In Montgomery County, Maryland’s second event with eBridge, eight suppliers competed on an annual contract for unleaded gasoline and E85 with estimated annual usage of over 12 million gallons. For this reverse auction, Montgomery County was the lead agency in establishing the fuel contract for the Metropolitan Washington Council of Governments. Over 20 public jurisdictions and entities from Montgomery County, Maryland, Metropolitan Virginia, Washington, D.C., and Anne Arundel County participated in the bid, which made this a very high profile event.
The County sought to establish pricing for will-call and automatic delivery of regular unleaded, midgrade unleaded, premium unleaded gasoline and E85 for the participating jurisdictions with three different options for delivery: FOB Terminal Point, Truck Transport, and Tank Wagon. All the different options resulted in over 80 line items for this bid. With the volatility of the fuel market, eBridge’s dynamic bidding platform was the best way for the participants to ensure that they arrived at true market value for the contract.
The way that eBridge approaches fuel bids of this nature is to have suppliers offer pricing that is tied to a particular OPIS (Oil Price Information Service) average, which indicates the market price based upon a specified index. The suppliers then can bid above or below the OPIS index-based pricing.
The real-time competition among the eight participants generated 73 time extensions over the course of the auction. The best measurement of success was the close competition among the suppliers. On certain line items, the spread between first and second place was a mere 0.01 which indicates that true market value has been achieved, and in this case, multiple suppliers were the lowest priced for different geographic zones and/or fuel types.
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.
eBridge partnered with a Michigan-based company to assist them in their purchase of 64,000 gallons of diesel fuel. The bid featured three suppliers, who placed a total of 250 bids throughout the reverse auction event. First place changed hands 103 times and first and second place finished within 0.04%. These two statistics showcase the competitive nature of the bid.
At the conclusion of the reverse auction, the company saved 16% versus their original budgeted amount.
The company’s purchasing director remarked, “Our organization has incorporated eBridge’s process as a best-practice in our purchasing strategy. We have run several events with eBridge and, again, have achieved great results. We can’t wait for our next bid!”
Last Thursday eBridge ran fuel auction for a large pizza company. The company wanted to purchase a fuel card with a low negotiated rate for their semi truck drivers and that was where we came in. Ten bids were placed and in eight of them there was a first place turnover! Only two suppliers were bidding but we still managed to get a great turn out. We were able to save them $84,000 off their total budgeted price and we were satisfied with that savings.
The company was so impressed with how our online reverse auction system works that they were immediately interested in turning their purchasing for their ten quality control centers over to us. Once you see how easy the savings is, it’s a no-brainer to do all of your purchasing in this way.
Next time you order a pizza, give us a call.
Suppliers Actively Compete for New Q1 Coal Contract
TRION, Ga., Jan. 19– At the end of 2009, Mount Vernon Mills, Inc. closed a contract that helped the company acquire coal for manufacturing operations over Q1 of 2010. The organization teamed with BidBridge, a proven eAuction services provider for the public and private sectors, to leverage an electronic reverse auction platform.
Mount Vernon Mills, Inc. is a diversified and integrated manufacturer of textile, chemical and related products for the apparel, industrial, institutional, and commercial markets. The company’s Trion, GA location consumes approximately 1200 tons of coal per week to fuel diverse manufacturing operations like the production of denim, fabrics with indigo and sulfur dyeing, piece dyed and finished fabrics (cotton and blends) including flame retardant, military uniforms, sportswear and career apparel.
Trent Jordan, Division Controller for Mount Vernon Mills’ Trion location, chose BidBridge’s unique eProcurement platform because it was the best option for running a smooth, efficient bid that could potentially save money for the organization. In partnering with BidBridge, Mount Vernon Mills placed its suppliers in a forum that allowed them to actively compete for the company’s business.
In an event that logged 35 first place turnovers and 76 time extensions, four suppliers placed 84 bids to win the business. The bid event resulted in a significant cost savings that represents just one of the many benefits purchasing organizations gain by using BidBridge’s e-Auction platform.
“With BidBridge, the bid event ran smoothly, and we were able to monitor the entire process as it unfolded via the company’s web-based platform,” said Jordan. “At no cost to us, we were able to leverage the dynamic transparency and reporting capabilities provided by BidBridge to keep the reverse auction process under our control at all times.”
BidBridge was approached to run the fuel bid for Greater Clark County Schools for the second year in a row.
In this year’s event four suppliers placed bids for a two year contract to provide diesel and unleaded gas to the school district. Specifically the contract was for 58,000 gallons of unleaded and 120,000 gallons of diesel fuel.
The same four suppliers competed on both line items, both yielding over 50 bids, 34 time extensions and less than 2% between first and second place bidders.
As a comparison to last year’s contract pricing achieved through BidBridge, Greater Clark County Schools paid 0.1475 per gallon for both the diesel and unleaded fuel. For the 2009-2011 contract, low bids came in at 0.0825 for unleaded and 0.0889 for diesel fuel, almost half of the price from last year.
While fuel prices have significantly decreased over the past year, BidBridge helped this school district achieve true market value for the purchase of the fuel for the next two years.