University Saves Fifteen Percent on Print Contract Using Reverse Auction

An east coast university partnered with eBridge to establish a print contract for new materials for the 2011-2012 school year.  The university engaged the use of eBridge’s reverse auction technology, but also the team of purchasing professionals to help create specifications and identify the right purchases for the process.  This bid was comprised of two line items.

eBridge’s team worked with the purchasing team to establish neutral specifications and would allow multiple suppliers to bid on this project.  One specific requirement was that suppliers be within a 300 mile radius of the university to ensure timely delivery.

During the live bidding event, the four suppliers placed 14 total bids.  First place changed hands 10 times.  First and second place were separated by a mere $500.  The final low bid was 15% below the university’s budgeted amount.

FCC’s Final USF Reform Workshop

A recent article from BroadbandBreakfast.com discusses the recent Federal Communications Commission (FCC) final workshop in a series devoted to the Universal Service Fund (USF). The goal of the fund is to help extend broadband service to uncovered areas across the United States. Workshop discussions included how and to whom funding will be appropriated. The FCC has proposed using reverse auctions to award financial assistance to broadband service-providing telco companies.

The reverse auction proposal would limit government funding to a single entity that would provide service to the entire service area. Providers would enter into an auction wherein the company that could provide the service with the lowest level of government funding would win.

What do you think? Should the FCC use reverse auction technology to award the contracts? Is this an appropriate item for the process?

FCC Explores Reverse Auction in New Broadband Expansion

A recent article from Connected Planet Online outlines the Federal Communications Commission’s current exploration of potential methods to extend broadband internet access to the entire continental US, with a specific focus on under-served rural areas. The FCC plans to accomplish this broadband expansion by financially assisting selected private telecommunications companies in their endeavors to extend their services to rural areas that are not currently receiving broadband internet service.

The question is: which private telco companies will the FCC select?

Among the FCC’s most viable options in selecting telecommunications suppliers is the utilization of reverse auction to award contracts. The FCC could implement reverse auction services to create competitive pricing between companies and thus incentivize suppliers to extend their services at the lowest price possible by selecting to award the lowest bidding supplier with financial assistance.

There are, however, some significant obstacles to the reverse auction process’ successful implementation here. First, satellite-based internet suppliers would have a significant leg-up in the bidding process as their services require considerably less installation overhead than cable-based services. Should they still be allowed to compete in the bidding process? Second, AT&T and Verizon already have a significant amount of market-share and are most likely the favored suppliers going in, which leads us to the question of: will this bidding process further oust business from smaller, local telecommunications providers?

eBridge recommends that the FCC explore the viability of this purchase through reverse auction. While reverse auction can be an incredible tool, it may not be the perfect fit in this particular application. If some suppliers are more capable than others in fulfilling bid specifications, perhaps the FCC should table their use of reverse auction to a different project. eBridge takes leadership not only in the execution of the reverse auction process , but also in preliminary analysis to determine the viability of reverse auction in specific applications. Half the battle is finding the right fit for reverse auction to be successful.

Higher Education uses Reverse Auction to Purchase LCD TV’s

Today eBridge ran an event for a university hospital to purchase LCD TV’s. The televisions will outfit patient rooms in the new medical facility at the university. Prior to the bidding event, the buyer received a sample of the televisions each vendor was bidding on to make sure the electrical adaptors fit the wiring of the rooms.

The buyer approved 11 suppliers to participate in the event. During the bidding event the suppliers placed 196 bids total. First place changed hands 55 times, with first and second place being separated by a mere 0.15%, indicating true market value was found. At the conclusion of the one-hour fifteen-minute bid, the final low bid was 30% lower than the university’s estimated budget.

State lottery promotional items purchased through reverse auction, saving 17%

Today, eBridge facilitated a bid for a state organization’s purchase of lottery promotional items.  Items included pens, t-shirts, mugs, hats and bags.

Prior to the bid eBridge worked with the purchasing organization to create specifications, this allowed for multiple vendors to bid on the contract.  eBridge’s team also advised the client to structure the bid with both line item pricing and lump-sum.

One of the strongest differentiators in a reverse auction bid versus a traditional bid is the pre-qualification of suppliers.  In this case, each supplier submitted samples of the company’s items.  Suppliers were also pre-qualified to ensure they could fulfill the order requirements and meet delivery deadlines.

eBridge sourced multiple vendors and ultimately, the purchasing organization approved four suppliers to participate in the event.  First place changed hands eight times.  First and second place suppliers were separated by 0.33%, indicating that true market value was achieved.

Final low bids came in 17% below the state’s anticipated budget.

Using Reverse Auctions to Purchase Water Treatment Chemicals

A water district partnered with eBridge to purchase three different chemicals for their water treatment plant via reverse auction.  Originally, the bid was for a two year contract.  However, the water district and eBridge collaborated and determine the best strategic approach would be to bid the project for just one year because chemical pricing was trending higher than average.

The three chemicals were bid per pound.  Eight suppliers placed a total of 188 bids on the three line items during the bid.  First place changed hands 35 times.

At the conclusion of the event, the buyer saved 10% versus their previous contract, with one chemical’s pricing coming in higher than expected.  Due to the volatile nature of chemical prices, reverse auctions are ideal for this type of commodity, giving the buyer confidence they are buying at market.

Reverse Auctions for Hotel Room Furniture

Last week eBridge ran a second event for a large hotel chain to purchase furniture for their second phase of rooms.  These rooms were larger, therefore different styles of furniture were outlined in the specifications.  The same suppliers were approved to bid on the project.  Each had set up a demo room in the hotel so the purchasing team could visualize the set up and evaluate the quality of the goods prior to the companies responding to the bid specifications.

The live event ran just over an hour, with the three suppliers placing 43 bids total.  First place changed hands 26 times and first and second place bidders were separated by a mere 1.5%, indicating that true market value was achieved.  At the conclusion of the reverse auction event, the final low bid was 16.95% below budget.

The hotel organization is slated to run several more bids this month including other building and renovation materials.

The 6 Pitfalls of Reverse Auctions

In a white paper published by ThreeCore Purchasing Consultants, the author highlights six common pitfalls of reverse auctions.  Below each pitfall, I address the objection and how our services complement each roadblock.

At eBridge we work hand-in-hand with our clients to not just avoid pitfalls, but achieve remarkable results. Take a look at these pitfalls and let us know what you think.

1. Lack of supplier preparation: Prior to the event, eBridge gives one-on-one tutorialsto each pre-approved supplier.  Our procurement team is available throughout the process for additional training and to answer questions that will naturally arise.

2. Inviting the wrong suppliers:  Although a key part of our process is supplier sourcing and recommendation, the buyer always reviews and approves which suppliers will participate.

3. Including too many suppliers:  A common misconception in reverse auction procurement is that the number of participating suppliers determines a successful event.  Through eBridge’s sourcing and recommendation process, our team brings an average of 32 suppliers to the buyer for their consideration.  On average, 6 suppliers participate per event.  A competitive environment is the ultimate goal for our customer.  

4. Starting with difficult materials:  At eBridge, our team provides the expertise to determine which items are appropriate for the process.  Our comprehensive Spend Analysis report provides customers with a full view of the items on their upcoming purchasing schedule that will fit the process.  Our analysis clearly defines the items that fit the reverse auction process- and those that do not.

5. Not enforcing the rules:  Reverse auction software companies and third party providers do not provide the leadership and guidancenecessary to integrate reverse auctions into your purchasing strategy.  At eBridge we recognize that leadership is an integral part of the solution.  Our mission is “to provide leadership in reverse auction procurement and process change that creates meaningful value for our customers.”

6. Setting artifically low targets:  At eBridge, the cornerstone of our services is to allow the free market to reign.  The competitive environment created through our process yields an average net savings of 14%, but ultimately gives customers assurance they are purchasing at market.

Achieving successful change with reverse auctions

Last week on ZDnet.com guest blogger Barbara Kivowitz, shared insights in adopting new technology successfully.  Kivowitz writes:

One of the most formidable challenges an organization faces when implementing new technology is simply getting employees to use these tools and the new processes they support.  Senior management budgets development costs and training, but typically under-invests in the change management efforts needed to turn technology into the strategic transformation the business expects.

Underestimating the impact of technology-driven process change on employees is a key factor in project failure, even when deploying excellent technology.

Communication, collaboration, and knowledge sharing are the critical factors for achieving project success.

At eBridge, we work with customers to make reverse auction procurement an integral part of their purchasing strategy.  And that doesn’t just include running an auction.  Our team of procurement professionals work hand-in-hand with our customers, providing the tools to implement the reverse auction process and also the leadership through education and training to achieve long-term success.

In the most literal sense, implementing new technology into an organization requires individuals to perform their job in a new way.  While senior management might buy in to the reverse auction process, we also deliver extensive training and education so our customers are comfortable and ready to take on a new opportunity that will achieve remarkable results for their organization.

How is your organization adopting change?

eBridge Joins High Impact Portfolio

High Impact Program identifies Louisville’s top fast-growth companies

LOUISVILLE, KY (April 12, 2011) – eBridge, a leader in fully managed reverse auction procurement services, was recently named to the High Impact Portfolio as one of the top fast-growth companies headquartered in the Metro Louisville Region.  The High Impact Program, a public/private partnership between Louisville Metro Government and Greater Louisville Inc.’s (GLI) ENTERPRISECORP, introduced the newest companies selected to the High Impact Portfolio during ENTERPRISECORP’s Signature Event today.

“Fast-growth companies are critical to the continued economic success of our region,” said Bobby Ferreri, Executive Director of ENTERPRISECORP.  “The High Impact Portfolio honors those businesses poised to lead our community in job growth over the coming years, and it was exciting to see the variety in this year’s companies.”

eBridge provides fully managed reverse auction procurement services, delivering an average net savings of 14% on purchases and creating efficiencies in procurement operations.  eBridge significant growth over the past twelve months is due to an infusion of capital and the addition of seasoned leadership to drive revenue and expand market share.

“It is an honor to be recognized as one of the fast-growth companies in Louisville,” said Jim Headlee, CEO.  “We are poised for continued growth thanks to a robust service offering and our team of procurement professionals that lead customers deliver savings and drive efficiencies for our clients.”

The High Impact program strives to nurture the prosperity of Greater Louisville’s growth businesses. Initiated in 2003, the program identifies companies meeting specific criteria, which are then named to the High Impact Portfolio.

Collectively, High Impact Portfolio companies represent $2.3 billion in annual revenues; have a 36 percent average growth rate; have created nearly 3,000 new jobs in our region; and have invested $438 million over the last four years.

About eBridge

Founded in 2002, eBridge Business Solutions, LLC provides fully managed reverse auction services, creating efficiencies and delivering hard dollar savings to the customers’ bottom line.  Leveraging years of experience in purchasing, sourcing and spend management, eBridge creates meaningful value for our customers through leadership in reverse auction procurement and process change consulting.   For more information, visit: www.ebridgeglobal.com.

About the High Impact Program

The High Impact program strives to nurture the prosperity of Greater Louisville’s growth businesses. The High Impact Program is a public/private partnership, funded by Louisville Metro Government and administered by GLI’s ENTERPRISECORP, that identifies and serves fast-growth companies, companies with the potential for fast growth, and those companies that enable growth in others. The program focuses on companies of these types headquartered in Louisville that have a disproportionately higher impact on the metro area economy. For more information on the High Impact Program, visit www.HighImpactLouisville.com.