A State Department of Corrections in the Southeastern US partnered with eBridge to run an annual propane bid for 8 of their facilities. Fuel bids shouldn’t be run on a fixed price quote because of large weekly fluctuations in petroleum costs. The bid required the 5 suppliers to compete by lowering their mark-up to the weekly oil price index for liquid petroleum. The 48 minute reverse auction allowed 5 suppliers to aggressively compete, resulting in 76 first-place turnovers. There were twelve separate lots and the spread between 1st & 2nd place did not exceed .18% on any of the lots. Despite increases in delivery costs since the last time the bid was run, the agency will realize a 4% decrease in propane costs relative to the old contract.
Archive for the ‘Change Management’ Category
Reverse Auction Fuels Savings on Propane Contract
CA University Will Sleep Better After Saving 12.5% on Their Dorm Room Furniture Through eBridge’s Reverse Auction Process
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%.
7 Myths of Reverse Auction
Everyone familiar with reverse auction knows that there is a large amount of opposition out there facing those who believe in this process. Everyone in the purchasing industry – whether they have been directly involved with reverse auction or not – has formed a positive or negative opinion through the years based on their particular experience with reverse auctions, as well as their relative perceptions of the industry as a whole. This article from Supply Excellence does a great job of addressing many of the key objections to the reverse auction model.
At eBridge, we believe that all of the myths/objections to reverse auction listed in this article can be addressed professionally and appropriately, creating an end result that is beneficial to both the buyer and suppliers in a purchasing transaction.
We understand that many people have either had a poor experience with reverse auction, or are opposed to it because of what it can be. However, we believe that the reverse auction purchasing model can actually be beneficial to almost any business model when applied through our professional and respected team of experts. We do our part to run purchases with integrity, and with respect towards both the buyer and suppliers – maintaining key relationships that every company desires, and creating value not solely through pricing.
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?
Getting Employees to Accept Change- in eProcurement and Beyond
In a blog post by Anne Field of Register Rep, the author writes about the importance of communication and collaboration when implementing a change and then offers practical tips for adoption.
From the post:
You know what they say: The one constant is change. That said, there’s another eternal truth: The one constant about change is that people hate it. And since your employees undoubtedly are people, you can expect that they, also, feel uncomfortable when facing the prospect of a disruption to their routines. But that can make it very difficult to try to introduce changes, large and small, into your practice. We’re talking about anything from a new CRM system to an all-out revision of strategic direction. Making matters even trickier, according to Daniel Crosby, an organizational psychologist in Huntsville, Ala., who specializes in change management for financial advisors, the natural inclination for many results-oriented advisors is to move at top speed, completely ignoring the time-consuming spade work they might need to persuade their staff to get on board.
Trouble is, if your employees don’t embrace whatever change it is you want to introduce, you can forget about it: You won’t succeed. “Trying to make a change without staff buy-in is a recipe for disaster,” says Crosby.
Still, introducing change is quite doable if approached with sufficient finesse and patience, as Story discovered. “Change is a process,” says Crosby. Understand what’s involved and you, most likely, can make just about any change stick.
First place to start is a reality check. That means acquiring an understanding that you and your employees might regard a specific change very differently—and that you need to respect their point of view.
Like any sale, however, introducing change ultimately is about convincingly demonstrating the benefits of whatever you’re pushing. In other words, you need to show employees how the move will help them and the practices do better. “When people are well-informed and understand the decision, change is much easier,” says Palaveev. In some cases, that might take some doing—but the effort is essential.
After you’ve made your case, then you have to persuade employees they have a stake in the outcome. And you do that by, as the jargon goes, getting them to assume ownership of the change. Best is to identify the people directly affected by the change and incorporate them into the decision-making process.
By getting employees involved in the decision-making process, you also can save time in unexpected ways.
How are you including your employees in decision-making processes, particularly when it relates to new procurement processes?
The Individual is the Unit of Change: Implementing Reverse Auction Procurement
A few weeks ago I wrote a post entitled, Organizational Change and Reverse Auctions. It stated “organizations don’t change, people do or they don’t”.
Expanding on the topic of the individual’s role in change management, the Change Management Learning Center states, “The essence of change management is encouraging and enabling individual transitions resulting from a project or an initiative. Because change happens one person at a time, change management provides a critical component for achieving project outcomes and results.”
When applied to the reverse auction, organizations will not realize the efficiencies of the new technology if individuals are not challenged to do his or her job in a different way. The reverse auction is not a big change, but it is new technology and management is asking employees, as individuals, to do their jobs slightly different to yield greater results.
This makes having an effective change management strategy that focuses on the individual in your organization essential to affecting change and sustaining change.
How are you focusing on the individual to take advantage of new opportunities for your business?