eAuctions = creating more value & savings for your business

Situation

  • ConvaTec, a global medical device company (owned by the capital fund Nordic Capital) needed to reevaluate supply for folded cartons for their factory site in the Dominican Republic
  • Volume for this factory site had increased by 50% due to the closure of a US-based factory
  • ConvaTEC had used the same supplier for 7 years and asked for new pricing for existing and new business
  • Negotiations with incumbent supplier on both price and service levels were not successful so ConvaTec decided to source new suppliers for both existing and incremental volume


Solution

  • ConvaTec was able to include 3 new suppliers from the same location as incumbent and 2 suppliers located in the same geographic region
  • All suppliers were prequalified through a 4-month process, including factory visits, review of quality and production systems, and initial quotations
  • Scanmarket consultants provided significant assistance in competitive price analysis, eAuction strategy, supplier training, and bid format selection
  • ConvaTec had two favorite suppliers and the eAuction set up was tailored towards moving these two new suppliers on price


Results

  • 6 Suppliers including incumbent participated in the eAuctions
  • The two preferred suppliers (as well as a new third bidder) made significant price concessions
  • The eAuction process had a duration of 2 weeks and the eAuction results revealed a substantial number of award scenarios that work in ConvaTec’s favor
  • Next step will be individual face-to-face negotiations with a number of selected suppliers
  • While the results are likely to lead to a change in suppliers, relations with incumbent remain healthy due to their ongoing contract and proximity to the factory

 

"The Support from Scanmarket’s consultants was excellent, both during the eAuction workshop and LIVE Auction preparation."
— Andy Hughes, Category Manager Strategic Sourcing