an industry look at bidding goods and services in online reverse auctions

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an industry look at bidding goods and services
in on-line reverse auctions
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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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Who is Pantellos and what do we do?
Pantellos is the leader in supply chain services
and solutions in the energy industry
Business Process Solutions
Supply Management Service
Dynamic Services
Professional Services
Rapid Business Assessments
Strategic Sourcing (Supply Contracts)
Contingent Workforce
Auctions
Supply Chain Improvement Projects
Training Implementation
Electronic Bid Management
Craft Labor
Market Research Benchmarking
Supply Chain Consulting
E- Settlement
Supplier Adoption
Marketplace Platform
Integration Hub
Transaction Engine
Document Translation
Analytics
Content Management
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Who is Pantellos and what do we do?
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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

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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 utilitys 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

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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

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What Happens in a reverse Auction?
Millions
GSU Transformers Reverse Auction
78.0
76.0
74.0
72.0
70.0
68.0
66.0
64.0
930 AM
1000
1030
1100
1130
1200 PM
1230
100
130
200 PM
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Bidder Interface
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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

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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

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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

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Auction Categories Executed
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Business Case
Statistics for top ten programmatic users of
auctions sorted by savings since January 2001.
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Buyer View
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Closing Thoughts

• Its 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