Driving savings and real results, even on pure commodities

Situation

  • Incumbent supplier proposed price increase on bulk flour for European food manufacturer
  • Retailer wanted to keep the supplier but couldn't accept price increase without adversely impacting margins
  • Finding new sources of supply would be difficult and time-consuming

 


Solution

  • Utilized Japanese auction with single bidder
  • Each minute, bid price stepped down by 1 GBP
  • Bidder must agree to new pricing to remain in event
  • Bidders have no visibility to other participants
  • Event closes when bidder stops

 


Result

  • Able to maintain relationship with existing supplier
  • Avoided cost increase
  • Savings of 28.5%
  • No switching costs or new supply sourcing