An Introduction toAn Introduction toPurchasing AuctionsPurchasing Auctions

Tips to Help Organisations

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Product Suitability for Product Suitability for Reverse AuctionsReverse Auctions

Increasing Cost £

Increasing Risk

LowLow HighHigh

HighHigh

TacticalTactical ProfitProfit

TacticalTactical AcquisitionAcquisition

StrategicStrategic CriticalCritical

StrategicStrategic OpportunityOpportunity

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Suitable products have the following characteristics: Strict and unambiguous specifications that ensure a level playing field A competitive market Price as a primary selection criterion Low strategic relevance or impact (green on the previous chart)

Products or commodities which have proven suitable include:

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Product Suitability for Product Suitability for Reverse AuctionsReverse Auctions

Paper Products Medical Supplies

Chemical Products Tools

Food Construction

Navigation Equipment Steel

Office Supplies Bespoke Manufacture

PPE Oils and Lubricants

Transport Telecommunications

Pallets Administration Fees

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Benefits of using Purchasing Benefits of using Purchasing AuctionsAuctions

Saves Money Saves Money Widely accessible and easy to use Widely accessible and easy to use

Increased transparency & honesty Increased transparency & honesty Increases small business utilization Increases small business utilization

Saves time in negotiation Saves time in negotiation Improves awareness of opportunities Improves awareness of opportunities

Gives purchasers more control at contract renewal Gives purchasers more control at contract renewal Improves competitive process Improves competitive process

Account managers who have successfully used the site have said:Account managers who have successfully used the site have said:  

“We were very impressed with the auction site. It is one of the best we have used. Easy to use, clear information and quick”

Karen Hardy, PolestarKaren Hardy, Polestar

“I found the Purchasing Auctions tool extremely easy to use and appreciated the guidance offered. We will definitely be using this

valuable service again, especially as we saved 33% on our spend at our first auction!  It is great to find a medium created by purchasers

for purchasers. Thank you Purchasing Auctions!”

Pauline Sumner, Peel PortsPauline Sumner, Peel Ports

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How Reverse Auctions can How Reverse Auctions can help everyone!help everyone!

Savings over previous contract value

Drives Improvements to the preparation and planning for the tendering process

Opportunity for suppliers to submit revised bids for a contract (as opposed to the formal tendering process)

Increased market knowledge for buyers and suppliers. Suppliers particularly benefit from increased awareness of competitor pricing

Provides a level playing field for suppliers

Purchasing Auctions offer training and support to both suppliers and purchasers

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The Auction & The Auction & Procurement LifecycleProcurement Lifecycle

Only a small part of the cycle, but done properly realises

significant savings with very littlehassle!

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Introducing Purchasing AuctionsIntroducing Purchasing AuctionsAs a purchasing consultancy our role is to advise companies and part of our remit has been to run reverse auctions on their behalf.  Unfortunately, our experience of market providers of online auction capabilities is that they are expensive to use and their products are invariably all-encompassing, complex and intrusive

We have recently created an auction site that is:

Web-based and delivered at a competitive price Attractive to both purchasers and suppliers in its ease of use Reliant on competitive bidding at live on-line auctions

to reduce prices Run and owned by procurement professionals with

real knowledge and understanding Offered With training and support throughout the

Auction to ensure a smooth and effective process

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Preparation for AuctionsPreparation for AuctionsPreparation is so essential for Success:

• Preparing detailed product or service specification. Preparing detailed product or service specification. The fewer parameters allowed to vary: the better. This will

help suppliers in bidding and also make the post-auction evaluation more straightforward.

• Recruiting suppliersRecruiting suppliers Some suppliers are not familiar with electronic reverse

auctions, so may not be immediately willing to join in. Suppliers will need validationvalidation in the normal way..

• Training purchasers and suppliers Training purchasers and suppliers

Purchasing Auctions can provide training

assistance on use of the website.

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Tips to Help OrganisationsTips to Help OrganisationsWe have found the following tips can help organisations run effective reverse

auctions:

1. Select and Train the Right People Prepare internal stakeholders and obtain senior leadership sponsorship.

2. Ensure Sourcing Professionals Take Ownership of the Process

3. Get the Right Tool for the Job

There are many different reverse auction platforms offering alternative solutions.

4. Have a Back Up If the auction doesn't go well, it is important to have the ability to default back to the traditional paper-based RFP process.

5. Sell it Internally In promoting the concept for the first event, emphasize things to internal customers that

will resonate specifically with them e.g. R & D speed.

6. Explain the Rules and Process Another key to building acceptance among internal customers is to explain that

they aren't obligated to accept the lowest bid in a reverse auction.

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Tips to Help Organisations Tips to Help Organisations Cont.Cont.

7. Prepare the Supply Base It is essentail to prepare internal customers for the negative supplier reactions that may

occur in connection with an e-auction. However transparency can be used to encourage

suppliers to participate in the events. Supplier training prior to an event is paramount!

It is also important to provide clear specifications and service level requirements to

suppliers ahead of the event so that there is a common understanding of what is being

bid.

8. Invite Only the Right SuppliersThere's a fine line when it comes to how many suppliers to invite to an e-auction. While

too few can mean not enough competition, too many suppliers invites those with less

than true intentions, so pre-event qualification is key.

9. Get RSVP’s Obtaining clarification on which suppliers are bidding is important to plan the

event properly.

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Tips to Help Organisations Tips to Help Organisations Cont.Cont.

10. Watch the actionA successful reverse auction should have realistic bid decrements. It is important to set

up parallel communication routes during the auction, so suppliers can communicate with

hosts if there are problems communicating via the reverse auction.

11. Talk it up! The energy and appreciation Senior Management gain from watching procurement

manage live events has been very beneficial in marketing future events. Assuming the

first event is a success, it is important to publicize the event as a procurement win that

can in turn market future events.

12. Track the Data Ensure that you obtain a percentage saving made through using the site. Where

contracts are short diarise the following years auction to ensure the process is repeated

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Purchasing Auctions Purchasing Auctions Cost OptionsCost Options

Pay as you goPay as you go

The buyer can purchase individual auctions. Consulting services may be

required to train, set up and manage the first auctions. Price will depend on the

number of suppliers taking part in the auction. Prices start from £3,000 per

auction

MultibuyMultibuy

The buying organisation can purchase a number of auctions as a package

for a set price. The package usually includes support and training for both users and

suppliers. Annual subscriptions start from £14,000

Commission on the realised savingsCommission on the realised savings

Purchasing Auctions takes a % of the savings realised by the buyer on the

agreed contract.

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ThankThank You!You!

To view an auction please go to: To view an auction please go to:

www.purchasingauctions.co.uk/screencasts

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For further information or to For further information or to discuss different options for your discuss different options for your

auction please call the team on auction please call the team on 0845 603 81610845 603 8161