how to take politics out of purchasing as seen on edwardctracey tv live
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How To Take Politics Out of Purchasing As seen on EdwardCTracey.com TV Live Introducing Industry Best Practices to Government January 31, 2012. Value Proposition. - PowerPoint PPT PresentationTRANSCRIPT
Reverse Auction Technology powered by Prepared by: Direct2Bottomline, LLC
How To Take Politics Out of PurchasingAs seen on EdwardCTracey.com TV Live
Introducing Industry Best Practices to Government
January 31, 2012
Reverse Auction Technology powered by Prepared by: Direct2Bottomline, LLC
Direct2Bottomline, in conjunction with our technology partner Intesource, helps companies become more
profitable by bringing vendors into a competitive, live bidding environment with the objective of bidding
prices down on the goods, services and capital items they buy.
Value Proposition
Fair Market Fact:As vendors compete, prices go
down!
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As the Gwinnett County Board of Commissioners evaluated its options in response to the affects of declining tax revenues and
increasing operating costs vs. service cuts, former Commissioner Kevin Kenerly had this to say:
“… Bold action is needed to keep Gwinnett County a preferred place to live, work, and
raise a family.”
Press Release“Kenerly Issues Call to Restore
County Services”Gwinnett County Board of Commissioners
Lawrenceville, GA Oct. 6, 2009
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Boldness Yields Results
Meaning of Boldness in this context: Drastic changes to the status quoWITHOUT becoming wrecklessWITHOUT ignoring corroborationWITHOUT abandoning accountability
Customers have realized more than $2.5B in savings in the past 11 years in tens of thousands of events across hundreds of spend categories
Reverse Auction Technology powered by Prepared by: Direct2Bottomline, LLC
Success
Midwest General Retailer Since 20031 Dedicated ResourceMore than 700 EventsMore than $130 million in Savings
Reverse Auction Technology powered by Prepared by: Direct2Bottomline, LLC
ContrastForward Auction vs. Reverse Auction
Forward Auction
eBay
Reverse AuctionIntesource
Initiator: Seller Buyer
Objective: Highest Bid Lowest Price
Bidders: Anonymous Customer Controlled
Winner: Highest Bidder Customer Controlled
Bidder Presence:
Sporadic Live
Timing: Spans Several Days
Minutes (15-60)
Reverse Auction Technology powered by Prepared by: Direct2Bottomline, LLC
Buyer Control
Contents and Completeness of the RFPVendor participation is by INVITATION
ONLYoIncumbent (s)oPast BiddersoNew vendors identified
Vendor ViewEvent ScheduleAwarding of Contract
Reverse Auction Technology powered by Prepared by: Direct2Bottomline, LLC
Transparency
Online RFP distributionOnline Q&A via the SystemSystem capture of:
oVendor’s acknowledgement/refusal to bidoVendor’s scheduling of any training neededoVendor’s participation in any training
scheduledoEvery aspect of the event itself with
reports and replay capabilityDocument management
Reverse Auction Technology powered by Prepared by: Direct2Bottomline, LLC
Savings Realized Per Event
A “Category” is a good or service, or group of goods or services, which can be bid upon by a common group of vendors.
An “Event” is the execution of a reverse auction for the purpose of bidding a category purchase.
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Category Success Factors
1)Good Specifications2)Spend level sufficient to entice
vendors to compete3)At least 2 vendors willing to compete4)Willingness to shake up the vendor
base5)No adverse supply conditions
Reverse Auction Technology powered by Prepared by: Direct2Bottomline, LLC
Item Current Price
Vendor A Vendor B Vendor C
Cost Element 1 $390,000 $360,000 $390,000 $375,000
Cost Element 2 $5,750 $3,750 $5,300 $4,000
Cost Element 3 $9,400 $8,700 $18,900 $9,500
Cost Element 4 $1,400 $900 $450 $900
Cost Element 5 $110,000 $94,000 $107,000 $105,000
Cost Element 6 $8,500 $8,850 $8,810 $8,875
Cost Element 7 $25,000 $30,000 $24,250 $25,000
Cost Element 8 $8,500 $7,250 $9,500 $7,500
Cost Element 9 $210,000 $185,000 $195,000 $175,000
Cost Element 10 $45,000 $57,000 $44,000 $46,000
Cost Element 11 $2,000 $4,000 $2,100 $1,500
Event Screen Depiction
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Categories Examples
Communications
Equipment
Office Supplies
Insurance Brokerage
RefuseHauling
Uniforms Fuel Paving Services
Meters
Water TreatmentChemicals
LegalServices
Document/Form
Printing
Payroll Services
BackgroundChecks
DrugScreening
Building Construction
Valves & Pipe
Installation Services
Janitorial Services
Motor Vehicles
Turf Managem
ent
Reverse Auction Technology powered by Prepared by: Direct2Bottomline, LLC
Case StudyDisposable Medical Supply
Category Baseline 9 SKU’s 3 Vendors Annual Spend – $1.551 million
Bids Placed (95 total) Standard event window – 28 Extended event window – 67
Savings First bids - $1.466mm (Savings - $85K+ or
5.5%) Final bids - $1.213mm (Savings - $338K+ or
21.8%)
Reverse Auction Technology powered by Prepared by: Direct2Bottomline, LLC
Beneficiaries
Our Customer’s Enterprise – Lower prices Private - Increased profits Public – Lowered operating costs/revenue requirements
Our Customer’s Buyers Increased Productivity Expanded Vendor Reach
Customer’s Customer Private Enterprise – Potentially lower prices Public – Lowered tax requirements
Vendors New - Exposure to new business opportunities Incumbent – Removal of “best price” doubts Fair treatment during the event – time extensions
Reverse Auction Technology powered by Prepared by: Direct2Bottomline, LLC
What’s Next?
Review of spend categories Execute a series of pilots to test the solution Execute a purchasing calendar for high
potential events of the coming year
No up front costs No people to hire No software to buy No hardware to buy No long term commitment or investment
required
Reverse Auction Technology powered by Prepared by: Direct2Bottomline, LLC
For more information or to discuss the prospects of using reverse auctions to improve your organization’s bottom line – public or private – please contact:
Jim Clark, PresidentDirect2Bottomline970 Peachtree Industrial Blvd., Suite 100Suwanee, GA 30024866-990-3225 (d2bl)770-312-2221Email [email protected] them know you saw it on EdwardCTracey.com website