3.12.12 Reverse Auctions Webinar


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In today’s economy, procurement managers across all industries are aggressively pursuing new opportunities to reduce costs and incur huge savings in their buying efforts. In the cooperative community, many managers struggle to take advantage of new cost-cutting measures due to growing demands, reduced staff and shrinking budgets.

In this free webinar, attendees will discover the benefits of utilizing online reverse auctions and how they can significantly improve a co-op's bottom line, increase savings and gain additional benefits.

Attendees will learn how to:

Achieve optimal, immediate and sustainable savings

Reduce negotiation time by 50-60 percent

Utilize a dedicated team of category and sourcing experts

Identify and qualify new suppliers to meet stakeholder requirements

Maximize competition via complete price transparency

Published in: Business, Technology
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  • 3.12.12 Reverse Auctions Webinar

    1. 1. TopSource Auction Overview Prepared for 1
    2. 2. Agenda Overview Benefits Results Considerations 2
    3. 3. TopSource OverviewTopSource is a wholly owned subsidiary of Topco Associates LLC and providesnot-for-resale (NFR) spend management. For 65 years, Topco has leveraged thescale with its members in procurement to lower product costs. For-Resale Programs NFR Spend Programs  Frozen  Construction  Dairy/Bakery  Equipment  Grocery  Hired Services  HBC/GM  IT Telecom  Rx  Logistics & Distribution  Fresh Meat  Marketing  Branded Meat  Office Products &  Produce Supplies  National  Packaging & Supplies Brands  HR Benefits  Fuel
    4. 4. TopSource OverviewTopSource customers represent over $150 billion in sales collectively. Our customernetwork includes grocery retailers, wholesalers, food manufacturers, food servicesproviders, convenience stores, drug stores and other retail businesses.
    5. 5. TopSource OverviewTopSource manages not-for-resale spend on behalf of our wholesale and retailcustomers. In addition, TopSource conducts auctions on behalf of all customersacross for-resale and indirect spend.  Retail and Distribution Strategic Sourcing Professionals  Broad Scope Spend  Sourcing Leverage – over $13 Billion in potential indirect Management spend  Proven Sourcing Process  Enabling Technology (Spend Analytics, eSourcing, and Contract Management)  Dedicated Auctions team Auction Center  Robust automated online auction capability Of Excellence  Mature process and capabilities  Experience across multiple commodities
    6. 6. TopSource AuctionsA reverse auction is a price negotiation in which suppliers selected and invited bythe buyer compete in real time on the internet.  It is based on transparency of products / delivery / logistics through publication on the website, and on the transparency of prices quoted by each supplier  It is NOT a substitute for the sourcing process, but only a single component … price discovery.  Auctions transfer the negotiation process from buyers and their suppliers to suppliers and their competitors. 6
    7. 7. TopSource AuctionsA well designed auction process will facilitate individual, regional, and nationalsourcing opportunities. It should have no impact on other aspects of yoursourcing process. Auction Process:  Used for both Direct and Indirect  Managed as:  “Stand-alone” - allows for one participant only  “Mini-aggregation” across participants  Streamlined process based on participants’ specific requirements 7
    8. 8. TopSource Auctions: BenefitsOn-line auctions deliver significant benefits when compared to conventionalprice negotiations, primarily around efficiency and savings. Sourcing Value Curve Incremental benefit from shortened sourcing cycle  Speed to savings Cumulative  Optimal pricing Value  Increased competition  Complete transparency  Price compression Incremental benefit from improved pricing Time 8
    9. 9. TopSource Auctions: BenefitsAdditionally, competitive bidding events allow for multiple award scenarios to beconducted in a single event, providing better cost data to the Category Managerand enabling an optimized decision. Sourcing Value Curve Incremental benefit from  Factual economic data specification and volume optimization  Non-traditional suppliers  Alternate scenarios Cumulative  Regional vs. national Value  Domestic vs. international  SKU rationalization  Common package size Time 9
    10. 10. TopSource Auctions: BenefitsThe price transparency of auctions allows suppliers to compete more effectively inmarkets where they are not typically the low cost provider, thereby driving pricecompression. 10
    11. 11. TopSource Auctions: SuppliersAn increase in the number of vendors that are qualified to bid in an auction willlead to greater competition, and therefore higher savings. 35% Typical number of 30% suppliers invited Average Savings 25% Adding additional 20% savings opportunities 15% by inviting more suppliers 10% 5% 0% 0 2 3 4 5 6 7 8 9 10 11 12 13 # Participants 11
    12. 12. TopSource Auctions: ResultsReverse auctions have delivered tremendous savings across a variety ofcommodities and services. Office Products IT Office Supplies/Toner Laptops/Desktops Labels Logistics Labels Plastic Bags Batteries/Chargers Storage Servers Aluminum Trays Labels Wireless Services Plastic Pallets Construction Trailers Hired Services SkyLights Record Management Light Fixtures Secondary AP Audit Carpet Outplacement Services 12
    13. 13. TopSource Auctions: ResultsOffice Supplies has proven successful in auction for many companies as thespecifications are easily defined and the spend is typically significant. Case StudyProduct – Office SuppliesNo. of Members: 18No. of Items: 6,500Baseline Spend: $7,500,000No of Suppliers: 4 The net result was auction savings of $748,000 (10%) with each member retaining their incumbent supplier. 13
    14. 14. TopSource Auctions: Considerations Products and services best suited for auction exhibit many of the same characteristics.  Characteristics that ensure a universal supplier understanding of products or services  Clearly defined specifications  Easily achieved logistical requirements  Well understood price fluctuations  Generally accepted terms and conditions  Characteristics that indicate the likelihood of a competitive market  Three or more qualified suppliers  Attractive business opportunity  Vendors of similar production and delivery capabilities  Competitive preliminary pricing 14
    15. 15. TopSource Auctions: ConsiderationsAuction success is greatly enhanced when the process and parameters are clearlycommunicated to all participants. It is important that all suppliers perceive that theywere treated fairly. Understand the commodity market & cost Clearly define the specifications for bid Invite only qualified bidders Maintain integrity, ethics, professionalism, fairness Publish the rules and follow them Provide adequate planning, training and organization Understand that reverse auctions are a strategic tool in a sourcing process, not a silver bullet 15
    16. 16. Questions?? 16
    17. 17. TopSource Contacts Chuck Wright - Director, eSourcing cwright@topsourcellc.com, 781-926-6058John Latham - Director, Account Management jlatham@topsourcellc.com, 781-926-6021 17