eSourcing process for Lubricant Oil - Savings of 10%

Situation

  • Spend £7,500,000 a year for several grades of lubricant
  • The buyer wanted to go out to the market to consider a new supplier for delivering lubricant oil for their fleet of ships to be delivered to ports across Europe
  • The current contract was close to expiry and even though they were satisfied with incumbent supplier, they wanted to consider alternative solutions focusing on the best Total Cost of Ownership
  • A structured eSourcing process (eRFP and eAuction) was initiated

Solution

  • An eRFP was conducted as a prescreening for the eAuction and as clarification of TCO
  • Lubricant purchased by grade and by port in 2012 was provided as the benchmark and best indication of the volume
  • Surcharges identified in regards to drum, pail, oil samples, short notice delivery and small order fees
  • Documents like General Terms of Purchase, Standardized commercial terms etc. was uploaded to the eRFP
  • Surcharges was included as a parameter in the eAuction so evaluation was based on TCO

Result

  • 6 suppliers were invited including the incumbent supplier and 5 was approved for further participation in the eAuction
  • eAuction took 70 minutes including 20 time extensions
  • Savings of 10% was identified