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An Introduction toAn Introduction toPurchasing AuctionsPurchasing Auctions
Tips to Help Organisations
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Product Suitability for Product Suitability for Reverse AuctionsReverse Auctions
Increasing Cost £
Increasing Risk
LowLow HighHigh
HighHigh
TacticalTactical ProfitProfit
TacticalTactical AcquisitionAcquisition
StrategicStrategic CriticalCritical
StrategicStrategic OpportunityOpportunity
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Suitable products have the following characteristics: Strict and unambiguous specifications that ensure a level playing field A competitive market Price as a primary selection criterion Low strategic relevance or impact (green on the previous chart)
Products or commodities which have proven suitable include:
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Product Suitability for Product Suitability for Reverse AuctionsReverse Auctions
Paper Products Medical Supplies
Chemical Products Tools
Food Construction
Navigation Equipment Steel
Office Supplies Bespoke Manufacture
PPE Oils and Lubricants
Transport Telecommunications
Pallets Administration Fees
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Benefits of using Purchasing Benefits of using Purchasing AuctionsAuctions
Saves Money Saves Money Widely accessible and easy to use Widely accessible and easy to use
Increased transparency & honesty Increased transparency & honesty Increases small business utilization Increases small business utilization
Saves time in negotiation Saves time in negotiation Improves awareness of opportunities Improves awareness of opportunities
Gives purchasers more control at contract renewal Gives purchasers more control at contract renewal Improves competitive process Improves competitive process
Account managers who have successfully used the site have said:Account managers who have successfully used the site have said:
“We were very impressed with the auction site. It is one of the best we have used. Easy to use, clear information and quick”
Karen Hardy, PolestarKaren Hardy, Polestar
“I found the Purchasing Auctions tool extremely easy to use and appreciated the guidance offered. We will definitely be using this
valuable service again, especially as we saved 33% on our spend at our first auction! It is great to find a medium created by purchasers
for purchasers. Thank you Purchasing Auctions!”
Pauline Sumner, Peel PortsPauline Sumner, Peel Ports
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How Reverse Auctions can How Reverse Auctions can help everyone!help everyone!
Savings over previous contract value
Drives Improvements to the preparation and planning for the tendering process
Opportunity for suppliers to submit revised bids for a contract (as opposed to the formal tendering process)
Increased market knowledge for buyers and suppliers. Suppliers particularly benefit from increased awareness of competitor pricing
Provides a level playing field for suppliers
Purchasing Auctions offer training and support to both suppliers and purchasers
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The Auction & The Auction & Procurement LifecycleProcurement Lifecycle
Only a small part of the cycle, but done properly realises
significant savings with very littlehassle!
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Introducing Purchasing AuctionsIntroducing Purchasing AuctionsAs a purchasing consultancy our role is to advise companies and part of our remit has been to run reverse auctions on their behalf. Unfortunately, our experience of market providers of online auction capabilities is that they are expensive to use and their products are invariably all-encompassing, complex and intrusive
We have recently created an auction site that is:
Web-based and delivered at a competitive price Attractive to both purchasers and suppliers in its ease of use Reliant on competitive bidding at live on-line auctions
to reduce prices Run and owned by procurement professionals with
real knowledge and understanding Offered With training and support throughout the
Auction to ensure a smooth and effective process
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Preparation for AuctionsPreparation for AuctionsPreparation is so essential for Success:
• Preparing detailed product or service specification. Preparing detailed product or service specification. The fewer parameters allowed to vary: the better. This will
help suppliers in bidding and also make the post-auction evaluation more straightforward.
• Recruiting suppliersRecruiting suppliers Some suppliers are not familiar with electronic reverse
auctions, so may not be immediately willing to join in. Suppliers will need validationvalidation in the normal way..
• Training purchasers and suppliers Training purchasers and suppliers
Purchasing Auctions can provide training
assistance on use of the website.
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Tips to Help OrganisationsTips to Help OrganisationsWe have found the following tips can help organisations run effective reverse
auctions:
1. Select and Train the Right People Prepare internal stakeholders and obtain senior leadership sponsorship.
2. Ensure Sourcing Professionals Take Ownership of the Process
3. Get the Right Tool for the Job
There are many different reverse auction platforms offering alternative solutions.
4. Have a Back Up If the auction doesn't go well, it is important to have the ability to default back to the traditional paper-based RFP process.
5. Sell it Internally In promoting the concept for the first event, emphasize things to internal customers that
will resonate specifically with them e.g. R & D speed.
6. Explain the Rules and Process Another key to building acceptance among internal customers is to explain that
they aren't obligated to accept the lowest bid in a reverse auction.
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Tips to Help Organisations Tips to Help Organisations Cont.Cont.
7. Prepare the Supply Base It is essentail to prepare internal customers for the negative supplier reactions that may
occur in connection with an e-auction. However transparency can be used to encourage
suppliers to participate in the events. Supplier training prior to an event is paramount!
It is also important to provide clear specifications and service level requirements to
suppliers ahead of the event so that there is a common understanding of what is being
bid.
8. Invite Only the Right SuppliersThere's a fine line when it comes to how many suppliers to invite to an e-auction. While
too few can mean not enough competition, too many suppliers invites those with less
than true intentions, so pre-event qualification is key.
9. Get RSVP’s Obtaining clarification on which suppliers are bidding is important to plan the
event properly.
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Tips to Help Organisations Tips to Help Organisations Cont.Cont.
10. Watch the actionA successful reverse auction should have realistic bid decrements. It is important to set
up parallel communication routes during the auction, so suppliers can communicate with
hosts if there are problems communicating via the reverse auction.
11. Talk it up! The energy and appreciation Senior Management gain from watching procurement
manage live events has been very beneficial in marketing future events. Assuming the
first event is a success, it is important to publicize the event as a procurement win that
can in turn market future events.
12. Track the Data Ensure that you obtain a percentage saving made through using the site. Where
contracts are short diarise the following years auction to ensure the process is repeated
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Purchasing Auctions Purchasing Auctions Cost OptionsCost Options
Pay as you goPay as you go
The buyer can purchase individual auctions. Consulting services may be
required to train, set up and manage the first auctions. Price will depend on the
number of suppliers taking part in the auction. Prices start from £3,000 per
auction
MultibuyMultibuy
The buying organisation can purchase a number of auctions as a package
for a set price. The package usually includes support and training for both users and
suppliers. Annual subscriptions start from £14,000
Commission on the realised savingsCommission on the realised savings
Purchasing Auctions takes a % of the savings realised by the buyer on the
agreed contract.
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ThankThank You!You!
To view an auction please go to: To view an auction please go to:
www.purchasingauctions.co.uk/screencasts
/
For further information or to For further information or to discuss different options for your discuss different options for your
auction please call the team on auction please call the team on 0845 603 81610845 603 8161