13.5% savings on copy paper through Reverse Auctioning and BBBEE Supplier
A recent online reverse auction resulted in savings of up to 13,5% on photocopy paper whilst at the same time boosting the BBBEE score of a consortium of purchasers involved in the transaction.
The online auction, held at e-Procurement solution provider, MWEB CommerceZone offices in Johannesburg, furthermore resulted in the price being maintained for an extended agreed period. Apparently the entire online bidding process took less than one hour.
Interestingly enough the the cut photocopy paper supplier claims to benefit from the transaction. They will be receiving substantial orders for paper throughout the year (much more than before) – estimated at over 500 tons per annum – because it will be supplying not one, but a host of companies.
“Everyone wins when indirect office commodity products like cut photocopy paper is strategically sourced through an e-Bidding process,” says Wayne van Deventer, National Strategic Sourcing Manager at CommerceZone.
“Suppliers win, because they get to provide numerous companies without having to negotiate separate contracts with each one; and the companies requiring the commodity – in this case, photocopy paper – also win. These buyers get the benefit of the combined spending power of all CommerceZone’s customers in the form of an extremely competitive price. In addition, they are saved the hassle of negotiating that price or from having to establish the suppliers’ commercial and BEE credentials.
According to van Deventer, online sourcing via e-RFI and e-Bidding tools and mechanisms, is finally being realised as suppliers and buyers come to recognise the real business benefits it offers.
The barriers to entry to supply photocopy paper are extremely low. There are numerous suppliers from which companies can purchase their requirements. In addition, pricing is extremely competitive.
“However, we believe the choice of a supplier should go beyond price. We need to be assured that the supplier is commercially sound and able to meet our clients’ delivery requirements in terms of logistics and quantity. A supplier with satisfactory, verifiable BEE credentials is also important.”
The Sourcing Process
The auctioning team identified nine potential suppliers who were invited to participate by completing an online RFI (Request for Information) document.
Based on this information, six suppliers who met certain minimum requirements relating to their commercial capacity and BEE credentials were permitted to proceed to the next stage – the real-time, online e-Bidding process.
An opening-bid price had been set by CommerceZone and suppliers could either meet or better that price. As suppliers submitted their bids online, they were informed only whether or not theirs was the lowest bid. If their bid was not the lowest, they could adjust their bid throughout the event and improve their bidding position. Bidding continued for almost one hour.
Following the e-Bidding event, the sourcing team evaluated the suppliers’ responses and two suppliers were short-listed based on their bid prices as well as their pre-determined commercial and BEE scores. These suppliers then met with the sourcing team for further talks. Based on these meetings, a final recommendation for a photocopy-paper supplier was made.
e-Procurement solutions are revolutionising the procurement practices of companies, large and small, eliminating many paper-based and labour-intensive processes while ensuring transparency and improved control. This is quite apart from solutions providers being able to leverage the aggregated buying power of their clients in order to achieve significant and tangible cost savings.
Van Deventer can be contacted on Tel: +27 (+11) 340 7432