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Situation

The buyer, a large Nordic retailer wanted to conduct an eAuction on different kinds of Olive oil. A thorough RFP revealed that there was good competition between the suppliers on the individual products, but not on the total order. Current annual spend was €2.049.036. Previously the retailer had been used to having one supplier for all olive products and they wanted to keep it this way, however 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