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E-Auction presentation

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1 E-Auction presentation
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2 E-Auction What is E-auction

3 click2procure merges traditional procurement and e-business
Siemens Buyside Marketplace click2procure e-information e-sourcing e-ordering web-based purchasing information - supplier database click4suppliers incl. supplier evaluation system electronic sourcing tools - e-RfQ - e-bidding/e-auction electronic order processing - direct / indirect (MRO) material - with / without catalogs click2procure is the e-business workspace of the buyer!

4 Overview eSourcing eSourcing - wording ... .. Inquiry of commercial documents Inquiry for proposal from potential suppliers Commercial Clarification Price Neg- otiation to Contract Award Proposal Evaluation to Short List Currently not applicable for Internet / Extranet solution eRfQ via Siemens Buy Side Market-place with standardized Forms Review done face to face eBidding via Siemens Buy Side Marketplace eAuction via Siemens Buy Side Marketplace Partially automated within eRfQ Result: eRfQ: First request to suppliers (who should quote) eBidding: preliminary price negotiation (1st/2nd round) eAuction: final price negotiation (last round) participants i.e. short list / ranking contract award

5 Auction types There are two main auction types: Reverse (English type) and Forward (Dutch type) Reverse: This is an auction with decreasing price steps Start from price x and lower down to y – suppliers can place multiple bids in one auction; Forward: This is an auction with increasing price steps – price steps will be increased automatically by the system – only one bid can be placed in one auction; no interaction between suppliers

6 E-Auction Process

7 Prerequisites It is important not to compare apples with pears! First of all: the items need to be commercially evaluated Scope has to be clear, have time and flexibility Next step: bid evaluation and normalization Create Matrix and decide on bonus and malus for specific suppliers Based on supplier evaluation, quality risk, total cost General: the more competitors the better For an eAuction minimum 2 suppliers are required Suppliers have to be registered in C4S

8 Supplier Comparison Factor (SCF)

9 Process Steps Contact supplier and inform them that the negotiation will be via eAuction Clear any commercial and technical issues with suppliers and cross-functional team (including determining possible Bonus/Malus) Register eAuction with central services and get time slot Write event rules and invitation and send to suppliers Set up eAuction on platform Provide trainings to suppliers Moderate auction Summarize and Report auction eProcurement Manager Purchaser

10 E-Auction Advantages

11 Advantages of eAuctions
Transparent and formal communication Commercial issues cleared in advance Clear and transparent decision process for supplier Commitment of all stakeholders in advance Award via e-Auction avoids long lasting negotiations Possibility of accommodating other issues beside price through bonus/malus All offers are comparable Conformance to compliance requirements

12 E-Auction Examples performed by E O

13 eAuction-Example (REVERSE)
TEUR 220 210 200 190 180 170 160 150 140 130 120 110 100 15 min. core auction time extentions á 2 min. Supplier IV 211 Supplier III 201 197 Opening price 192 191 Supplier II Reservation price Supplier I 159 144 143 last offer 15:30 15:34 15:38 15:42 15:46 15:50 15:54 15:58 16:02 16:06 16:10 16:14 16:18 16:22:16:26 16:30

14 Auction-Example (FORWARD)
TEUR 174 172 170 168 166 164 162 160 158 156 154 152 150 148 146 144 142 140 138 136 134 132 130 128 11:00 172 171 Supplier III 158 Supplier II Reservation price Supplier I 145 +500 / min. Opening price last offer 10:30 10:34 10:38 10:42 10:46 10:50 10:54 10:58 11:02 11:06 11:10 11:14 11:18 11:22 11:26 11:30

15 Challenges Keys to Success

16 Challenges Some suppliers refuse to negotiate via E-auction
Suppliers which loose seems sometimes more disappointed Huge changes may be added prior to the PO Suppliers to understand the concept

17 Keys to Success The challenge lies within the organization. Persuade the Buyers! Market successful eAuctions to upper management Include cross-functional team members in your success stories Assign one person as eProcurement Manager (+ one reserve) One entry and exit point for suppliers and buyers Buyers are relieved from negotiations and trainings Event rules make the negotiation and award transparent Savings immediately measurable

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