eAuctions have been around for awhile now… but what is new in this area? Come to this session to see what is new with Auctions in the Ariba and to hear what customers are doing with Auctions in the cloud today. We will work through an exercise in groups to demonstrate some auction concepts, and a member of the Ariba Best Practice Center will be on hand to facilitate discussion about driving toward auction success.

1. Auctions in the Cloud
April Miller, Sr. Consultant, BPC, Ariba
Joanna Smith, The Estée Lauder Companies
© 2013 Ariba, Inc. All rights reserved.

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Agenda
• Welcome
• Customer Story: The Estée Lauder Companies
• Paint Auction Example: Mobile Mini
• Interactive Activity: Let’s Lot
• Interactive Activity: Play by the Rules
• Closing Remarks and Takeaways
© 2013 Ariba, Inc. All rights reserved.2

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Welcome
Joanna M. Smith
Global Indirect Procurement, Estée Lauder Companies
Strategic sourcing manager with eight years of professional experience. Currently with
The Estée Lauder Companies, Joanna sources goods and services for various internal
Brands and corporate functions. Represents GIP on cross-functional teams, collects
and analyzes baseline data, drafts RFXs, develops evaluation matrices and financial
models, facilitates oral presentations and negotiations. She led the Ariba
implementation team and continues to train global users and facilitate online events.
Joanna has a bachelor’s degree in Economics from Wesleyan University and maintains
a professional designation as a Certified Professional in Supply Management from the
Institute of Supply Chain Management.
© 2013 Ariba, Inc. All rights reserved.3

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Selecting the Right Opportunity
• Six C’s
Contractually Available
Commercially Attractive
Competitive Supply Base
Clearly Defined Requirements
Compressible Margins
Commitment
• Scope is clear and consistent: apples to apples
• Preferred or competitively based relationship
• Market evidence of competition
© 2013 Ariba, Inc. All rights reserved.4

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Paint Auction Example
• Category: Paint
• Leveraged volume with Smile Brands
• Annual Spend: $2 Million
 Category spend grew 40+% previous year
• 4 paint types = 92% spend
• Primary incumbent for both brands
• Locations also purchasing from 10+
other vendors in a mix of colors and
container sizes
• Incumbent increased PPG (Price Per
Gallon) by 8% in Jan 12’
• 25 bids received during the auction
• Achieved lower price on all items
Background
Build Auction
• Collect baseline data and specs
• Supplier discovery via Ariba Discovery
Network
Auction
Released
• Auction released to 5 pre-qualified national
paint suppliers
Pre-Bids
Solicited
• Pre-Bids received and reviewed
Auction
• Auction held one week after pre-bids received
• Draft auction held 2-3 days prior
Supplier
Selection
• Supplier selection made one week after
auction
• New prices effective within 2 weeks
Process
5-7Weeks

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Paint Auction Example
Award Strategy Total Paint Spend
Projected Savings
Differentiator
Lead Bid,
Historical Volume Mix
$120,910 (5%) • Award all liquid paint business to lowest
bidder for each paint type.
• Utilizes historical product volume mix.
Orders split 55/45 in 55 gallon drums to 5
gallon buckets.
Cherry Pick Lowest
Price,
Revised Volume Mix
$190,470 (9%) • Awards business to 3 suppliers based on
lowest bidder of each item.
• Must order at least 90% in 55 gallon drums
Sole Source,
Revised Volume Mix
$174,370 (8%) • Awards all paint business to lowest sole
source bidder
• Must order at least 90% in 55 gallon drums
© 2013 Ariba, Inc. All rights reserved.6
Awarded Sole Source to lowest supplier, previous incumbent
ROI = 30.4x

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Interactive Activity: Let’s Lot
Item Quantity Current
Price
Delivery
Location
Current
Supplier
1 100 $5.50 PA ABC Co.
2 250 $10.98 PA XYZ Inc.
3 1000 $15.50 DC ABC Co.
4 200 $6.87 CA XYZ Inc.
5 100 $12.98 DC Item Co.
6 500 $10.25 PA ABC Co.
7 500 $10.25 PA ABC Co.
8 250 $7.50 CA XYZ Inc.
9 1000 $11.00 DC Item Co.
10 500 $8.98 DC Item Co.
• Award Goal
Supplier
Compression
Best Price
Local Award
Options
Global Supplier
Maintain
Incumbents
© 2013 Ariba, Inc. All rights reserved.7

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Activity Discussion
The goal of lotting is to combine goods or services into
logical groups or “lots” to encourage competitive pricing
and overall supplier participation. Objective from lotting
should be driven based on project award goals:
• Foster competition
• Reduce complexity
• Prevent “cherry picking”
• Drive award scenarios
• Implementation Feasibility
© 2013 Ariba, Inc. All rights reserved.8

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Interactive Activity: Play by the
Rules
Item Quantity Current
Price
Delivery
Location
Current
Supplier
ABC Co. XYZ Inc. Item Co. New
Org.
1 100 $5.50 PA ABC Co. $5.50 $5.00 - $4.75
2 250 $10.98 PA XYZ Inc. $9.50 $10.50 - $16.98
3 1000 $15.50 DC ABC Co. $15.50 $10.25 $10.00 $9.50
4 200 $6.87 CA XYZ Inc. - $6.55 $6.50 $7.00
5 100 $12.98 DC Item Co. $13.00 $15.00 $12.25 $17.98
6 500 $10.25 PA ABC Co. $10.25 $5.75 - $6.00
7 500 $10.25 PA ABC Co. $10.25 $6.00 - $6.25
8 250 $7.50 CA XYZ Inc. - $7.00 $7.75 $7.00
9 1000 $11.00 DC Item Co. $12.00 $8.00 $11.00 $6.50
10 500 $8.98 DC Item Co. $8.75 $8.00 $8.25 $9.50
Item Quantity Current
Price
Delivery
Location
Current
Supplier
ABC Co. XYZ Inc. Item Co. New
Org.
1 100 $5.50 PA ABC Co. $5.50 $5.00 - $4.75
2 250 $10.98 PA XYZ Inc. $9.50 $10.50 - $16.98
3 1000 $15.50 DC ABC Co. $15.50 $10.25 $10.00 $9.50
4 200 $6.87 CA XYZ Inc. - $6.55 $6.50 $7.00
5 100 $12.98 DC Item Co. $13.00 $15.00 $12.25 $17.98
6 500 $10.25 PA ABC Co. $10.25 $5.75 - $6.00
7 500 $10.25 PA ABC Co. $10.25 $6.00 - $6.25
8 250 $7.50 CA XYZ Inc. - $7.00 $7.75 $7.00
9 1000 $11.00 DC Item Co. $12.00 $8.00 $11.00 $6.50
10 500 $8.98 DC Item Co. $8.75 $8.00 $8.25 $9.50
© 2013 Ariba, Inc. All rights reserved.9

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Activity Discussion
Market feedback given during an event should be used to
drive competition. Suppliers need to receive information
to understand where they are in the market and
encourage additional bids.
• Starting Gate
• Lead Bid
• Rank
• Full Disclosure
• Line Item Ranking
© 2013 Ariba, Inc. All rights reserved.10

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Closing Remarks
• Characteristics of successful auctions
Select the Right Opportunity (6 C’s)
Prequalified Participants
Directly Comparable Pricing
Clear Requirements
Lotting and Market Feedback Strategy
Supplier Communication
© 2013 Ariba, Inc. All rights reserved.11

12. Questions?
© 2013 Ariba, Inc. All rights reserved.
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