Post on 30-Nov-2014
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E-Auctions
Zerrin Lovett
Head of Strategic Stakeholder Management for Construction
UNCLASSIFIED
What is an E-Auction
• Good for high volume
standard products
• Think of Ebay where the
price reduces
– Prices can be adjusted
whilst auction is livewhilst auction is live
– Suppliers are measured on
both cost and quality
aspects
UNCLASSIFIED
Typical Savings Achieved from E-Auctions in IT
48.96
40
50
60£m
eAuction value at pre-auction prices Savings
5.80
16.10
10.60
5.70 6.608.02
13.70 13.7012.50
20.40
1.30
4.602.40 1.72
2.70 2.93
6.805.20 5.70
10.51
6.05
0
10
20
30
1 2 3 4 5 6 7 8 9 10 11
eAuction #
UNCLASSIFIED
Background to London’s Highways E-Auctions
• Capital Ambition used e-
auctions previously
• Essex achieved approx
10% savings for blacktop
• London Highways
transformation project –transformation project –
changing the face of
highways contracts
• Aggregation with WMHA
UNCLASSIFIED
Traditional Route to Customers
ContractorsContractors
Highways Highways Highways
Service Suppliers
Materials Suppliers
Component Suppliers
Contractors
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
UNCLASSIFIED
Competitive Rivalry
High if: Low if:
High number of Low number of Street High number of
competitors
Low number of
competitors
Low number of
customers
Fragmented customer
base
UNCLASSIFIED
Salt
London
Highways
Street
Lighting
Lamps
Combined
Contracts
Principals of E-Auction
Electrical Testing I
UNCLASSIFIED
Electrical Testing II
UNCLASSIFIED
New Model
Main Contractors
Component
Suppliers
Main Contractors
Service Suppliers
Materials Suppliers
Component Suppliers
Skills
Suppliers
Materials
Suppliers
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
Highways Authorities
UNCLASSIFIED
Pathfinder E-auction - Streetlighting Lamps
30%
40%
50%
60%
Sav
ing
Indicative Savings SON T Master
UNCLASSIFIED
0%
10%
20%
30%
B A A B A B A B A B
50 Watts 50 Watt 70 Watts 100 Watts 150 Watts 250 Watts
Sav
ing
Suppliers/ Wattage
Total
Running an E-auction
• Identify new
opportunities
• Measure volumes/values
• Measure unit costs
• Liaise with potential • Liaise with potential
suppliers
• Run procurement
process
• Run e-auction
• Let contracts
UNCLASSIFIED
Moving forward
• Move to standardisation across the Capital / Country
• Aggregate demand across country
• Identify areas where e-auctions • Identify areas where e-auctions can make most impact
• Continue to measure unit costs
• Greatest savings occur in first round of auctions
UNCLASSIFIED
1. GE used to run reverse auctions before the Internet, with bidders sitting
in a series of rooms in a hotel, with a GE person slipping the latest price
under the door.
2. Items sourced by e-auction include ejector seat components, missile
components.
3. Both BP and GlaxoSmithKline each run a over 1000 of e-auctions every
year.
A Few E-Auction Factoids
UNCLASSIFIED
Any Questions?