A case study on Reverse auction and Office furnitures. In 2005, London council ‘reverse e-auction’ saved 2 million costs on office furnitures.
An online ‘reverse e-auction’ held on Tuesday 21 June 2005 has cut an estimated 2million GBP off the cost of office furnitures (stationery) for London Councils.
Hosted by the London Borough of Hammersmith & Fulham and run in partnership with Ealing Council the e-auction was designed to use the combined buying power of London’s 32 boroughs in a transparent way to slash the cost of buying goods like stationery, paper and electronic office and school supplies. Companies interested in tendering for the four separate contacts submitted costs and proposals before Tuesday’s auction. Each bid was then judged on non-price related issues such as service levels, ordering and delivery processes, invoicing etc before being admitted to the auction.
The e-auction then works by allowing each of the companies to see where their bid sits in relation to the other companies on an interactive graph. The process involves suppliers bidding on predetermined lots. Bids are placed in a downward trend, unlike in a conventional auction where bids increase. Suppliers are able to see the bids placed, but not the identity of the bidder. The sense of competition is heightened as suppliers compete in real time by bidding lower as the auction unfolds. It is anticipated that an estimated 20% was saved off the cost of goods.
Councillor Stephen Burke, Leader of Hammersmith & Fulham Council, said: “”Collaboration in procurement has existed for sometime but e-auctions take it to a new level. E-auctions are an innovative way of driving down costs. This benefits council tax payers and boosts investment in better services. The collaboration is also an apolitical partnership with all of the London Boroughs getting together with other public bodies to reduce costs for everyone.”