Estonian first conference on Innovation ProcurementCase Examples from Holland

Jeroen VeenendaalApril 21st 2016 - Tallinn, Estonia

Contact

• +31 6 28 48 22 52

• jeroen@procuremanagement.nl

• www.procuremanagement.nl

• www.jeroenveenendaal.nl

• nl.linkedin.com/in/jeroenveenendaal

• @JVIAI

8% less government funding towards research and innovation

“Wheninnova+veandscien+ficknowledgeistransformedintoprac+calapplica+ons,wecanallbenefitfromthistogether.Itallowsforsciencetocreateprosperityandgrowthaswellasmorejobs.”

Innovation & Research• Innovation is often confused with research• They are in fact very different processes.

• Research is a way of turning money into knowledge.• Innovation turns knowledge into money.

• Research is about doing things for the first time.• Innovation is about using known things for a new purpose.

• You don’t know the results of research in advance.• Innovation is always targeted on known outcomes.

• A key success factor for innovation is an accurate understanding of the unmet need it is targeting.

© Dr Jonathan Frost, OBE - Industry Chairman of EcoQUIP Steering Group

Procurement professionals • Sensible procurers have difficulties with the word “new”, therefore

demands are made the avoid “new”. Such as reference and turnover demands as well as specific demands for the products and services.

• The reasons for making such demands are understandable:• New products or services might not work• It might not be delivered on time• It doesn't have a track record• Therefore, it might be cost ineffective, or at least risk increasing

• But in some cases, and in more then we like to admit, existing products and services are not sufficient. They simple don’t supply what we need.

• If we keep buying them we will fail!

• Therefore, its not a question if we need to buy more innovative solutions, but how we need to buy them

© Dr Jonathan Frost, OBE - Industry Chairman of EcoQUIP Steering Group

No procurement is risk free

Suppliers• Development of new products and services means taking

technical risk and a investment of time and money

• Rational suppliers only take that risk if they have to• To protect margins• To get new clients• To retain turnover

• Suppliers are very good in managing technical and financial risks

• So where is the risk?• Who is going to buy “new”?• Is there a real and credible demand?

Did you know?40 % of the projects are successful

The procurement process

Kickstarter example

http://explodingkittens.com

Lesson Learned from the bed washing facility project:A genuine and credible costumer (public procurer) is needed to complete the project in collaboration.

FCP is about integration

More succesvol innovation through procurement • Look at it from a supplier point of view

• Binding and added value procurement• Specifies (future) unmet needs• Engages in relationships with (new and unexpected) suppliers• Offers a credible demand for the future• Supports suppliers in their need for information

• “Supply Chain Management” vs “Buying”

Innovative vs. traditional

AgreementAgreement

Reference and turnover demands

Communicatie unmetneeds

List of Requirements Reduction of ideasbased on added value

Supplier selection meanlybased on price evaluation

Supplier selection based on the best solution for the unmet needs (TCO)

Traditional Innovative

FCP as a tool for PPI1. Identification

Recognise problems, unmet

needs & opportunities

Consult with stakeholders and

set up team

Define an outcome based requirement

Prepare a FCP project

outline/business case

Project approval/sign off

2. Market Engagement

Market Sounding

Market sounding review & analysis

Supply chain feedback

Market consultation

Market consultation report

3. Procurement

Develop a pro-innovation

procurement strategy

Feedback to the supply chain and

stakeholders

Implement procurement strategy

Negotiate Procurement

Contract

@ Gaynor Whyles - Jera Consulting

FCP critical elements• Specify the unmet needs in terms of wanted outcome, or even

better don’t specify at all.• Communicatie wanted outcome in the context of a genuine

demand, not only exploratory• Stimulate Supply Chain to combine knowledge and expertise

to stimulate the formation of consortiums • Try to create a broader demand

• Innovate the procurement process itself. Less legal, more storytelling / costumer journey;

• Ownership from the “business” is a must and a key factor, preferably supported by a innovation agenda;

• Be credible, throughout the project;• Create the circumstances for the market to come up with the

best solution;• Wel organized projectmanagement

Case examplesCompleted In process

Project outlinesErasmus MC Clean Beds

• Replacement necessary because of new hospital

• High CO2• Just 1 possible supplier

• Unmet needs:• 70.000 beds clean annually• Substantial reduction CO2

footprint• Substantial reduction TCO

Social transport R’dam• 35000 clients, € 30 mil annually• (To) competitive market• 2,4 occupants on 8 seats • Internal islands• Determines Imago

• Unmet needs:• Client in the center of service• Flexibel (financial) system• Viable revenue model• Durable and sustainable• “Stay home longer”• “Fighting loneliness”

PlanningErasmus MC Clean Beds

• 06 - 2011 Unmet Need ident.• 09 - 2011 Marketengagement• 01 - 2012 Market meeting day• 03 - 2012 Pre selection• 06 - 2012 Start Dialog phase• 12 - 2012 Final offer phase• 07 - 2013 Contract awarding• 12 - 2013 Signed agreement• 10 - 2015 Official opening

Social transport R’dam• 05 - 2015 User centered design• 09 - 2015 Market meeting day• 10 - 2015 Pre selection• 10 - 2015 Marketengagement• 10 - 2015 Market meeting day• 11 - 2015 Market meeting day• 12 - 2015 Market meeting day• 04 - 2016 Start Dialog fase• 11 - 2016 Final offer Phase• 07 - 2017 Start services

Client in center of serviceUnmet needs specification User Centered Design

Marketengagement

Market Meeting Days

Selection phase• Aimed on broadening the

market and stimulating SME’s

• Demands like:

• Liablity insurance

• ISO - 9001

• Description on R&D facilities

• Aimed on clients and the best carrier

• Demands like:

• Licenses

• Criteria like:

• References

Dialog Phase - R’dam

Dialogtable

Supplier

City Counsel

Hea

res

Trib

une

City

Cou

nsil H

earersTribune Supplier

2 hour initial dialog1 hour suspension1 hour completion

Dialog Phase - R’dam

Boeken rit Gesprek 1

• 30 mei

Voorbereiden vertrek

Gesprek 1• 20 juni

De RitGesprek 1

• 11 juli

BestemmingGesprek 1

• 1 augustus

Conditioneel Gesprek 1

• 22 augustus

Boeken rit –Gesprek 2 • 12 september

Voorbereiden vertrek

Gesprek 2• 3 oktober

De RitGesprek 2

• 24 oktober

Bestemming

ConditioneelGesprek 2

• 24 oktober

Mei 2016

Juni 2016

Juli 2016

Augustus 2016

September 2016

Oktober 2016

November 2016

Final offer & contract fase• Similar to a “normal” european tender procedure• 1 supplier did not comply with payment scheme

• Drawing up Business Case• Lessons learned: Project takes a long time and key

stakeholders can change. It’s important to continuously communicate project progress and results.

The results• Fact based results as presented by IMS. These results were

even greater (and unintended) then the original projecttargets.

• But there are more and unexpected results:

• For Erasmus MC:

• Confirmation of its innovation image

• Cleaner, cheaper and better bed washing

• For the (dutch and EU) economy

• A new export product is born

• More and new jobs

FCP summarized• FCP combines progressive ideas with best practices from

the private market which can achieve innovation• It creates a credible demand to the market which

ensures that suppliers conceive innovative and cost effective solutions

• FCP is an innovative philosophy which was developed for the public procurement sector and thus fits in procurement legislation

• FCP is based on unmet needs, not on existing solutions• Commitment provides the actual incentive for suppliers

to create better innovative (and often non-existent) solutions

• FCP works and exceeds expectations