Get started with e auctions

Get started with e auctions

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  3 HOW MANY E-AUCTIONS HAVEYOU CONDUCTED? POLL Experience with e-auctions 21+ auctions 0 auctions 1-5 auctions 6-20 auctions
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  4 The key benefits of e-auctions Increasedsavings Increased coverage Increased efficiency Easy compliance Online and pre-qualified Fair and transparent Requires an internetconnection Improve their position Instant market feedback Most competitive participant(s) win(s)
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  5 SELECTED E-AUCTION REFERENCES FROMAN ONGOING PROJECT Electrical components • 31% savings in total • Completedin 12 weeks Lifting tools • 29% savings in total • Completedin 9 weeks Fasteners (MRO) • 43% savings in total • Completedin 10 weeks Pressure control systems • 16% savings in total • Completedin 10 weeks
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  6 E-AUCTIONTRADITIONAL NEGOTIATION SupplierSupplier Supplier Buyer Supplier SupplierSupplier Buyer Supplier Supplier Facilitated online
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  7 English reverse auction Other formats ~80% ~20% Winning bid Savings • Downwardprice movement • For buying products or services • The online negotiation can include price and non-price parameters • Recommended where supplier pricing is at the same level • Can be used in split-award scenarios RFQ pricing
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  8 Traditionally, suppliers/products are validatedduring or after negotiations In e-auctions, validation is forced to be done upfront Time Deadline for validating suppliers and products Time Deadline for validating suppliers and products E-auction and awardPreparation Preparation and negotiation 1 Preparation and negotiation 2 Preparation and negotiation 3 Award Supplier A Supplier B Supplier C Supplier D Time saved Supplier participating in sourcing process Supplier A Supplier B Supplier C Supplier D
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  9 What share (%)ofyour spend is fit for e-auction? QUESTION Which of yourcategories is fit for e-auction? HOW TO GET STARTED
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  10 Ability to specify theproduct/service Two or more suppliers THE TWO CATEGORY REQUIREMENTS
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  11 IMPACT DRIVERS Internal impact drivers Externalimpact drivers Source to contract complexity Implementation complexity Number of suppliers Level of competitive rivalry Current contractual binding Need for product/supplier approval COMPLEXITY DRIVERS Need for gathering external data Need for developing specifications Stakeholder buy-in Spend size Latest competitive sourcing Spend consolidation potential
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  12 6+ qualified suppliers inthe market No approval necessary No binding Key stakeholders are supporters of the e-auction approach Some data mustcome from external sources (significant amountfrom few suppliers) Global frame agreements with several vendors can cover 50- 80% of spend Yearly spend EUR 3-6m 2+ years since lastnegotiation Low supplier interestin the auctioned spend Limited supplymarketcapacity and low supplier interestin the auctioned spend Excess supplymarketcapacity and high supplier interestin the auctioned spend Medium supplier interestin the auctioned spend High supplier interestin the auctioned spend Few simple specifications (maximum 1 week fully allocated) No need for any resources to develop specifications Complexand customised specifications (minimum 1 month fully allocated) Customised specifications (minimum 1 week fully allocated) Complexand customised specifications (minimum 2 weeks fully allocated) Yearly spend EUR 0.5-1.5m 0.5-1 years since lastnegotiation 3 qualified suppliers in the market Limited data mustcome from external source (small amountof order lines from one supplier) 0.5-year binding Requires little investmentin internal/external approval and no engineering resources Yearly spend < EUR 0.5m 0-0.5 years since lastnegotiation 2 qualified suppliers in the market No need for external data Global frame agreementwith a few selected vendors can cover +80% of spend All data mustcome from external sources (large amountoforder lines and suppliers) 2+ years’ binding Requires significantinvestmentin internal/external approval and internal engineering resources 1-1.5 years since lastnegotiation 4 qualified suppliers in the market 1-year binding Requires little investmentin internal/external approval and engineering resources Global frame agreements with few selected vendors can cover 50-80% of spend 1.5-2 years since lastnegotiation 5 qualified suppliers in the market Most data mustcome from external sources (large amountof order lines and suppliers) 1.5 years Requires some investmentin internal/external approval and engineering resources Key stakeholders are advocates of the e-auction approach Key stakeholders are trying to block the e-auction approach Key stakeholders are neutral aboutthe e-auction approach Key stakeholders are critical of the e-auction approach Global frame agreements with several vendors can cover 20- 50% of spend Not possible to consolidate spend as local entities use own preferred suppliers Yearly spend EUR +6mYearly spend EUR 1.5-3m 21 53 4 IMPACT/COMPLEXITYSCORE Need for developing specifications Level of competitive rivalry Spend consolidation potential Need of product/ supplier approval Need for gathering external data Number of suppliers Latest competitive sourcing Stakeholder buy-in Current contractual binding Spend size ComplexitydriversImpactdrivers ImplementationSourcetocontractExternalInternal
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  13 = Size ofspend* Category example Impact HighLow Low Complexity High 4 3 5 5 5 2 3 1 1 2 Need for developing specifications Level of competitive rivalry Spend size Need of product/ supplier approval Need for gathering external data Number of suppliers Latest competitive sourcing Stakeholder buy-in Current contractual binding Spend consolidation potential ComplexitydriversImpactdrivers ImplementationSourcetocontractExternalInternal Example of selection matrixExample of scoring = Size of spend
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  THE 6-STEP MODEL todevelop the e-auction strategy 3. Cost model 1. Winning criteria 2. E-auction types 4. Live feedback 5. Item structure 6. Length of auction
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  15 Should handicaps begiven to certain suppliers based on non-price attributes? 100 94 6 Comparable rate in auction Rate Value Value-added services Location CSR Liability Safety TVO MODEL ADJUSTMENT TOTAL VALUE OF OWNERSHIP MODEL
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  16 DOS DON’TS Our experience hastaught us the dos and don’ts of e-auctions