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

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


Objectives for today

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


Who is pantellos and what do we do

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


Pantellos auction experience

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


Industry trends in e commerce

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


What are on line auctions

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


What happens in a reverse auction

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


Bidder interface

Bidder Interface


Auction value proposition

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


Auction value proposition1

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


When should i consider an auction

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


Auction categories executed

Auction Categories Executed


Business case

Business Case

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


Closing thoughts

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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