Snapshot - eAuction on Olive Oil

Situation

  • A large Nordic retailer wanted to conduct an eAuction on different kinds of Olive oils
  • A thorough RFP revealed that there was good competition between the suppliers on the individual products, but not on the total order
  • Spend €2.049.036 annually
  • Previously one supplier for all the olive products
  • Wanted one supplier for all products, but there was no competition on the total order

Solution

  • 4 suppliers were pre-qualified for the eAuction based on a thorough RFP and product testing
  • Even though one supplier, by far, was the overall cheapest, he was not cheapest per product. Resultantly, a Cherry Picking eAuction was chosen to exploit the good product line competition
  • The new suppliers had a switching cost of around 0.5% added to their cost price to ensure competition on total cost
  • Thorough supplier trainings were conducted to ensure that the suppliers understood that our clients preference was to have one supplier for all products despite product line competition in the eAuction

Result

  • High bidding activity - 182 bids submitted
  • The eAuction lasted 97 minutes including 41 extensions of 2 minutes
  • €125.147 (6%) saved compared to current price
  • One supplier for all olive products

Good supplier conditioning helped the buyer achieve a good overall saving despite the low overall competition.