After a year when road salt prices were significantly higher than normal, prices appear to be declining for this year. eBridge hosted our first road salt bid of the 2010 season for a large Midwestern county.
Six suppliers from across the country bid on the contract. Throughout the course of the competitive bidding event, first place changed hands 19 times, resulting in a total of 98 bids placed among the six suppliers.
The bid concluded at 7.99% lower than 2009 purchase price, providing savings versus last year’s budget for the county and providing a key indicator that prices may be dropping for the 2010 salt purchasing season.
Since the late 1990’s, reverse auctions have revolutionized purchasing through the competitive bidding environment and transparency.
While the case for reverse auctions is obvious, many are challenged by determining the best items to purchase through the process, as not every item is a fit.
In order for an auction to be successful, ask the following questions:
1. Are the specifications neutral and open to competition?
2. Does more than one supplier or company provide this good or service?
Below is a story highlighting the success for a purchase that had open specifications and was able to bring more than one supplier to the able to compete for the business.
A mid-western company needed to purchase furniture to outfit a new facility. BidBridge operations staff worked with the purchasing organization to establish open and neutral specifications and bring additional suppliers to the table.
During the reverse auction event, the suppliers competed aggressively with one another, placing 55 bids through the event and first place changing hands 27 times.
At the conclusion of the event, first and second place suppliers were separated by a mere 0.23%, indicating true market value had been achieved. Based on the company’s budget, the final pricing was 40% lower than expected.
This case study is yet another example of how the competitive bid environment is achieving true market value for buyers and gives suppliers the opportunity to place additional bids in order to win new business.
Saves 28% versus budget on two year contract
A large city in Florida partnered with BidBridge to engage in a contract for the purchase traffic signs to outfit the city for the next two years.
Ten suppliers participated in the bid, placing 164 total lowering bids over the course of the 30 minute bid. First place changed hands 34 times. At the conclusion of the bid first and second place suppliers were a mere 0.26%, indicating true market value had been achieved for the purchase.
A Midwestern state’s water district engaged BidBridge for the purchase of two water treatment chemicals. The bid was comprised of four line items, with pricing segmented out for a 6 month and 1 year contracts for each. The chemicals included ferric sulfate and hydrofluorosilicic acid.
Seven suppliers placed a total of 31 lowering bids over the course of the one hour, 58 minute event. The final overall pricing for the event yielded a 21% savings versus budget.
The buying organization was thrilled with the pricing and is slated to run several more events through BidBridge reverse auction process in the near future.
In an article by Matt Chafkin from Inc Magazine, the writer provides some tips for competing to win in a reverse auction. He also includes a history and opinions from both buyers and suppliers regarding the technology that is quickly becoming industry standard for businesses that want to remain competitive in America today. Below is an excerpt. The full article can be found here.
How to Compete in a Reverse Auction
A growing number of large companies are forcing suppliers to bid through reverse auctions. Here’s how to survive one with your margins intact
By: Matt Chafkin
On days when Gartner Studios is trying to lock down a major sale, Greg Gartner turns his employee lounge into a war room. An arsenal of laptops and phones and reams of data are brought in for employees to use. Shouting matches among workers are common. So is heavy perspiration. If Gartner’s team wins the deal, there’s a lot of whooping and the boss hands out tequila shots. These back-breaking dealmaking sessions can last for eight hours or more.
For Gartner, a company that supplies stationery and related products to mass market retailers and office superstores, selling paper ain’t what it used to be. Deals that 10 years ago would have started with a cold call and ended months later with a handshake are now governed by a process that was virtually unheard of when the Stillwater, Minnesota, company was founded in 1998: the online reverse auction.
During a reverse auction, a customer allows suppliers only a short window of time to bid down the price on their products or services. The practice was pioneered by automotive and aerospace buyers, which used reverse auctions to procure commodity parts. Today, many large companies use them to buy everything from paper clips to their employee health care plans. Reverse auctions are loved by corporate purchasing managers, loathed by suppliers, and rarely discussed publicly by anyone involved.
Click here to read the full article.
This city partnered with eBridge for the purchase of 400 fuel operated coolant heaters, with specifications for 200, 300 GPH capacity and 200, 120 GPH capacity.
BidBridge sourced 35 suppliers for the bid, with six suppliers approved by the buyer to participate. The 56 minute bidding event yielded 98 bids, 18 first place turn overs and 47 time extensions.
The competitive bid environment yielded 1.15% between first and second place suppliers, indicating true market value had been achieved for the city’s purchase. The overall savings versus budget was 29.17%, presenting a compelling case for the city to award the bid.
Stephen Lewis Brings More than 17 Years of Business Management and Development to Louisville eAuction Service Team
LOUISVILLE, KY- February 2nd, 2010 – BidBridge, an eAuction services provider for the public and private sectors, today announced the addition of a new Vice President of Sales. Stephen Lewis is an experienced Fortune 500 Senior Sales Manager who will bring more than 17 years of business management and development experience to the BidBridge sales team.
Lewis joins BidBridge in a leadership, management and coordination role for the sales team. Prior to joining BidBridge, Lewis was the Senior Zone Sales Manager at Paychex, Inc., where he led and supported the efforts of a regional sales division of skilled sales professionals and support staff. He holds a B.A. in Organizational Management from Ashford University and completed the Executive Scholars Program in Marketing & Sales at Northwestern’s Kellogg School of Management.
“Stephen’s extensive experience, strong work ethic and professional attitude make him an integral addition to our sales team,” said BidBridge CEO Jim Headlee.
“As a leader in the eAuction services industry, BidBridge was the logical next step for me and a great professional opportunity,” said Lewis. “Representing a cutting-edge technology and forward-thinking procurement strategy, the company has a lot of potential for expansive growth in 2010.”
About BidBridge
Founded in 2002, Louisville-based BidBridge provides fully managed e-auction services to both the public and private sectors. Through its competitive sourcing and online procurement system and services, BidBridge assists its buyers in achieving true-market value for the goods and services needed for ongoing business operations. Significant cost reductions and procurement efficiencies have allowed BidBridge’s buyers to save millions of taxpayer, corporate and investor dollars, ultimately producing a positive effect on compressed budgets.
For more information, please visit: www.bidbridge.com.
A national insurance company partnered with BidBridge for the purchase of steel case furniture through its dynamic eAuction platform.
Due to the unique nature of the furniture, two steel case suppliers competed in the reverse auction process, logging 56 bids and 25 time extensions, demonstrating the competitive nature of the dynamic bidding environment.
First place changed hands 19 times, with the two suppliers concluding their bidding with a 0.01% spread between first and second place, indicating true market value was achieved.
The insurance company achieved a 23% savings versus budget for this purchase.
By Anna Field
Published: December 22 2009
The Obama administration will use an “Ebay in reverse” system as part of its efforts to cut $40bn in contracting costs from the federal budget each year.
Officials said yesterday they had already found $19bn (€13.3bn, £11.8bn) in savings for the current fiscal year.
The strategy, which would also see federal agencies banding together to buy the likes of stationery and software, was part of President Barack Obama’s directive to end unnecessary contracts and improving acquisition management, the White House said.
“We are here today for a simple reason: at a time when we face not only a fiscal crisis, but also a host of difficult challenges as a nation, business as usual in Washington just won’t do,” Mr Obama said after the White House’s Office of Budget and Management announced its plans for cutting waste.
“After years of irresponsibility, we are once again taking responsibility for every dollar we spend, the same way families do,” the president said.
US government spending on contracts more than doubled between 2002 and 2008, with contract spending reaching $540bn last year. Notably, the value of “high risk” contracts, awarded without open competition, increased by 129 per cent to $188bn during the Bush administration years.
Mr Obama in March issued a directive to government agencies to save $40bn in contracting costs in the year ending September 30 2011. The report published on Monday identified $19bn, or 3.5 per cent, in savings that could be made by the end of September next year.
“No business, large or small, could survive the continued waste and mismanagement the federal government has experienced,” Jeffrey Zients, OMB deputy director for management, told reporters on Monday morning. “It’s illogical, it’s unacceptable, and we will fix it.”
As an example of how money could be saved, the Department of Energy’s national nuclear security administration would conduct “reverse auctions” where contractors could bid online, with the lowest bid winning.
This “Ebay in reverse” system was expected to save the NNSA about 18 per cent on each contract, Mr Zients said.
Under the cost-saving measures, agencies have identified initiatives to reduce by 10 per cent the money spent through new high-risk contracts.
Suppliers Actively Compete for New Q1 Coal Contract
TRION, Ga., Jan. 19– At the end of 2009, Mount Vernon Mills, Inc. closed a contract that helped the company acquire coal for manufacturing operations over Q1 of 2010. The organization teamed with BidBridge, a proven eAuction services provider for the public and private sectors, to leverage an electronic reverse auction platform.
Mount Vernon Mills, Inc. is a diversified and integrated manufacturer of textile, chemical and related products for the apparel, industrial, institutional, and commercial markets. The company’s Trion, GA location consumes approximately 1200 tons of coal per week to fuel diverse manufacturing operations like the production of denim, fabrics with indigo and sulfur dyeing, piece dyed and finished fabrics (cotton and blends) including flame retardant, military uniforms, sportswear and career apparel.
Trent Jordan, Division Controller for Mount Vernon Mills’ Trion location, chose BidBridge’s unique eProcurement platform because it was the best option for running a smooth, efficient bid that could potentially save money for the organization. In partnering with BidBridge, Mount Vernon Mills placed its suppliers in a forum that allowed them to actively compete for the company’s business.
In an event that logged 35 first place turnovers and 76 time extensions, four suppliers placed 84 bids to win the business. The bid event resulted in a significant cost savings that represents just one of the many benefits purchasing organizations gain by using BidBridge’s e-Auction platform.
“With BidBridge, the bid event ran smoothly, and we were able to monitor the entire process as it unfolded via the company’s web-based platform,” said Jordan. “At no cost to us, we were able to leverage the dynamic transparency and reporting capabilities provided by BidBridge to keep the reverse auction process under our control at all times.”
About BidBridge
Founded in 2002, Louisville-based BidBridge provides fully managed eAuction services to both the public and private sectors. Through its competitive sourcing and online procurement system and services, BidBridge assists its buyers in achieving true-market value for the goods and services needed for ongoing business operations. Significant cost reductions and procurement efficiencies have allowed BidBridge’s buyers to save millions of taxpayer, corporate and investor dollars, ultimately producing a positive effect on compressed budgets.
For more information, please visit: www.bidbridge.com.