell them the benefits of engaging in a GEMS project to shape their market. Buy-in is essential for progress and ultimate success.

From the Kelly experience, the ultimate governance will be left to a market supervisory group to implement the recommendations and provide an overarching and longer-term perspective. For example, the OGC Public Sector Construction Clients Forum (PSCCF) was established for the construction market and Defra's Waste Infrastructure Development Programme was established to take forward the second Kelly market recommendations.

GEMS is a useful tool that can be used to assist preparation for an OGC Gateway 0 (Strategic) Review of a market-related programme.

Reference: For information on Project and Programme Management and Gateway Reviews see the Programmes and Projects section of the OGC website.

The Programme

GEMS can help you establish a programme to undertake a market shaping initiative effectively. It will set a challenge for both customer and supplier to respond to, for working towards a market that:

Is clear on the strategic drivers; Is focused on sustainability; Is aware of the need to develop its capacity and capability; Has opportunities for increased private sector provision; Obtains efficiency savings and addresses waste and inefficiencies; Has the opportunity for change.

Developing the Programme

Change is a feature of a GEMS programme, and you will need to plan and implement changes both to the programme and the market it is examining at the right time.

The team you assemble should be confident, capable and delivery-focused. As they gain experience you will require flexibility to develop the team in size, competency and scope.

The team will need to grow as research and related programme management activity increases.

To help this work, it is considered that the manager needs to bear a few principles in mind:

Build up knowledge contacts - no market exists in a total vacuum (even a new one). There will be a range of knowledgeable organisations and individuals that can be accessed to provide background, research and consultancy. Such would include universities, management and industry-related consultancies, professional and industry representative bodies.


http://www.ogc.gov.uk/programmes_and_projects.asp


Develop political awareness - the programme needs to understand the role politics play in the market under review, especially once the GEMS programme commences to make recommendations for intervention / shaping activities.

Develop and gain access to private sector experience - understanding the key supplier stakeholders will lead to constructive engagement.

Develop market awareness and experience - how the market works and what it responds to are going to form part of any strategic recommendation from the GEMS programme.

Develop repeatable processes - following the excitement of the early days of the programme when everything is new, the team will deliver more effectively with well-designed and accessible processes.

Introduce additional support functions - there are a number of areas that will need establishing as the GEMS programme proceeds, these include: -A programme / project office; -Records and document management; -Quality review and assurance; -Consolidate from loose to tighter structures - the increasing maturity of the GEMS team will require restructuring to introduce a stability and a set of new roles possibly not required in the early stages. The objectives will be to make the most from the assembled knowledge base.

Design to deliver

A market-shaping undertaking has to be fast moving and kept on track. You will design your team to be a delivery-focused operation. It will deliver:

Speedy reconfiguration - grow quickly; shrink equally quickly! Reconfiguration and restructuring is the order of the day in a GEMS programme. Skills profiles suitable for the work in-hand and the near future;

Flexibility - The team members must be ready to respond to changes in direction as new information and

understanding requires resources to be redeployed; Fast moving - to obtain results and influence a market, the GEMS programme has to deliver

understanding and advice in a timeframe relevant to the market; Team capability - as the spotlight moves on, adjust the skills & competencies profiles to ensure they are

able to keep the programme moving; Knowledge sharing - expect to access large amounts of data to process into information and knowledge.

Your programme cannot afford to allow knowledge silos to be created by teams or individuals; "Hitting the ground running" - team members will go straight into place - there is little or no honeymoon

period; "Saying goodbye" - an exit process to manage leavers is vital. You need to capture knowledge and

experiences, tie up loose ends, close down the working relationship cleanly and send them on their way; Shared vision - whilst mavericks and free thinkers may help the programme to get off the ground and

start rolling, at all times there must be a centrally promoted and shared vision with related aims and objectives;

Collaboration - a shared approach to working and information sharing is essential.

Be sure to build

The GEMS manager will establish processes and systems to support and build the competencies expected in the team and those they deal with. This would include:

Introducing formal programme management (after initial scoping); Experience exchange to help learning through the sharing of war stories and exposure to innovative

thinking; Knowledge management and managing the turnover of key individuals during the life of the programme; Knowledge transfer between programme staff e.g. contractors, permanent project staff and organisation

as a whole;



Actively undertaking to ensure knowledge and skills transfer occurs between staff including contractors and permanent staff;

Risk management systems - to identify and respond to the risks in a timeframe relevant to the risk and to the programme.

Making it work

Undertaking an exercise to identify how and where market shaping can be undertaken requires considerable momentum and support.

There has to be a big enough trigger to get it all started and to develop political will, senior organisational support, supplier interest and involvement and to maintain this throughout the GEMS programme.

For the Kelly Programme it was an initiative from HMT Ministers to establish and understand how public sector markets could be developed and shaped through public sector actions. For each market there was an existing momentum and political support. The third market (Independent Sector Treatment Centres) evolved from an understanding that the health market itself could be used to lever change within the NHS to meet policy objectives.

So, there has to be:

A clear and shared vision / way ahead; Political support; Senior player involvement; and Significant political benefits for both suppliers and customers.

Work will then continue in obtaining senior people's consistent and visible support. Not only that but they must see the GEMS programme as being owned by them. The programme leader will be "one of them",

accepted and recognised as a key player in the market.

A market will only respond to sufficient motivators - usually money!! To engage it with a view to shaping it will require a clear engagement plan to ensure the market stakeholders are informed about what is happening and why, and what their role is to be. The suppliers will have to be brought with you therefore they will need to know that you:

Will balance commercial sense with political policy; Know and understand the risks for them as well as for you; Intend to understand the market and base your decisions on that understanding; Will keep the market informed about why you are doing this; about new and changing policy; about

process changes e.g. contract changes / adjustments; Will open feedback and information flows - encouraging them for their ideas and input; to ensure they

understand; Intend to identify what is attractive to the market; Will develop business models appropriate to support the market shaping that will encourage innovation.

Programme Board

A programme board should be established to provide closer management and liaise between the steering group and the programme team. The programme board's role is to keep an eye on the big picture, looking towards the future whilst still dealing with today / tomorrow and anticipating the in-house solutions.

Composition

Carefully select programme board members. Do they represent key stakeholder interest? Is the rationale for their attendance sustainable? Is the programme board size manageable?



Is it capable of giving direction?

The programme board will have representation from:

Lead organisation(s) in the market. Key public sector organisations with a lead policy role. Other key public sector organisations with significant market sector involvement.

Programme Team

The Programme Board will commission a Programme Manager to undertake the work to interact with, and build a greater understanding, of the marketplace. Establishing the programme team will follow whatever standards you have relevant to programme and project management. If you want advice on this, see the references below.

A GEMS programme would begin with a small team that will establish the programme itself and undertake the initiation phase.

You should expect the team to grow rapidly as the tasks (projects) begin to be identified. You are looking to obtain and deploy expertise to achieve capability in the following:

Data and information management - discovery, classification & categorisation, processing and analysing; Knowledge management - identifying the lessons learnt and establishing systems for their evaluation and

deployment; Political awareness - to construct a map of the various policies (whether in public or private sector),

initiatives, legislation

Market awareness - experience, understanding and exposure to the market being investigated; Change management (external) - appreciating how the market will respond to recommendations to cause

it to change.

As the programme matures, it is inevitable that it will move from a loose and flexible operation to one that has more formal and repeatable internal systems. Hence expect to re-design the internal structure of your team; look to:

Maintain and manage information and feedback flows; Reconfigure systems; Identify new roles; remove old roles. Review experience profile(s) and sources for them.

Experience has shown that it is important to be sure permanent staff have the opportunity to learn and improve their own understanding of the market and the work being undertaken to shape it. Hence involve them and do not rely solely on private sector experience.

References: Programmes and Projects in OGC's website.

Market Supervisory Group

A market supervisory group for a specific market may exist or require establishment to develop and provide an overarching and longer-term perspective. It is there to make market-shaping decisions and will own the market strategy but not the responsibility for delivery of organisations' procurements, or, the day-to-day management of the programme.


http://www.ogc.gov.uk/programmes_and_projects.asp


The Market Supervisory Group (MSG) will receive and consider demand data and advise on market implications. The MSG will scope and direct the investigation into the market with a view to subsequently working with the market to implement the recommendations.

To work effectively when engaging with senior players in public and private sectors, the MSG should carry a great deal of authority. This is achieved through addressing:

Position - where it is in relation to other decision making bodies; Membership - the members selected need to be senior in their own right but also to have authority within

the field they are representing; and Chair - this is the most significant aspect. The chair has to be one of those individuals who carry authority

easily and is respected widely.

Identifying the Chair

The Chair will have a track record in dealing with procurement matters at a very senior level and will be someone who knows both the public and private sector procurement drivers and inhibitors.

Market Reference Groups

Establishing a market reference group can facilitate supply side consultation before new policies are implemented. It may include public sector officials, industry groups and CEOs of major suppliers and can inform the feasibility and potential effects of a market shaping activity by providing advice on relevant aspects of market performance and behaviour. The Market Reference Group (MRG) is unlikely to meet frequently and setting it up requires concerted effort, resource and management time. But it can be invaluable in seeking supplier input and buy-in to changing public sector policies and priorities.

MRGs would be provided with information on current / future demand; new and existing legislation affecting that market; details of any known issues; and barriers to entry.

The MRG will inform decisions for market management involving procurement projects and programmes, for example, by gearing up industry in some areas in order to ensure adequate competition and capacity is available to meet planned demand.

Once established the MRGs could have a role in continuing communication with the public sector to assist in monitoring the market and providing advise to market related procurement programmes. This was done for the first Kelly Market (Construction) with the early establishment of a construction supply-side forum.



Lessons Learned

Many lessons have been learnt from OGC's work with various markets. It is not our intention to address all the possible management techniques, methodologies and processes. Here are some specific lessons that were learnt when we engaged with the market and its stakeholders.

Programme Management

Allow sufficient time to plan the work effectively. Consider scope and the personnel required. Decide early in the programme what is feasible - is a sampling approach for collecting data appropriate? If

not, what limits to the programme scope should be applied, or what resources are needed to gather a wider range of information.

Consider the limited and targeted use of secondees/consultants to obtain specialist expertise when they are required.

Manage and review the risk and issues logs frequently. Use the Gateway 0 review process to validate the strategic approach and governance arrangements for

your GEMS programme.

Knowledge Management

During Initiation you will select the team based on the experience and knowledge required to fully understand the characteristics of the market being explored.

As the programme proceeds ensure that knowledge is captured and disseminated to those who need to know. Issues arising include:

Ensuring the roles involved have the data and information required to undertake their tasks. Embedding lessons as soon as they are learnt. It is too easy to record them and through leaving action to

another time effectively take no action. Introducing and maintaining standards - early successes are often achieved by "innovative" approaches,

once things begin to bed down then consistency of approach becomes very important. Maintain control. Do not outsource integral parts of a programme to other areas but consider using these

other parties to undertake discrete tasks with clear terms of reference.

Risk Management

There is a tendency to revert to old ways - an inertia associated with organisations to do what they always felt happier with.

You may wish to consider the following when looking at how the potential market delivery organisations might perform in the new market structure. You will need to:

devise a set of tests to draw out the risks (for example have they the capacity to do it? - see below) examine those that score the lowest decide whether issues identified can be addressed or consider removing them from the market

management approach.

One of the approaches for examining a particular market has involved a set of five areas to question ("5 Cs") in order to assess potential for delivery performance. These are:



1. Capacity of organisations to respond effectively to the planned market shape in terms of:

their financial resources management bandwidth relevant assets and facilities technical and professional skills other critical areas (such as geographical location).

2. Creativity / Innovation

looking beyond the requirement looking beyond the scope of the market interesting and different solutions being considered.

3. Change Catalyst

willing to engage and work with change showing a way ahead helping to develop the stepping stones breaking down barriers.

4. Coherence

within the organisation's concept within the standards.

5. Customer

appreciation of their need how they respond to customers.

The principles of good risk management are documented on the OGC website

Procurement process

Undertake effective research on understanding the market. Ensure there is a strong and robust process able to respond to the developments which inevitably occur

during market shaping. Standardise documentation across the market. Look to improving the procurement professionalism associated with the market. Create a policy for encouraging innovative responses and how to measure / track them.

Engaging the suppliers

Develop a detailed strategy for engaging with suppliers at the outset and consider what will "sell" the idea to them and get them interested - possibly brainstorming sessions could be used.


http://www.ogc.gov.uk/index.asp


With particular reference to market shaping activities, the potential and actual suppliers (i.e. the market) are key to your success. We have learnt that you will need to ensure:

they appreciate and understand the legal framework applicable to this exercise you have considered, and are willing to meet, the suppliers' information needs and especially when they

will need to know that you encourage them to consider and offer new ways of delivering this latter point will lead you to consider how to undertake a proof of concept and test the ideas for

penetration / acceptance there are opportunities for honest and open discussion.

Existing suppliers

Existing (incumbent) suppliers can be comfortable with they way things are and disbelieve things would change, so, they offer the same formula. You need to address their complacency and encourage them to think differently - new pricing structures; reorganised delivery; changed attitude. You may even look to other markets and benchmark against different / new models of working.

New entrants to the market

New entrants will challenge the established ways of thinking and demonstrate the most innovative approaches. They want to get into the market but often either don't know how or are unaware that opportunities are about to arise. Sometimes you have to find them and encourage them into the market. This may require you to be creative in looking to see who else could meet the requirements - it is noted that we can be euro-centric (possibly because of needing to use OJEU), so, consider also looking to other

continents.

Supply chain

As you move further into the market shaping exercise it is as well to be aware of the supply chain that main suppliers will be using to meet the requirements. Supply chain management is a separate topic area but you will need to consider:

where there might be risks - and manage them what standards are needed and are they clear up and down the supply chain how you will monitor the supply chain - be aware of players and their sub- contractors observe behaviours ensure main suppliers cascade requirements.

Supplier development

The fact that you are considering market shaping may be imply that the suppliers could need some support - e.g. training, guidance, instruction - to help them become better players in the market. This not usually thought of as a public sector priority / activity but you do need to do all you can to make the market work. So consider:

use of OGC guidelines (see www.ogc.gov.uk/index.asp?id=1004608) suppliers' understanding of, and competence for, becoming involved in the public sector procurement

process whether the suppliers understand their own capability - a reality check that only an outsider can provide.


http://www.ogc.gov.uk/index.asp?id=1004608


Contract management

Ensure procurement and contract management resources can respond to the market changes anticipated. All the good work in market shaping could be seriously endangered without an effective Contract Management function:

Early design and planning of the Contract Management function Contract process - build in mechanisms to pass lessons forward; develop and monitor contract KPIs; open

channels to the supply- side and maintain throughout the life of the contract. Consider one manager per contract: to facilitate its working; provide support to customer and supplier;

with full authority and scope to manage contract; sourced from the market itself Plan the succession regime and develop additional Contract Managers Set and operate with high standards in a professional function; actively measuring performance and

professionalism as the contracts are let; using early contracts to set the baseline. Work closely with stakeholders - suppliers; other professionals in the market; customers using the

contracts.

Communications

You will develop the communications strategy to fit the characteristics of the stakeholders identified as playing a significant role in this market. Here we are looking closely at some of the lessons learnt when undertaking our own stakeholder intercept plans.

We have learnt that attempts to shape a market can lead to suspicion in a range of stakeholders. So you need to plan to keep stakeholders well informed since change will feed into more change - for both supply and demand sides.

Know how to generate interest - establish an effective means for supplier contact and early two-way communications. Keep the message simple and consistent so that you can develop the required trust between all parties. Some simple points to bear in mind -

be honest and open establish a mutual understanding on the seriousness of intentions deliver what you say you will create a "long term offer" take suppliers seriously show political will establish that you really have something for them to do identify a core group of industry representatives and communicate with them in a consistent and regular

way throughout.

Creating the opportunities to talk

You will need to design events for engagement with suppliers according to what is to be achieved - sounds simple but it is not that straightforward. You will also need to take into account the message, your audience and what you expect to get out of the event.

Suppliers appreciate the chance to have an input into the development of the marketplace - after all they have a key role in it. It is suggested you consider:

targeted workshops - say, to teach them the rules of the new game. As an example - one market shaping exercise had a "supplier day" for all interested suppliers. The departmental representatives provided intensive input during the morning sessions, and then withdrew to encourage the suppliers to discuss their options for meeting the requirement. This encouraged supplier exploration and the basis for a number of consortia to be formed.

supplier stakeholder forum - to offer information and to receive feedback.



reference groups - to explore particular issues related to the market and its capability to deliver to requirement.

"key event" days e.g. an Invitation to Tender day to discuss with suppliers the nature content and process to be used; or, a supplier day to issue information.

selecting high-powered venues for high-powered people e.g. The Terrace at the House of Commons for CEOs and CFOs.

regular supplier meetings, say monthly, which are short and sharp dealing with one topic at a time and in which high-profile support is visible.

regular one-to-one meetings with strategic stakeholders.

Stakeholder management

Stakeholders may be identified from many groups for example:

owners or shareholders, executive management, operational management and staff of the organisation(s) who are:

sponsoring the programme affected by the programme responding to public sector demand creating the public sector demand. customers or consumers who will be affected by the market changes internal and/or external audit political or regulatory bodies the wider community such as the general public

Programme and Project teams

Below is an example of a Stakeholder Map that can be used to document and explore the interests of the stakeholders in the programme.

Stakeholder Analysis

Each of the stakeholders will have a specific interest, such as strategic direction, operational changes, and interface with markets and/or competitive position. Information dissemination, consultation and two-way communications - listening as well as telling - are critical for managing expectations effectively. Stakeholder analysis is the process of identifying these groups and their communications needs.

It may then be appropriate to develop stakeholder engagement plans for either individual stakeholders, groups of stakeholders (or a mixture of both).




Groups of Stakeholders

As part of a Communications Plan, the Programme Team may find it useful to group stakeholders according to one of the following headings, listing out their key motivations and interests:

Providing Strategic Direction Involved In Operational Changes Negotiating Deals Within Markets Interest In Competitive Market

Public sector bodies which represent market segments, e.g. Health or Education, and which are endeavouring to ensure a procurement strategy which is directly geared to optimising a competitive market for their segment.

Contacts

You should first check with OGC’s Markets and Collaborative Procurement Team to ensure that there is not already a collaborative approach in operation in the market in which you are considering the use of GEMS. For assistance in using and applying GEMS to markets please contact OGC via the Service Desk.

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