A healthcare system with over 2000 beds partnered with eBridge to establish a contract for trashcan liners. Six qualified vendors placed 134 lowering bids during the online reverse auction, and the winning offer created a net savings of 13% or roughly $55,000 per year. But in addition to saving money, the eBridge process helped their procurement team created value in 5 additional ways.
- The IDN reduced waste by over 20% (according to director of Environmental Services), by buying liners in rolls rather than flats—flats are harder to store on ESD carts, and are easily scattered and lost.
- Reduced the number of SKUs from 21 to 10, so the staff has less inventory to track.
- Increased recycling and lowered waste hauling costs by buying clear bags instead of black. Recycling company will not accept black liners, and as more waste is sent to recycling, the client pays less for the municipal landfill service—and less waste goes to the landfill.
- Improved quality of office can liners from 0.3 to 0.7 mils, so bags will be less likely to tear, cause spills, etc. Case weight increased from 7.7 to 17.9 lbs.
- Established better terms by consolidating purchases to one primary vendor, and locking in pricing for one year, rather than remaining vulnerable to price changes every 3 months.
The eBridge customized RFP process is about much more than price. We help our clients procure the right products and services, from the most qualified vendors, with the best contract terms—helping their procurement team capture cost savings throughout every step!
Interesting read from Supply Chain Review about the rising interest in demand for procurement solutions- including reverse auctions.
Large enterprises are back in the market driving big deals, while mid-market firms are implementing sophisticated procurement systems for the first time.
Cloud computing is behind most of the positive trends in this market, including increased adoption, improved collaboration and new forms of application functionality.
I expect 2011 will be a strong year for the procurement systems market.
There is a great article out on Spendmatter.com about the impact of the falling Euro on sourcing, procurement and supply chain strategies. Procurement professionals have to develop strategies to circumvent the damage the failing Euro has done to the economy. Contracts have to be rewritten, new sourcing strategies developed and currency hedging will be vital for a successful 2012 business year.
The current unemployment rate has everyone looking at where the American jobs are going. As companies strive for best value, jobs are outsourced to lower priced manufacturers. Of course this low cost comes at a price, the loss of American jobs. So which should the procurement professional be more concerned with, the lower price or the possible job loss?
This issue has been debated from every angle, politically to economically. Ideally, the procurement professional should be concerned with the best-value sourcing, whether that is local or global. Saving money on manufacturing parts internationally, may allow the company to add jobs locally in another area. There will always be disagreements where outsourcing is concerned, however don’t allow this issue to undermine what a procurement was designed for. Concentrate on finding the best-value sourcing for your company, and incorporate those savings to enhance your company.
eBridge prides itself on being a fully managed reverse auction service provider. We provide strategic sourcing based on the criteria provided by the buyer. We source for local, national, or global suppliers, based on our buyers needs. We average 36 suppliers to a buyer’s bid, and strive to reach “true market value” on every bid.
The European financial meltdown has made headlines worldwide, but it is just a small part of the global economic crisis. The devaluation of the Euro has many global businesses wondering if global sourcing is such a good idea. Procurement organizations have to consider the outcome of the volatile currency markets, when considering their supply chain risks. Currency hedging is a difficult game to play in a stable market, let alone in such a risky economic environment. In light of this, global supply contracts are being reevaluated, for more local options. Businesses are buying and selling locally, to avoid the risk of currency inflation loss.
eBridge prides itself on being a fully managed reverse auction service provider. We provide strategic sourcing based on the criteria provided by the buyer. We source for local, national, or global suppliers, based on our buyers needs. We also average 36 suppliers to a buyer’s bid.
The failing economy has almost everyone on edge, waiting to see if the next turn will be for better or worse. The job market is increasing marginally, but not fast enough. The downgrading of the U.S. and several European countries’ credit ratings was a blow to the global economy. The stagnant economic growth looks like a bleak outlook on a prosperous future.
However, there are some who disagree, and say we are just in a transitional period. Technology improves so fast, that man often can’t keep up. As soon as we upgrade our technology, a new invention makes it obsolete. There are some scholars who believe our economy will level out, when people adjust to the new digital economy. When major technological advancements are made, it takes time for their adjustments to be accepted. The current argument is whether or not, once these adoptions are accepted if the economy will then catch up?
Let us know what you think? Do you agree with these thoughts, and we are just in a technological transitioning period? At eBridge we believe in an integration of personal interaction with a technological platform. We provide fully manage reverse auction services, within our platform and our customer service. To learn more about eBridge please contact us at: 1-877-245-8880, or visit our website http://www.ebridgeglobal.com.
The federal government has been using reverse auctions for many years, purchasing $1.15 billion worth of products and commodities through reverse auctions in fiscal 2010. While their purchasing process is different than how private companies purchase, it’s important to note that they are using the technology as a standard purchasing technique and see the value of finding true market value when using tax payer dollars. Click here to read the full story.
Jamie Gracia writes an excellent article on barriers to entry for reverse auctions in the Government sector. His article below outlines some fears of government agencies adopting the technology and why it is important to embrace this technological advancement that is quickly becoming industry standard practice in professional purchasing.
By Jaime Gracia on December 17, 2010
As Government continues to leverage its buying power through continued fiscal pressures, one process that is not getting enough attention is the use of reverse auctions. Reverse auctions are an effective and efficient means of realizing large savings on purchases of not only commodities, but highly defined services as well. Although current initiatives exist such as the General Service Administration’s (GSA) Federal Strategic Sourcing Initiative (FSSI), which encourages adoption of industry best practices, federal buyers are simply not going far enough in leveraging their buying power to maximize price savings. To achieve maximum efficiency, the Government should begin to create holistic strategic souring initiatives that include reverse auctions as a mechanism for cost savings, since programs such as FSSI are simply catalog buys to bidders that have been pre-qualified, and mimic the GSA Schedules program. Further, many Program Managers and other acquisition officials I have spoken to state that they do not always get the best prices by using these types of pre-negotiated arrangements, and thus buy either directly from vendors or execute procurements outside these initiatives. The result is ineffective buying and the continuation of not maximizing efficiencies to the detriment of the taxpayer.
Reverse auctions are by definition a structured competitive bidding event where competition can be maximized to help drive the price lower over the course of the event. One common reason I have heard for the poor adoption rate is technology barriers, which is a frankly a disingenuous reason. The benefits of potentially significant cost savings, enhanced transparency, increased collaboration, and increased competition all outweigh any barriers that seem to be artificially created by Federal organizations. If the Office of Management and Budget (OMB) and the Obama Administration are serious about Open Government and accountability, then enhanced adoption of reverse auction should be further explored.
Another stumbling block to adoption is the issue of transparency, as the risk adverse nature of Government creates issues that should not exist through fear of protest that seems to be paralyzing acquisition decision-making. The reverse auction process is Acquisition 2.0 in motion, as reverse auctions create a structured and automated negotiation process with transparency at its core, since the process depends on vendors creating a clear and documented process for creating the pricing structure and the subsequent contracted price. It is the openness of the process that should be embraced, since the reverse auction allows for real time pricing feedback, and also allows acquisition officials to have real time visibility into the negotiation. This type of structure and the transparent process creates and enhances competition, reduces complexity, enhances collaboration, and ensures compliance with the acquisition policies and regulations.
It is these types of procurement methods that should be embraced, and will need to be further explored to help create holistic strategic sourcing initiatives for realizing true cost-savings by adjusting processes, ensuring leadership drives change, and breaking the endemic status-quo culture of Government. Successful examples of reverse auctions already exist through both Defense and civilian agency use, so lessons learned are available for use and need to be expanded upon to help with widespread adoption. As OMB continues to issue guidance on improving federal acquisitions and government management in general, reverse auctions need to be part of this process of continuous improvement and increasing accountability to the taxpayer.
Click here to read Mr. Gracia’s blog.
During hard economic times, asking tough questions can be a key factor to the success of your business. It is often uncomfortable to ask about the financial health of your business partners, but knowing those answers is vital to your business’ economic health. Buyers and Suppliers must have an honest discussion during the procurement process, or both could face heavy losses with extreme economic consequences.
An excerpt from the article Risk Management Requires Tough Questioning, By Paul Teague, highlights how many business have been affected by this economy over the last few years.
Here is a startling statistic: 49,895 businesses filed for bankruptcy in the US federal courts during the 12-month period ending September 2011. Think that’s a big number? It is – but it’s 14% lower than the number for the 12 months that ended in September 2010. In other words, business bankruptcies in the US have gone down despite a less-than-stellar economy. From a macro-economic perspective, that’s good news. From a micro-economic perspective (that is, your own personal business world), it’s only good if none of your key suppliers were among the companies going bust.
Companies, large and small are doing everything possible to add to their bottom line. They are looking for innovative ways to cut cost, and find true market value for their purchases. Reverse Auction is an exciting method that allows multiple suppliers to bid against each other, allowing the buyer to receive competitive pricing. Purchasing at true market value will allow for a more accurate budget to be developed.
eBridge provides a fully managed reverse auction service, and understands the needs of companies facing financial struggles. Our procurement team would be happy to show you how our process can work effectively with your procurement procedures.
Please contact us at firstname.lastname@example.org, or call us toll free at 1-800-245-8880.
To read Paul Teague’s article in its entirety click here: http://blog.procurementleaders.com/procurement-blog/2011/12/12/paul-teague-risk-management-requires-tough-questioning.html?printerFriendly=true
A press release in the Camden, SC, Chronicle-Independent, on October 7, 2011:
Vic Carpenter, County Administrator for Kershaw County, worked closely with eBridge to implement the first reverse auction for the task force. “Working with taxpayer dollars, it is imperative to look at ways to innovate while still providing the highest quality products and services to our community,” said Carpenter. “eBridge’s fees are paid by the supplier that is awarded the contract, so the agencies will realize all of the savings achieved through this bid.” The bidders all had to provide samples in advance of the bid and had to be pre-approved before participating in the reverse auction.
“Thanks to the Synergy Task Force’s innovative, forward thinking approach to purchasing, the agencies were able to save thousands of dollars” remarked Jim Headlee, CEO of eBridge. “It was great to work with a government agency that embraces technological change and shows great foresight and responsibility in spending taxpayer dollars.”
“The Synergy Task Force is continuing to work together and we are eager to pursue other opportunities built upon the success of this first project” said Carpenter.
To read the entire article from the Chronicle-Independent, click here: Local Agencies Take Innovative Approach to Cutting Costs.htm
To read the blog post from Kershaw County Schools Superintendent, click here: http://kcsdblog.wordpress.com/2011/10/07/collaborating-to-save-money/