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an industry look at bidding goods and services in on-line reverse auctions

an industry look at bidding goods and services in on-line reverse auctions. Objectives For Today. Industry trends in e-commerce What is an online auction? When can you use an online auction? What are the criteria to perform an action? A Case Study.

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an industry look at bidding goods and services in on-line reverse auctions

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  1. an industry look at bidding goods and services in on-line reverse auctions

  2. Objectives For Today • Industry trends in e-commerce • What is an online auction? • When can you use an online auction? • What are the criteria to perform an action? • A Case Study

  3. Pantellos is the leader in supply chain services and solutions in the energy industry Who is Pantellos and what do we do? Business Process Solutions Supply Management Service Dynamic Services Professional Services Strategic Sourcing (Supply Contracts) Contingent Workforce Rapid Business Assessments Auctions Supply Chain Improvement Projects Electronic Bid Management Training & Implementation Craft Labor Market Research &Benchmarking Supply Chain Consulting E- Settlement SupplierAdoption Marketplace Platform Integration Hub Transaction Engine DocumentTranslation Analytics Content Management

  4. Pantellos’ Auction Experience • Proven Results & Track Record • Over $ 1 Billion in Volume, 650 Auctions • Over $190 Million customer reported savings • 18% Average Savings • Over 20 utility customers, 13 are in programs • Industry Specific Expertise • Energy Industry Focused • Experience in over 100 Spend Categories • Extensive online auction experience

  5. Industry Trends In e-commerce • In 2002 ISM reported that in 84% of Global 2000 use a form of e-sourcing • 20 of the top 25 largest US Electric utilities utilize auctions • Studies find that 40% of a utility’s spend is “auctionable” • IDC reported in 2001 $192 billion of goods and services were auctioned, 2002 $ 350 billion • In 2003 est that $600 billion will be sourced on-line • On-line auctions are quickly becoming a standard in sourcing • Pantellos’ customer are experiencing 18% average savings from over $1billion in auction volume

  6. What are On-line Auctions? • A process which stems from traditional procurement methods allowing organizations to make more informed decisions through an online, competitive bidding format to obtain best available market prices. • On-line reverse auctions are transforming industries into more • efficient marketplaces

  7. First Bid $76.6M Opening Period Overtime Period 18% Buyer Goal $72.0M 10% Closing Price $64.9M Millions What Happens in a reverse Auction? GSU Transformers Reverse Auction $ 78.0 $ 76.0 $ 74.0 $ 72.0 $ 70.0 $ 68.0 $ 66.0 $ 64.0 9:30 AM 10:00 10:30 11:00 11:30 12:00 PM 12:30 1:00 1:30 2:00 PM

  8. Bidder Interface

  9. Benefits to Buying Organizations Reduction in negotiation time and effort Improved pricing, more representative of market Introduction to new, quality suppliers Improves internal processes Shortens overall procurement cycles Improved decision making capabilities Provides market transparency Compliments other supply chain initiatives Auction Value Proposition

  10. Auction Value Proposition • Benefits to Suppler Organizations • More market feedback and competitive position • Typically faster turnarounds and decisions from buyers • Typically tighter requirements • Value added positions stay in tact (MVB) • Introduction to new business opportunities • Fair and ethical process

  11. When should I consider an auction? • When it meets your procurement goals • Currently use a sealed bid process • Cost and/or Process savings • Introduction to new market • Changes in market conditions • Establish a value reference for strategic relationship • Increased pricing clarity • Establish new supplier/buyer relationships • Success Factors • 3 or more suppliers • Selection criteria is quantifiable • The good or service has some “margin” or “compressibility” in price • A clear bidding spec and a level playing field can be established

  12. Auction Categories Executed

  13. Business Case • Statistics for top ten programmatic users of auctions sorted by savings since January 2001.

  14. Closing Thoughts • It’s not all about the technology • Auctions transform traditional markets into more efficient markets • CAPS research concludes that on-line auctions will be a standard way to source goods and services

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