Barriers to engagement

Noah Edmonds-Carter has a long history in craftsmanship and design. Originally a composite boatbuilder, he has spent time constructing racing yachts, worked as a production manager for Haines Hunter, and even created boats for a ride at Disneyland Shanghai. On returning to Aotearoa, Noah switched to joinery and Toi Māori.

Noah is a director and shareholder of JB Kitchens as well as the sole owner and director of He Tohu, a supplier registered with Amotai. JB Kitchens is a kitchen joinery company based in Lower Hutt that serves both residential and commercial clients. He Tohu is a Toi Māori company that creates Māori artworks for corporate and government entities. Examples of its work include Māori art installations for Gisborne City Council (including their Kiwa Pools project), Te Tihi o Ruahine, Ernst & Young (Wellington office), and the Ministry of Business, Innovation, and Employment (Auckland office).

We interviewed Noah about some of the barriers his business has faced when engaging with buyers and what, in his view, can help to improve prospects for diverse suppliers.

Expectations and Communication Issues

Noah noted that putting together a proposal or tender response can represent a lot of work, especially for newer suppliers with little or no experience with bid writing. As with any other business, a supplier will weigh up the cost of bidding against the likelihood of success. When suppliers do not have information about what a compliant bid looks like, the task of preparing a bid becomes even more difficult for them and they are thus less likely to bid or may submit non-compliant or low-quality bids.

Noah related a relevant experience he had when he was relatively new to business. At the time, he was operating a different business and was invited by a buyer to bid as the direct contractor for a large contract. Because he had been specifically invited to bid, Noah assumed his business had a good chance of winning the contract. He was excited about the new opportunity and spent considerable effort sourcing suppliers and subcontractors. When they did not win, everyone was disappointed and discouraged.

Looking back now with the experience he has gained since then, Noah realises that this business was nowhere near where it needed to be to win such a large and complex contract. However, because he did not know this at the time, he put a lot of work into bidding for a contract he was unlikely to win.

Noah identified some key learnings from this experience. The first is that buyers should communicate clearly what they intend when they invite a supplier, especially one that is not used to working with large buyers, to bid for work. Many new entrants will take the invitation to mean that they have a high chance of winning work, but the buyer may only be sending out invitations because they want to attract a reasonable number of bids. Noah says that it benefits everyone if buyers are upfront with diverse suppliers about exactly what they are looking for and the chances of the supplier actually winning work.

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The second key learning is that it would help both the buyer and the diverse suppliers if the buyer looked at the supplier’s capacity and capabilities before inviting them to bid. (Note, the Amotai matchmaking service can help buyers with this). For instance, if having a track record of doing similar work at a similar level is likely to influence the outcome, a supplier should be made aware of this from the outset. Similarly, if the buyer is aware that the supplier has deficiencies that would need to be rectified to be awarded the bid, they should inform the supplier of areas of concern. Not only would this help the supplier manage expectations, but it would give them the opportunity to either address the deficiencies or to choose not to go through the work involved in submitting a bid.

Noah thinks that both key learnings show that clear and honest communication between buyers and suppliers — especially when the supplier is new to this level of work — benefits both parties. Suppliers will not waste time on bids they have little chance of winning and will be able to learn from their failures (and successes). Buyers will make bidding a positive learning experience for diverse suppliers, as well as making it more likely that they will win work, and, in the long run, this will help buyers improve their supplier diversity performance.

Noah noted that many buyers have a Māori lead, advisor, or entire team who could provide valuable support to buyers when carrying out supplier diversity initiatives. At present, these staff tend to be involved with projects at a high level, whereas the actual engagement with diverse suppliers is carried out by the procurement team. Noah feels that this is somewhat of a missed opportunity – in his view, involving Māori leads in the procurement process would help buyers interact with Māori suppliers, improve communications and awareness of potential issues, and, overall, lower barriers to engagement for Māori suppliers.

Value of Supplier Debriefings

While Noah thinks it is important for buyers to communicate clearly when setting out the expectations for a bid and during the process, he thinks it is equally important that buyers keep communications open after the procurement process has finished. This is because feedback is a key issue, especially for new suppliers who are just starting to bid for work at this level.

Due to their unfamiliarity with the process and expectations, newer suppliers often do not know why their bid was unsuccessful (or even successful). Therefore, feedback from the buyer provides a very valuable learning experience for the supplier, even if that feedback only explains why they lost. On the other hand, a lack of feedback can discourage new suppliers from bidding for future work, because they do not know if they are doing the right things. Noah would therefore encourage buyers to keep this in mind when dealing with new suppliers and delegate someone to provide feedback, preferably in the form of a debriefing.

Looking back to the project previously mentioned (during Noah’s early days in business), Noah recognizes that a debrief would have been very valuable. In this particular case, the buyer had intended to provide a debrief, but it did not eventuate. Without knowing for sure why they were unsuccessful, Noah assumed his business was not ready to take on large contracts and that it should ‘stay in its lane’ as a subcontractor. He also guessed that it was likely the buyer would have known this earlier on, in which case it would have been useful to know this before they put so much effort into the bidding process.

A debrief may have confirmed this or, at the other end of the scale, it may have shown that it was actually a very close result between them and the successful bidder. Even a debriefing that showed the business was nowhere near ready to engage would be very valuable – Noah could then concentrate on an appropriate level of work while making plans to improve in the future. Either way, a debriefing would help reduce the knowledge gap that new entrants have about the bidding process and contribute towards leveling the playing field for diverse suppliers.

Debriefs are another area of procurement in which a buyer’s Māori lead(s), advisors, or team would be very useful. If involved throughout the procurement process, Māori leads can ensure that debriefs take place and that information is delivered to suppliers in a constructive and appropriate manner.

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The Tendering Process

When coming in under a main contractor, it is easy for Noah and his business partner to manage the tendering process. This is because many aspects of the tender are handled by the main contractor. JB Kitchens or He Tohu are mainly then left with just the pricing to do for their component of the work, which they are more than capable of.

However, Noah has found the experience of bidding as the main contractor much more complex and difficult. Tendering documents are typically made available to suppliers, and the buyer does not then provide guidance through the process of preparing their bid. Since buyers are used to working with such processes, they may not realise how different this is for businesses that are used to being subcontractors.

If large buyers genuinely want to encourage diverse businesses to put themselves forward for working with them, they need to address this barrier by providing some form of assistance or guidance. This also is a good opportunity for the buyers to set out expectations and requirements for the bid, so that suppliers understand this before starting the work involved in preparing a response.

Similarly, if buyers want to engage and form long-term partnerships with Māori suppliers, they must understand that health and safety prequalifications and other onsite requirements cause barriers. Given there is no guarantee the supplier will get the contract, these represent costs that may not be able to be recovered.

Contract Size and Breadth

An obvious barrier to many smaller suppliers is the sheer size of some contracts and the range of work covered by a single contract. Some diverse suppliers are specialists in their field and do not necessarily want to take on other areas of work.

In the case of He Tohu, Noah’s expertise is with Toi Māori. However, since buyers do not usually separate out the Toi Māori work package from other aspects of the work, if Noah wants to contract directly with the main supplier, he will need to carry out a wider range of project tasks. For instance, in a construction project with a Toi Māori element, he would need to take on construction-related work packages which are outside the core focus of He Tohu.

Unless buyers are willing to unbundle contracts, businesses such as He Tohu are more likely to remain as subcontractors. Relegating businesses in the Toi Māori industry to always being subcontractors is not to the advantage of either the supplier or the buyer over the long term. One of the reasons for this is set out below.

Noah thinks that this is another area of procurement where involving Māori leads would help, as they are more likely to understand the value that Toi Māori brings to a project in and of itself, and hence better understand the case for unbundling the Toi Māori elements from the rest of the project work.

Mana and Respect

As with any supplier, diverse suppliers want their contributions to a project to be respected. However, when dealing with diverse suppliers there can be an extra level of importance, especially in relation to cultural aspects of a project.

For example, in the Toi Māori industry, the buyer is not just buying a decoration, but a piece of indigenous art that has its own mana. To gain full value from this transaction, the buyer needs to understand and properly respect the mana of the piece, which can in no way be reduced to its financial value. However, a common issue in the Toi Māori industry is that financials come first, then kaupapa, and then outcomes (whereas kaupapa should always come first).

As a result, the Toi Māori elements of a project are often treated as just another part of construction or even as a ‘nice to have’ component. Invariably, this means that the Toi Māori elements are the first casualty when the budget needs to be trimmed, especially if is just part of a larger work package administered by the main contractor.

What buyers and main contractors do not usually realise is that the ‘financials first’ approach devalues the mana of the art. When buyers seek to include Toi Māori into their projects, they typically envisage this as bringing an element of prestige and recognition to the space. However, in order to achieve this, the work needs to be treated with due respect. Furthermore, failing to do so makes suppliers in the Toi Māori industry less willing to be part of a project.

For Noah, this is another case in which involving the buyer’s Māori lead(s) in the procurement aspects of a project would bring additional value. A Māori lead would recognise those elements of a project that need to be kaupapa-driven and could advocate for those work packages to be treated separately (with their guidance). Not only would this safeguard against cost overruns in other parts of the project, but it would also help ensure that the buyer’s vision and intent for the artwork could be achieved. Another tip is to include the supplier early in the design process of the project. This enables the artist to use their skills and talent to help bring the desired mana and prestige to the space.

Bonds, Retentions, and Payment Terms

It is well-known that bonds and retentions are obstacles to smaller suppliers securing work, as they are simply unaffordable. Similarly, payment terms can sometimes disadvantage smaller suppliers who are more likely to run into cashflow issues while waiting for payment.

Although bonds, retentions, and payment terms are typically part of a buyer’s standard terms and conditions, buyers need to be willing to compromise if they are serious about working with new entrant diverse businesses.

Noah’s experience in this regard has been positive. When first faced with a contract that required a large retention amount and other unfavourable clauses, he sought legal advice and sent back an amended version of the contract. In this case, the buyer did not have a lot of alternatives and really needed He Tohu more than He Tohu needed them. The buyer was thus willing to accept these terms, which included a retention percentage half that of the original contract. These new terms and conditions have since become standard for further work with that buyer.

Not all Māori and Pasifika suppliers will be as fortunate as He Tohu in this regard. If a buyer has plenty of alternatives to choose from, they may not feel compelled to be acceptive of alternative terms of trade. However, it is important that buyers do take the time to consider the impact of their terms on suppliers – a small change to terms may have minimal impact on the buyer, but a large positive impact on the supplier. This is yet another area of the procurement process in which the buyer’s Māori lead(s) could provide valuable insight and assistance.

As a buyer, it pays to keep in mind that policies do not have to be fixed forever. Just as they are created by people for the benefit of the organisation and can be changed by people to better serve the interests of the organisation. A procurement policy that provides a high level of protection will also limit the number and range of suppliers willing or able to work for them. Ultimately, this disadvantages the organisation, particularly when what it is they are looking to procure can only be sourced from diverse suppliers, as is the case with the Toi Māori industry.

In concluding his interview, Noah reinforced the need for buyers to look at their procurement process using a kaupapa-Māori lens. He acknowledged that many buyers have already invested in having staff in cultural advisory roles, so the next step is to give these team members more ownership or responsibility in the procurement space. In this way, buyers will have internal resource they can draw on to identify and help remove barriers to engagement for diverse suppliers.