eBridge hosted two separate reverse auctions for the University’s three (3) year contracts for Copy Paper and Ink & Toner purchases. Eight (8) suppliers competed for 67 minutes on the Ink & Toner, placing 71 bids while Seven (7) suppliers competed for the copy paper placing 53 bids during the 43 minute auction. The high-low spread for both auctions came in under 2% —- again reflecting true market value. Together, both auctions will save the University $1.2 million or 16% over the three (3) year contract periods.
Archive for the ‘Office Supplies’ Category
eBridge’s Reverse Auction Wins Again, Saving a Large Southern University $1.2 Million on Copy Paper and Ink & Toner
eBridge teamed with a Georgia county to purchase copy paper. There were 12 highly competitive suppliers, with 28 first place turnovers. The 30 minute bid had an additional 39 time extensions, as the suppliers continued to lower their bids. The spread between 1st and 2nd place was 0.11%, showing an amazing true market value. The Georgia country had a savings of 6.67% on their budgeted value. They were pleased with their savings, as the fuel price increases this year has added cost to their paper deliveries.
A California University needed 93 copiers, and wanted the option to lease or purchase. There were eight suppliers approved to participate in the bid, which lasted for an hour and 13 minutes. The bidding was competitive, with 199 total bids and 14 first place turnovers. The spread between 1st and 2nd place was a only 0.65%, demonstrating true market value. eBridge’s process helped the university save 33% versus their budget, on their first auction.
A southern state recently ran paper and ink toner annual purchase contracts through eBridge. All government entities in the state will be able to purchase off these state contracts and the value is expected to be in excess of $7 million. The bids were extremely competitive, showing the significance of reverse auctions in achieving true market value for the buyer. In the end, the low bidders were separated by less than 1% on every key lot. Specifically, in one lot (valued at $1 million), first and second place were separated by only $23 after lowering their bids multiple times. There has been a significant increase in the price of paper over the last year, due to rising fuel costs. Despite that increase, the state will be paying less for 8 ½ x 11 copy paper under the new contract than it did under the old contract, which was run using traditional methods. Initial estimates are that the state saved at least $500,000 by utilizing the eBridge reverse auction.
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.
Yesterday eBridge ran a bid for a school district in Illinois and saved them 27% on their budgeted price. Our faithful operations team sourced five copy paper suppliers and four of them bid in the auction. The suppliers bid a total of 99 times and first place changed 27 times.
A neighboring school system put out a bid for copy paper through the traditional paper bid process where suppliers may only submit one bid in order to win the business.
The school system that purchased the copy paper through the paper bid process paid $29.50 per case and our client paid $27.43, which is a savings of 7%. See, the paper bid does have a purpose. Its purpose here was to serve as a reference point.
The real savings is through eBridge and our reverse auctions. Have a great weekend!
In another auction for the DMV the competition was steep for print forms. Three suppliers bid 108 times exchanging first place over 100 times. The auction was extended 102 times further reaching towards the goal of achieving the lowest price possible. When the auction was over the winning bidder came in 5.5% below the purchaser’s budget.
From supplies in your office closet to print forms, eBridge is the answer to your purchasing needs!
Going once, going twice
Saturday, November 14, 2009
by: Jonathan Bilyk
Brad Cauffman has heard the refrain from frustrated would-be vendors for years. “They see the final price that we accept, and they say things like, ‘All I had to do was drop my bid by $500? I would’ve done it,’ ” he said. “So to us this just made sense to try it out.
“And from what we’ve seen, we’ll probably do it again.”
Earlier this summer, Cauffman, assistant superintendent for business services at the St. Charles School District 303, supervised what would be a first time event among Illinois school districts — a reverse auction.
The item up for bids in this case was paper — an entire truckload of copier and printer paper. Or, to be more precise, the item up for bids was the right to be paid by District 303 to supply the truckload of paper for the 2009-2010 school year.
Traditional auctions begin low and do not end until potential buyers reach the point at which they are not willing to pay more. But in a reverse auction, it is the sellers who compete with each other in a race to the bottom, to find the lowest price at which they are willing to sell their products to an interested buyer.
Since the 1990s, the process has made consistent gains in popularity in the private sector, as companies of all sizes have used the process to trim costs compared to traditional purchasing and bidding techniques.
However, the reverse auction concept has found slower going in attempting to gain a foothold in the public sector.
In Illinois, for instance, local governments were limited by law to methods like the sealed bid when using tax money to purchase goods and services. That essentially made using reverse auctions illegal, or legally questionable, at best.
This summer, however, the state enacted a new law specifically permitting local governments and taxing bodies to use the reverse auction process to purchase goods. The law, however, continued to bar local governments from using reverse auctions to secure bids for construction projects or to obtain professional services, such as engineers.
One of the chief sponsors of the new law was State Sen. Chris Lauzen, R-Aurora.
“It sounded like it made perfect sense,” Lauzen said. “We want to provide high quality service to our citizens, and to do it at the lowest possible cost.
“And this seemed to be a good way to try to do that.”
Within weeks of the measure becoming law, District 303 had signed on with Louisville-based BidBridge to organize just such an auction for its paper contract.
The way BidBridge’s process works is simple: BidBridge and the buyer — in this case, District 303 — prequalify certain companies to bid, reviewing, for instance, their capability of meeting the district’s supply requirement.
From there, BidBridge schedules a time for the auction, which is conducted electronically. The auction lasts 30 minutes, but can be extended by three minutes, should a supplier put in a lower bid before the auction ends. That then allows the other bidders to submit lower counter bids, as well. The auction ends when no supplier submits a lower bid within three minutes.
The program creates a scenario in which buyers can sit in front of a computer somewhere and watch their price go down and down and down.
“It’s a wonderful feeling,” Cauffman said.
District 303’s reverse auction for paper lasted about 52 minutes and ultimately saved the district about $18,139, or about 12 percent, when compared to the state contract for paper.
So far, District 303 is the only unit of local government in Kane County to take the reverse auction plunge.
But the results garnered by the auction have caught the attention of others in the area, prompting a number of local taxing bodies to begin either looking into the possibility of reverse auctions or talking directly with BidBridge about running similar auctions in the future.
Officials at Geneva School District 304 are reviewing their contracts to see if there might be some that would benefit from a reverse auction.
Assistant Superintendent for Business Services Donna Oberg said her district might not benefit from the reverse auction as much as larger districts, such as District 303.
“We probably don’t have the space to store that much paper, for instance,” Oberg said.
Rather, she said, the Geneva district has sought to save money by maintaining its membership in the Lake Bluff Consortium, a group of 42 school districts that buys its paper in bulk. While the district pays a little more than what District 303 paid, the paper is delivered as the district needs it.
However, that consortium does not help the district with contracts for other consumable products, she said, and the district would consider BidBridge or other companies’ aid in obtaining lower prices for those products.
Reverse auctions have also gotten the attention of the Batavia School District 101.
Kris Monn, District 101’s assistant superintendent for finance and operations, said his district is very excited by the opportunities offered by reverse auctions.
“It just seems like a terrific way to drive down costs,” Monn said. “We are trying to find the next big ticket item that we have coming up, so we can hopefully use this process.”
Guy Ramsey, an operations analyst with BidBridge, said his company has also had contacts with the city of Batavia, Aurora, Campton Township, the Geneva Park District and even Delnor Hospital.
“We’ve gotten a lot of attention in Illinois since the St. Charles bid,” Ramsey said. “But you can make a lot of headway when you save someone’s neighbor a lot of money.”
Ramsey, however, noted that his company’s ability to use reverse auctions to save taxpayer money will be limited in Illinois by the construction and professional services exclusions in the law.
But, he said, lobbies for construction-related industries in Illinois and other states have prevented BidBridge and other supporters of reverse auctions from successfully changing the law.
Lauzen said he would support such a change in the law.
“That’s a huge exemption,” Lauzen said. “Construction is where the real money can be saved, and I would eventually like to see the law broadened.
“But, for now, this is a start.”
What is a reverse auction?
Unlike a traditional auction, reverse auctions use a bidding process to help buyers obtain the lowest prices for the items they are seeking.
Suppliers essentially compete to see who can go lowest. In the end, the process can save thousands of dollars for local governments looking to buy anything from copier paper to automobiles, say those who run the service.
Save 12 Percent Against State Contract
ST. CHARLES, Ill., Sept. 29 /PRNewswire/ – Prior to the start of the school year, the St. Charles Community Unit School District (CUSD 303) took time to reevaluate its existing state contract price for copy paper. Cathy Koch, Director of Business Services for CUSD 303, recognized the potential for savings and sought out Louisville-based BidBridge, a proven eProcurement services provider for the public and private sectors.
In order to provide an alternative to the public sector’s traditional process of a one price per supplier response, BidBridge facilitates a secure, real-time electronic sealed bid platform that allows suppliers to place multiple bids. In CUSD 303’s copy paper bid, five suppliers competed for a copy paper contract to supply 7,132 cases of paper consisting of six total line items, varying products based on coloring, size, and recycled/non-recycled factors.
“With help from BidBridge’s expert support team, we were able to complete the bid in an efficient, professional manner,” said Ms. Koch. “The electronic reverse auction process that BidBridge provides is truly a step forward in public procurement across the country, especially for schools and school districts.”
Over the course of the 52-minute bid event, the 8.5×11 white copy paper line item logged 50 total bids, resulting in 20 first place turnovers and 21 time extensions. CUSD 303 saw a 20 percent overall savings against budget for non-recycled product and a four percent savings for recycled paper. Accounting for all line items, CUSD 303 saw a final low bid price that was 12 percent lower than its existing contract.
“The St. Charles bid serves as further proof that public entities can beat state contracts if they give suppliers the opportunity to compete in a dynamic purchasing environment,” said BidBridge CEO Jim Headlee. “Education is the backbone of this country, and the more money we can save for our schools, the more money they have to allocate towards areas of greater need.”
In this school district’s fifth bid with BidBridge, 5 suppliers competed on a copy paper contract. The 5 suppliers placed a total of 76 bids over the course of the 35 minute bidding event, leading to 15 first place turnovers and a differential of only .19% between the first and second place suppliers at the conclusion of the bid.
This competition allowed this copy paper bid to beat the established state contract price by over $3.00 per case. Had the school system simply purchased their desired 18,480 cases on state contract they would have spent an extra $55,440.