An FMCG company:
Before 2005, an FMCG company did not have a common e-Sourcing platform, and the processes in place at subsideries were not standardized. From the various possibilities the company first tried to pick the low hanging fruits by quickly implementing Electool’s AuctionTool Solution as it gives immediate results.
Situation:
To overcome the internal opposition for the software, the company piloted the auctiontool with a specific product group. For the pilot packaging materials were chosen.
Action:
Being a significant spend for the company, the first auction resulted in better than expected results. The savings in this case amounted to more than the usage costs of the system for a whole year. Piloting the auction with packaging materials also eased perceptions that auctions are unsuitable for direct materials.
Follow up:
The companies procurement team continues to track reverse auction savings to demonstrate the value of the technology. Procurement uses the following tools to calculate and report captured savings:
The company creates commodity profiles that detail estimated spend with a current supplier, market information, recommended sourcing strategies, and estimated savings potential. It is essential that the companies know what factors influence the product price so they can better adjust the strategies
- e-Auction Summary Savings Table
All the result of all auctions are kept track of, presently in a single spreadsheet. The Chief Procurement Officer reports auction results and cost savings achieved to the Board of Directors on a quarterly basis.
Formal reporting procedures are a good way to gain support from executive level collegues to eAuctioning.
In addition to cost savings, the company highlights process efficiencies as a key benefit of online auctions. Swift execution of sourcing events generates interest from internal customers and helps procurement expand reach across the company. The company attempts to auction all sourcing initiatives where procurement has sufficient spend data.
Results:
The client saved more than 14%.
