Renegotiation of Unmanaged Spend

One of Europe's largest grocery distributors and retailers had used the same supplier for more than 80 years. The spend was €3,750,000 annually. Due to the high spending on the category, it was decided to go out to tender. The project included cleaning chemicals and cleaning equipment like clothes, mops, and brooms. The category had not been renegotiated for many years and the spend had not previously been managed and coordinated centrally. Internal stakeholders were very reluctant to switch because some specifications were very brand-specific making it difficult for other companies than the incumbent to bid for it. There were no common unit or case sizes for suppliers in the industry.

Japanese Auction with No Supplier Transparency

  • 70 suppliers were contacted
  • Based on a thorough RFP process 9 suppliers were pre-qualified for the eAuction 
  • The eAuction lots were designed so suppliers with different units of measure, case sizes, and different brands could be compared like-for-like
  • The eAuction was divided into 8 lots to enhance competition
  • A Japanese eAuction was conducted as the buyer wanted to be free to choose the most suitable supplier per lot after the eAuction, and therefore the buyer preferred to not share any ranking information

49.3% Savings by Managing Spend

  • 633 bids received in 3 hours and 44 minutes
  • €1,850,000 saved every year = 49.3%