After learning of the great success several other local universities were having with reverse auction bidding, this CA University decided it was their turn! They partnered with eBridge to run a reverse auction for their purchase of dorm room furniture. For the live competitive auction, suppliers were required to bid a lump sum total for the entire scope of service (included: purchase of furniture, delivery and handling, installation as well as removal and relocation of existing furniture). Immediately following the live auction, suppliers had 3 hours to electronically submit their unit pricing, giving a complete breakdown of the final lump sum bid placed during the live auction. During the 25 minute auction, 4 suppliers placed 41 bids resulting in 5 first-place turnovers. The spread between 1st and 2nd place was 0.32% with an estimated savings of $19,800 or 12.5%.
Archive for the ‘Furniture, Fixtures and Equipment’ Category
CA University Will Sleep Better After Saving 12.5% on Their Dorm Room Furniture Through eBridge’s Reverse Auction Process
CA University’s World Brightens Up After Saving $40,000 Through eBridge’s Reverse Auction on Specialty Parking Garage Lighting
The University Facilities Department identified a specific lighting fixture for use in its garage structure. The bid required a specific luminaire from a specific manufacturer, which can be challenging when sourcing for reverse auction. However, since there are multiple suppliers of this particular manufacturer’s brand, eBridge was able to source and invite 55 suppliers to participate. Of the 6 suppliers that did respond to the bid, 5 participated in the live event. During the 35 minute event, 60 bids were placed resulting in 24 first-place turnovers. The final spread between 1st and 2nd place was 0.13% ($1.00 price difference per unit). Based on an average estimated retail price for this particular luminaire, this University will save $40,000 on their purchase.
For their 3rd event a large resort/hotel chain used reverse auction for the purchase of Kitchen Equipment. There were four participating suppliers competing extensively for the opportunity to win this event. There were 123 bids placed with 8 first place turnovers. At the close of the bid the spread between 1st and 2nd place was 0.10%, reflecting true market value. The hotel chain saved 15.6% off their budget, and was pleased with the results.
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.
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.
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.
A large national hotel chain partnered with eBridge to purchase items for a room renovation project. The first purchase was for furniture (casegoods) in king, queen and double guest rooms.
First, eBridge’s worked with the hotel’s purchasing team to modify the specifications to complement the reverse auction process. Next, eBridge received a list of preferred suppliers from the hotel group. To increase competition the bid, eBridge’s sourcing team recruited additional qualified participants.
Once the suppliers were approved by the hotel group, eBridge conducted one-on-one tutorials for each supplier. In every event with eBridge, suppliers have the opportunity to ask questions throughout the process and receive a personal tutorial to make sure they are comfortable with the system and ready to compete.
During the live event, the three suppliers placed a total of 63 bids on the three line items. First place changed hands 12 times, and at the conclusion of the event, first and second place suppliers were separated by a mere 0.026%, indicating true market value was achieved. The final low bid was 17% below budget!
Today at eBridge we ran an auction for wheel loaders. This auction was unique because the purchaser was trading in their two old wheel loaders and purchasing two new ones. In the auction, the supplier bid up the trade-in value for the old wheel loaders’ and bid the new wheel loaders’ price down.
We sourced eight suppliers and there were 142 total bids made. First place turned over 13 times and the winning price came in with 9% savings. We were pleased with the results and look forward to doing business with this purchaser again.
BidBridge recently partnered with a community college system to purchase 150 of two different models of elliptical machines to outfit their college system’s fitness centers.
The reverse auction event lasted just 36 minutes with first place changing hands nine times. The four participating suppliers placed 43 bids total on the two types of machines.
The bid ended with the final low bid 24.9% lower than the school system’s budgeted amount! The savings will go directly back in to the school’s budget in order to provide additional programming in their fitness centers.
Since the late 1990’s, reverse auctions have revolutionized purchasing through the competitive bidding environment and transparency.
While the case for reverse auctions is obvious, many are challenged by determining the best items to purchase through the process, as not every item is a fit.
In order for an auction to be successful, ask the following questions:
1. Are the specifications neutral and open to competition?
2. Does more than one supplier or company provide this good or service?
Below is a story highlighting the success for a purchase that had open specifications and was able to bring more than one supplier to the able to compete for the business.
A mid-western company needed to purchase furniture to outfit a new facility. BidBridge operations staff worked with the purchasing organization to establish open and neutral specifications and bring additional suppliers to the table.
During the reverse auction event, the suppliers competed aggressively with one another, placing 55 bids through the event and first place changing hands 27 times.
At the conclusion of the event, first and second place suppliers were separated by a mere 0.23%, indicating true market value had been achieved. Based on the company’s budget, the final pricing was 40% lower than expected.
This case study is yet another example of how the competitive bid environment is achieving true market value for buyers and gives suppliers the opportunity to place additional bids in order to win new business.