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What buyers look for from suppliers

The opportunities for Queensland and Australian manufacturers to supply major projects is confirmed by feedback from procurement managers of major projects. At mining and energy projects they indicated that about 85% of the value of projects will go to Australian firms and about 45% to local firms. Australian firms' share of the value of projects is lower in heavy industry projects at about 70% of total value and about 33% for local firms. The main contributing factor to this difference is the higher level of imported machinery and technology for heavy industrial and processing projects.

Many projects seek to establish strong links with local communities as projects draw their workforce from these communities and wish to be seen as a positive contributor to these communities.

Major projects also seek to use local suppliers to meet the Enhanced Project Bylaw System and access tariff reductions of imported project requirements.

Consequently, projects seek to award work to local suppliers if they can meet the range of requirements for the project, including:

  • Core requirements - expected of local, interstate and overseas firms;
  • Relationship values - what procurement managers expect from you as a partner; and
  • Supplier capabilities and qualities - capabilities and qualities procurement managers value.

While procurement managers point out there is room for improvement, there are many best practice examples that highlight a business profile for success.

How local companies respond to future trends and changes over the next 5 to 10 years will also determine local success in major project work.

Core requirements

Procurement managers on major projects have a range of specific criteria which suppliers must meet in order to be selected to supply to projects. Broadly, these core requirements cover:

  • Quality of product and the capability and capacity to meet required specifications.
  • The capacity, resources and skills of the organisation to adequately supply the required item or service.
  • Cost competitiveness.
  • Timeliness in delivering product and the ability to fit in with project time line requirements.
  • Flexibility and adaptability to accommodate changes which might occur as the project and specifications develop over time.
  • Ability to absorb risk for some projects.

Relationship values

In addition to these core capabilities, procurement managers are also seeking a strong, positive and responsive relationship from suppliers. This includes the following:

  • The ability of the supplier to gain a strong understanding of the client's needs.
  • The ability to establish an ongoing relationship with the client.
  • The capacity to look towards the longer term relationship and benefits rather than focusing on only short term supply and benefits.
  • Effective and open communications including the ability to provide advice if problems or delays occur in the supply of materials or services.

Profile for success

The supplier capabilities which procurement managers value when selecting suppliers include the following:

  • The capacity of the supplier to manage information and processes through effective information controls and reporting. This includes:
    • The capacity to use information technology systems covering design activities.
    • The ability to provide updated advice to the client on production, delivery and supply activities.
    • Inventory control and monitoring.
  • Having R & D capabilities. While this is not necessary for all suppliers, an existing commitment to research and development and a commitment to identify future needs is a hallmark of a responsive supplier seeking opportunities to expand its supply capabilities now and in the future.
  • Having the necessary skills base within the organisation or the ability to draw in additional skills and capabilities to meet project and supply requirements.

Based on feedback from procurement managers in major projects, successful suppliers have the following qualities, approaches and capabilities:

  • Local suppliers have the advantage of being available within local time zones.
  • The ability to deliver products to the standard, specification and quality required.
  • Meeting delivery time frames.
  • Being able to provide availability of product and components. This includes the ability to either carry stock or access stock within time requirements.
  • Having the capacity to undertake work within the firm or having the ability to network with other firms to extend capabilities to supply a project.
  • Quick response times on requests and orders.
  • High quality service.
  • Proven track record and proven contract performance.
  • Having the necessary financial strength required for supply at different levels. While for smaller components and activities this is less important, the larger the contract size, the more important this issue becomes.
  • Safety record and safety performance.
  • Professionalism.
  • Reliability.
  • Proactive communication on problems and delays.
  • The ability to provide a warranty and maintenance support service on an ongoing basis.
  • The ability to be flexible and adapt to changing requirements if required.
  • The capacity to provide a quick response service to meet project needs. This is a significant advantage for procurement managers.
  • Having design capabilities.
  • Having a sound understanding of project requirements and not contracting to deliver beyond the firm's capacity.

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