eBridge News
A Kentucky city public works department ran a fully-managed purchasing event for the procurement of chemicals through eBridge Monday to achieve a savings margin of 16% against their budgeted amount. 7 total suppliers participated in this event During the event, there were 141 total bids placed, 19 first place turnovers, and 16 bid extensions. True market value was achieved through a 1st – 2nd place spread of less than 2%. This event truly models the potential of the eBridge team to deliver remarkable results to our clients. With initial bids of over $100,000 this event finished with the lowest bid coming in at $38,700.
eBridge assisted with this event from start to finish, leading throughout the entire process. We added value by sourcing additional suppliers, writing and developing specs, and training the buyer and suppliers. eBridge has extensive experience running a variety of auctions for municipals, as well as Fortune 1000 companies, medical centers, and Universities. We have run over 1300 fully-managed purchasing events such as this one, and can help any company achieve remarkable results.
eBridge recently completed a direct purchase bid for a Fortune 500 manufacturing company. The bid was for a component part and involved suppliers bidding from three continents. There were 62 bids placed, with bids coming in significantly lower than the company’s budget. eBridge conducted individualized training for the vendors and hosted the entire event through its secure website. The buyer didn’t have to invest in any additional software or staffing to run the event. In the end, the purchasing company estimates that it saved over $1 million by using this process and is currently looking at future bids on which it can partner with eBridge.
Last week a west coast hospital system purchased 220 LCD televisions. The specifications required the televisions to be hospital grade, ensuring they were appropriate to outfit hospital rooms and medical facilities. Specifications also included a request for installation cost. The online bid environment listed two line items for suppliers to bid on selected elements.
During the live reverse auction event, the five suppliers placed 61 total bids. In a paper bid process, the hospital would have only received five total bids, giving suppliers only one opportunity to submit pricing and compete for business. First place changed hands 15 times. At the conclusion of the reverse auction event, first and second place were separated by a mere 0.12% indicating true market value was achieved. Final pricing yielded a 6% savings versus budget.
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.
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?
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.
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.
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.
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.
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.