E-Auctions

Zerrin Lovett

Head of Strategic Stakeholder Management for Construction

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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

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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 #

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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

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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

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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

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Salt

London

Highways

Street

Lighting

Lamps

Combined

Contracts

Principals of E-Auction

Electrical Testing I

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Electrical Testing II

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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

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Pathfinder E-auction - Streetlighting Lamps

30%

40%

50%

60%

Sav

ing

Indicative Savings SON T Master

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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

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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

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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

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Any Questions?