Basware Bruger Forum Copenhagen 2011
e-Auctions
© 2007 Allocation Network GmbH
Allocation Network - BestPractice
solutions for e-Sourcing, e-Auctions & SRM
100% managed by the owners
14 years of award winning
Software & Services for
purchasing professionals
Professional contacts
Quick responses
Sustainable relationships
Profitable growth
Security by design
German BestPractice Award in Gold 2008
Austrian Supply Excellence Award with MAGNA 2009
German Best-In-Class Sourcing-Process 2010
Austrian Supply Excellence Award with AVL 2011
Strong partner in
complementary fields
© 2011 Allocation Network GmbH
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 2
Our Software ASTRAS –
Features of your Supplier Portal
e-SRM
e-Sourcing
&
e-Auctions
Complementary
Modules
© 2011 Allocation Network GmbH
Supplier
Portal
Certificate
Management
Supplier
Quality
Evaluation
Supplier
Qualification
Supplier
Master Data
eRFI
eRFx
Template
Management
(Reverse)
English
Auctions
(Reverse)
Ticker
Auctions
Sourcing
Items
Sourcing
Projects
Reporting
Engine
ERP
Interfaces
Document
Management
Corrective
Action / 8D
Tasks
NonConformance
Reports
Milestone
Management
Workflow
Management
Contract
Management
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 3
We proudly present
some of our customers
© 2011 Allocation Network GmbH
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 4
E-Auctions – What do auctions
have to do with purchasing?
Auctions (in theory)…
are events in which market prices for given objects
are negotiated and determined
based on the individual price limits of the bidders.
In Reverse Auctions …
suppliers are bidding for goods/services specified by a buyer.
The position of their own quote in relation to the quotes of the competitors
is (more or less) transparent to the suppliers.
Within a pre-defined time-frame all suppliers may submit multiple bids
in order to improve their position.
The auction ends when no more bids are placed by the suppliers.
© 2011 Allocation Network GmbH
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 5
E-Sourcing – Identifying the best
source of supply and the optimal price
ERP-System
PEP/PDM, REQ, et al.
Purchase
requisition
Specification
ASTRAS
eSourcing & eAuctions
eRFX
Requisitioner & Purchasing
eRFX-Process
© 2011 Allocation Network GmbH
Quotation
Supplier
ERP-System
PEP/PDM, REQ,
PO, et al.
Compare,
Negotiate
&
award
contract
Order
Req. & Purchasing
Co-operation of systems and departments
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 6
Different Auction Formats
are applied in Purchasing
Rank/Price/Traffic Light
e.g. Scrap auctions
© 2011 Allocation Network GmbH
Slowest format
1st price auction
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 7
English Reverse Auction –
Transparency „Rank“ – The classic
• The supplier gets the rank of his quote compared to the quotes of the competition
• Minimum decrements and other validations are defined
• One or multiple values can be completed, calculated and ranked
• Transparent „Walk-Away-Prices“ (individual price limits) per supplier (at least for suppliers 2-n)
• 2nd-Price format „price limit of the second best bid minus x“
© 2011 Allocation Network GmbH
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 8
English Reverse Auction –
Transparency „Traffic light“ – short listing
• The supplier gets a feedback for his quote by means of a traffic light GREEN – YELLOW – RED
• The number of suppliers per color is pre-defined
• Information: „You are located among the best suppliers / in the middle / in the last tier“
• Pre-Qualification round for further negotiations (also for combinatory auctions)
• An auction rule may be (Example):
„GREEN suppliers are qualified for the last round of negotiations,
YELLOW suppliers may be selected for the last round
RED suppliers will not continue into the last round.“
© 2011 Allocation Network GmbH
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 9
English Reverse Auction –
Transparency „Best price“ - TIOLI
• Suppliers can see the value of the overall best price in the auction
• Minimum in-/decrements and validations based on the overall best price
• Quick format, „Take it or leave it“
• The final price will be transparent to all suppliers
• No disclosure of the price limits of the suppliers
© 2011 Allocation Network GmbH
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 10
Reverse Ticker Auction –
Dutch – „First come first serve“
• One or multiple lots per auction
• The price is announced by the auction tool, starting very low (floor)
• Ticker steps (Time and Amount) are pre-defined by the buyer
• Minimum transparency for suppliers
• Only one bid per auction – the winner takes it all
• End of the auction by the first bid or by reaching the price ceiling
• 1st price auction: lowest possible price level of all suppliers plus x
• Competition is triggered by the risk to irreversibly loose the contract
• Final round of negotiations in combinatory auctions
© 2011 Allocation Network GmbH
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 11
Reverse Ticker Auction –
Dutch - visualized
•
•
•
•
•
Start time
Start price (floor)
Ticker length
Ticker height
End price (ceiling)
=
=
=
=
=
14:00 hrs
2.400.000,00 EUR
30 seconds
10.000,00 EUR
2.620.000,00 EUR
2.620.000 EUR
2.610.000 EUR
2.600.000 EUR
2.620.000 EUR
2.610.000 EUR
2.600.000 EUR
2.620.000 EUR
2.610.000 EUR
2.600.000 EUR
14:11:00 h
2.590.000 EUR
2.590.000 EUR
2.590.000 EUR
2.580.000 EUR
2.570.000 EUR
2.560.000 EUR
2.580.000 EUR
2.570.000 EUR
2.560.000 EUR
14:09:30 h
14:09:00 h
14:08:30 h
Step 17
2.580.000 EUR
2.570.000 EUR
2.560.000 EUR
Step 16
2.550.000 EUR
2.550.000 EUR
2.550.000 EUR
14:07:30 h
Step 15
2.540.000 EUR
2.540.000 EUR
2.540.000 EUR
14:07:00 h
Step 14
2.530.000 EUR
2.530.000 EUR
2.530.000 EUR
14:06:30 h
Step 13
2.520.000 EUR
2.520.000 EUR
2.520.000 EUR
14:06:00 h
Step 12
2.510.000 EUR
2.510.000 EUR
2.510.000 EUR
14:05:30 h
Step 11
2.500.000 EUR
2.500.000 EUR
2.500.000 EUR
14:05:00 h
Step 10
Step 9
2.490.000 EUR
2.490.000 EUR
2.490.000 EUR
2.480.000 EUR
2.470.000 EUR
2.480.000 EUR
2.470.000 EUR
14:04:30 h
14:04:00 h
Step 8
2.480.000 EUR
2.470.000 EUR
Step 7
2.460.000 EUR
2.460.000 EUR
2.460.000 EUR
14:03:00 h
Step 6
2.450.000 EUR
2.450.000 EUR
2.450.000 EUR
14:02:30 h
Step 5
2.440.000 EUR
2.440.000 EUR
2.440.000 EUR
14:02:00 h
Step 4
2.430.000 EUR
2.430.000 EUR
2.430.000 EUR
14:01:30 h
Step 3
Step 2
2.420.000 EUR
2.420.000 EUR
2.420.000 EUR
2.410.000 EUR
2.400.000 EUR
2.410.000 EUR
2.400.000 EUR
2.410.000 EUR
2.400.000 EUR
14:01:00 h
14:00:30 h
ceiling = Step 23
Step 22
Step 21
Step 20
Step 19
Step 18
Floor = Step 1
Supplier 1
Best eRFQ price:
2.650.000 EUR
© 2011 Allocation Network GmbH
Supplier 2
Best eRFQ price:
2.800.000 EUR
14:10:30 h
14:10:00 h
14:08:00 h
14:03:30 h
14:00:00 h
Supplier 3
Best eRFQ price:
2.850.000 EUR
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 12
Comparing suppliers and their quotes
Bonus or Malus – absolute or relative
• Establish true comparability: The bid with the best TCO / best cost/performance ratio gets the business
• Examples for Bonus/Malus: Cost of logistics, audit costs, terms of payment
• This enables commitment = best prices
• Either the bonus/malus can be influenced or no disclosure of a bonus/malus to the supplier
• The suppliers bid is ranked with his adjusted value
Example „Absolute Malus“
+ Malus
Rank 1
Value
entered by
the supplier
4,85%
100 €
3€
97 €
Example „Relative Bonus“
- Bonus
98 €
Rank 2
Comparable value /
adjusted price&rank
103 €
Rang 2
Rang 1
Comparable value /
adjusted price&rank
Value
entered by
the supplier
Only for Ticker, Rank
and traffic light
auctions
© 2011 Allocation Network GmbH
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 13
E-Sourcing – Various Examples of
Quotation Sheets in ASTRAS
Quick quotes – open-book calculations
Single position – multi position
© 2011 Allocation Network GmbH
Cross-commodity
in-/output via xls
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 14
E-Sourcing – Quote Evaluation in
Automated Comparison Sheets
1
2
3
Comparison sheets online and in xls
© 2011 Allocation Network GmbH
Consolidated and/or detailled
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 15
Commitment in auctions/negotiations
The principle of cause and effect
Imagine you are negotiating as a buyer
...and you give your supplier the last call:
„If you can offer a 10% discount,
I can write the PO immediately“
The supplier will think:
„If I accept the price level of my customer,
then can win this business“
The principle of…
cause and effect
If your supplier accepts but you
turn and give the business to another supplier
Your reputation will be burnt
The same applies to auction rules
Suppliers will only give you the best prices if they
have a chance to win the business
If you imply that the winner of the auction
gets the business and you change your mind
You need to have a good explanation for 2
© 2011 Allocation Network GmbH
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 16
Minimum Requirements and
Success factors for Auctions
Market / Supplier base
Auction
Position to Negotiate
Buyers market / Over Capacities
Substitutable suppliers (all
among the suppliers
suppliers may get the business
Binding auction rules
depnding on…)
Commitment
Substantial purchasing volume
Suitable aucion design (spread…)
Homogene or Homogenized
Open communication to the
Supplier base
suppliers
Comparable quotes (commercially,
Training for the suppliers
Competitive supplier market
3 Suppliers should be willing and
able to do the business
R&D, logistics, quality, legal)
Monitoring of the live auction
Solid specification
Do not accept „offline“ quotes
© 2011 Allocation Network GmbH
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 17
SRM – ASTRAS Supplier Portal
System Architecture
DB1
User login with user name and password
via HTTPS
© 2011 Allocation Network GmbH
Or SSO via a portal infrastructure
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 18
E-Auctions – Monitoring of
Live-Auctions in the Auction Cockpit
Real-Time Status Display
Extend time
Stop/Resume
Pause
Chat messages
to participants
Sort by…
Deactivate
participants
Edit Chart
settings
All internal users may use the
cockpit view
© 2011 Allocation Network GmbH
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 19
Allocation Network – Your Partner
for Full-Service-Auctions
Allocation
Customer
Block date and time
Arrange individual
training sessions
Allocation
Discuss and define
auction design
Briefing re.
event details
Set-up auction parameters
and initial bids
Set-up
training auctions
5 work days in advance
4 work days in advance
3 work days in advance
Allocation
Allocation
Customer
Suppliers
Allocation
© 2011 Allocation Network GmbH
Approve final
auction set-up
Conduct trainings
Dispatch auction rules
and T&Cs
Confirm reception and
acceptance of rules
Publish auction event
Monitoring &
Troubleshooting
Debriefing and
auction report
1-2 work days in advance
Day of the auction
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 20
ASTRAS Support & Services
Worldwide
© 2011 Allocation Network GmbH
AMERICAS:
EU:
ASIA/Oceania:
Atlanta, GA
Munich, DE
Tianjin, CN
Timezone
EST
Timezone
CET
Timezone
CNST
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 21
ASTRAS – Your Solution for a
1st Class Purchasing Organization
SPEED
Decrease RFQ cycle times by at least 30%
(less administrative work, elimination of mistakes)
CONTROL
Enable a centralized RFQ projectmanagement, -controlling,
-auditing and an equal level of knowledge for all parties involved
SUSTAINABILITY
Reporting / planning - hist. cost analysis, monitoring and revision
EFFICIENCY
Decrease costs of goods by 5–12 %*
(ecomomies of scale, best-country/supplier-sourcing, e-Auctions)
TRANSPARENCY
Obtain deep kow-how about the supplier base
and enable supplier portfolio management
Precondition:
NO PORTAL – NO BUSINESS
* BME/University of Würzburg „Electronic Procurement Mood-Meter 2011“
© 2011 Allocation Network GmbH
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 22
„Mood-Meter“ ePurchasing 2011
by BME* and University of Würzburg
Benefits
• The benefits of implementing e-tools in purchasing are being re-confirmed
by the companies that have implemented these tools every year.
Decrease Spend
• - 5% via eCatalog, -5% via eRFx, -12% via eAuctions
Decrease
process costs
• -25% via eCatalog, -10% via eRFx, -5% via eAuctions
eAuctions
• 75% of all companies (>2000 empl.) in the panel use eAuctions
*German Association for Materials Management, Purchasing and Logistics
© 2011 Allocation Network GmbH
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 23
Always at your Service ...
... right now ...
... for all your questions.
Allocation Network
e-Sourcing, e-Auctions & SRM
Bernhard Soltmann
Allocation Network GmbH
Stahlgruberring 22
81829 Munich (Germany)
www.allocation.net
[email protected]
Tel.: +49 174 3442244
© 2011 Allocation Network GmbH
© 2011 Allocation Network GmbH
All brand names and trademarks used are the
property of their respective owners
Software & Services | e-Sourcing | eRFx | e-Auctions | Supplier Relationship Management - Seite 24