Restaurant Groups Looking for Ways to Create Efficiencies in Supply Chain

Today’s Wall Street Journal features an article about the initiatives large restaurant chains are taking to create efficiencies in their supply chains.  Companies like Starbucks, Darden Restaurants (owner of Red Lobster and Olive Garden chains) and Texas Roadhouse are hedging prices on ingredients and looking for ways to purchase cooperatively to give the groups more buying power and more leverage with their suppliers.

“We’re seeing a level of sophistication in supply-chain management that didn’t exist five years ago,” said Dave Donnan, a partner in the consumer products practice at consulting firm A.T. Kearney.  “The separation of those that will succeed and those that will fail will be based on attention to detail.”

How is your organization paying “attention to detail” to improve your supply chain?

Click here to read the full article.

Practicing Boldness in Reverse Auction Procurement

Each month eBridge focuses on a character trait to help staff grow personally and professionally- and to exemplify these traits in our daily business interaction with customers.  This month we are focusing on boldness- “the confidence to say or do what is true, right and just”.

Each day eBridge provides value to our customers through our leadership in the reverse auction process.  Part of this process is encouraging our clients to be “bold”– with their suppliers, internal purchasing teams and with company leadership- to implement a new idea – even if it goes against status quo.

In the same way, we commit to our customers to be “bold”: to do what we say we will and be worthy of their trust.  This means operating with transparency and challenging them to be more efficient in their purchasing process.

In our discussion about boldness, one member of our team pointed out, “boldness is like a muscle we exercise.  The more we use it, we increase our ability to act with courage in the future.”  Another team member pointed out, “fear keeps us from being bold.  If you don’t face your fears, you will start making choices to avoid them rather than overcome them.”

We encourage you to join with our team this month and practice boldness by facing your fears and exploring opportunities to challenge the status quo.  What areas of growth does your organization have and where can you practice boldness to help achieve more remarkable results?

Keep it Clean: Hospital Uses Reverse Auction for Linen and Laundry Service Contract

A large hospital system engaged eBridge to help establish a three year contract for laundry and linen services.   eBridge worked with their procurement team to first identify purchases over the next year that would be appropriate for the reverse auction process.  Next, eBridge’s team helped the group develop a set of specifications for the bid.

“It had been several years since the hospital had opened this item up for competitive bidding so they didn’t have a set of specifications that appropriately appealed to a wide group of suppliers,” said Rebecca Flaherty, Senior Procurement Manager at eBridge.  “My team collected the requirements as directed by the hospitals’ team and then helped write specifications that were both thorough and clearly defined, positioning the bid to be highly competitive and fair.”

A total of eight suppliers were approved by the hospital’s team and included in the bid opportunity.  eBridge’s strategic sourcing efforts brought 6 new suppliers to the table for this event.

The suppliers placed 140 bids with first place changing hands 11 times.  At the conclusion of the bid, the hospital had saved 28% versus budget, with the three lowest bidders within a close margin.

State Agency Uses Reverse Auction to Save 66% on Highly Specialized Medical Materials

The Department of Health and Environmental Concerns for a state government utilized eBridge procurement services and reverse auction platform to purchase newborn screening forms.  This highly specialized paper is used in the initial testing done on new born children.

The bid included two suppliers who placed multiple lowering bids throughout the 30-minute event.  Manufacturers and distributors of this highly specialized material must be FDA approved and meet tough regulations.

During the reverse auction event, first place changed hands four times and suppliers’ final bids were less than 2% apart, indicating true market value was achieved.    The final savings was 66% versus budget and the incumbent’s price was $100,000 lower than the existing contract.

This state and eBridge have an exclusive contract and have run millions of dollars through the reverse auction saving an average of 22% overall.

Temporary Labor Service Reverse Auction Bid Yields 14% Savings for Freight Company

A national commercial freight company engaged eBridge to establish a contract for temporary labor services.  The specifications outlined solicitation for three classes of workers with pricing requested for regular hourly wage rates and overtime rates for an 18 month contract.

eBridge’s procurement team worked closely with the company to create specifications that allowed multiple companies to bid on the contract.  eBridge led both the buyer and suppliers each step of the process, as it was the first reverse auction experience for many of the participating suppliers.

Seven suppliers were approved and participated in the event, placing a total of 187 bids during the reverse auction.  First place changed hands 21 times and first and second place suppliers were separated by a mere 0.17% indicating true market value for the labor services was found.  At the conclusion of the event the buyer saved 14% versus budget or approximately $1,806,000.

Start up the Generators: Another Successful Reverse Auction!

eBridge partnered with a Michigan-based company to assist them in their purchase of 64,000 gallons of diesel fuel.  The bid featured three suppliers, who placed a total of 250 bids throughout the reverse auction event.  First place changed hands 103 times and first and second place finished within 0.04%.  These two statistics showcase the competitive nature of the bid.

At the conclusion of the reverse auction, the company saved 16% versus their original budgeted amount.

The company’s purchasing director remarked, “Our organization has incorporated eBridge’s process as a best-practice in our purchasing strategy.  We have run several events with eBridge and, again, have achieved great results.  We can’t wait for our next bid!”

New Zealand Airline Offers Discount Tickets through Reverse Auction

A popular reverse action service from Air New Zealand is now a significant part of its fare distribution system following a major upgrade of the platform.  Grab-a-Seat originally launched around three years ago and was only used ad-hoc to shift seats on specific occasions, but it did attract a reasonable following and was a useful way of offloading distressed fares.

Air New Zealand has now taken the plunge and relaunched the system as an always-on service, meaning there is a ticket deal available through reverse auction every 15 minutes, 24 hours a day.

What do you think?  Is this an effective way for Air New Zealand to create efficiencies in ticket sales?

Article from the Reverse Auction Research Center, David Wyld.

Community Bank Uses Reverse Auction Process to Purchase ATM Machines

Earlier this week eBridge ran an auction for a regional bank for the purchase of ATM machines.  The bank needed to purchase 20 new machines to comply with new ADA standards.

Due to internal software integration, the company solicited two vendors of these highly specified machines.  During the auction event the two suppliers place one lowering bid each, for a total of 4 bids throughout the course of the 30 minute bidding event.  Although the bid was not very active by eBridge reverse auction standards, the customer was floored by the results.

Because this is a community bank, any savings and efficiencies the bank creates in procurement directly affect its ability to enrich its local community.  At the conclusion of the event, the customer was very pleased.  But don’t take it from us!  Here’s what the chief procurement officer had to say:

“That was some really cool stuff today. I know Jim thought it could have been more exciting but believe me, we were thrilled. I can’t imagine how an “exciting” one would be…I’m touting this as a $400,000 savings.  Covers my salary for several years.  Thanks again!”

Audio interview on IT success and failure

Below is a link to a recorded audio interview discussing IT success and failure from a CIO perspective.  It includes discussion of collaboration and knowledge sharing on the subject between Mike Krigsman from ZD Net’s blog “IT Project Failures” and Mike Gammage, consultant for consulting firm, Nimbus Partners

Click here to listen!

Pharmecutical firm Draws Criticism for using Reverse Auction on PR Contracts

The Holmes Report recently published an article about GSK (GlaskoSmithKlein) using a reverse auction to streamline the organizations’ agency expenses.

“The pharma giant asked as many as 40 agencies that comprise the roster to take part in the online process, which ranks agencies according to their proposed costs for different services. The roster, which oversees at least £5m in fees, is believed to include such agencies as Ogilvy Healthworld, Chandler Chicco, Huntsworth Health, Waggener Edstrom, Weber Shandwick, Red Door and Virgo.

The GSK reverse auction comes after the company ran a similar exercise last year to refine its European PR roster from 20 agencies down to 10. “The process is not dissimilar from other big pharma companies,” said one source from a participating agency. “As an industry we can moan about it, but it’s a reality.”

While GSK maintains using the reverse auction has helped them, participants feel the process “treat[s] PR like paperclips and printers,” in a bid to drive down expenditure.

A spokesperson for GSK rebuttals, saying “It’s not a Tesco-esque bullying of the little guy,” added the participant. “The real question is – is there business once you’ve gone through that? There should be some level of guaranteed business.”

What do you think?  Is agency work appropriate for the reverse auction?