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Zerrin Lovett, Use of e-auctions

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Zerrin Lovett, Head of Strategic Stakeholder Management for Construction, Cabinet Office …

Zerrin Lovett, Head of Strategic Stakeholder Management for Construction, Cabinet Office
Using e-auctions as a resource for procuring high volume standard products; the possibility for combined contracts, aggregating demand and achieving substantial savings.

Published in: Business, Technology

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  • 1. E-AuctionsZerrin LovettHead of Strategic Stakeholder Management forConstruction UNCLASSIFIED
  • 2. What is an E-Auction• Good for high volume standard products• Think of Ebay where the price reduces – Prices can be adjusted whilst auction is live – Suppliers are measured on both cost and quality aspectsUNCLASSIFIED
  • 3. Typical Savings Achieved from E-Auctions in IT£m 60 eAuction value at pre-auction prices Savings 48.96 50 40 30 20.40 20 16.10 13.70 13.70 12.50 10.60 10.51 10 8.02 6.60 6.80 6.05 5.80 5.70 5.20 5.70 4.60 2.40 2.70 2.93 1.30 1.72 0 1 2 3 4 5 6 7 8 9 10 11 eAuction # UNCLASSIFIED
  • 4. Background to London’s Highways E-Auctions• Capital Ambition used e- auctions previously• Essex achieved approx 10% savings for blacktop• London Highways transformation project – changing the face of highways contracts• Aggregation with WMHAUNCLASSIFIED
  • 5. Traditional Route to Customers Component Service Materials Suppliers Suppliers SuppliersContractors Contractors ContractorsHighways Highways Highways HighwaysAuthorities Authorities Authorities AuthoritiesHighways Highways Highways HighwaysAuthorities Authorities Authorities AuthoritiesHighways Highways Highways HighwaysAuthorities Authorities Authorities Authorities UNCLASSIFIED
  • 6. Competitive Rivalry High if: Low if:High number of Street Low number of Saltcompetitors Lighting competitors LampsLow number of Fragmented customercustomers base London Combined Highways Contracts UNCLASSIFIED
  • 7. Principals of E-Auction Electrical Testing I UNCLASSIFIED
  • 8. Electrical Testing II UNCLASSIFIED
  • 9. ComponentNew Model Suppliers Service SuppliersComponent Skills MaterialsSuppliers Suppliers Suppliers Materials Suppliers Main Main Contractors ContractorsHighways Highways Highways HighwaysAuthorities Authorities Authorities AuthoritiesHighways Highways Highways HighwaysAuthorities Authorities Authorities AuthoritiesHighways Highways Highways HighwaysAuthorities Authorities UNCLASSIFIEDAuthorities Authorities
  • 10. Pathfinder E-auction - Streetlighting Lamps Indicative Savings SON T Master 60% 50% 40%Saving 30% Total 20% 10% 0% B A A B A B A B A B 50 Watts 50 Watt 70 Watts 100 Watts 150 Watts 250 Watts Suppliers/ Wattage UNCLASSIFIED
  • 11. Running an E-auction• Identify new opportunities• Measure volumes/values• Measure unit costs• Liaise with potential suppliers• Run procurement process• Run e-auction• Let contractsUNCLASSIFIED
  • 12. Moving forward• Move to standardisation across the Capital / Country• Aggregate demand across country• Identify areas where e-auctions can make most impact• Continue to measure unit costs• Greatest savings occur in first round of auctions UNCLASSIFIED
  • 13. A Few E-Auction Factoids 1. GE used to run reverse auctions before the Internet, with bidders sitting in a series of rooms in a hotel, with a GE person slipping the latest price under the door. 2. Items sourced by e-auction include ejector seat components, missile components. 3. Both BP and GlaxoSmithKline each run a over 1000 of e-auctions every year. UNCLASSIFIED
  • 14. Any Questions?