Japanese eAuction results in more than $2 million (49.3%) in annual savings for a large European grocery retailer.

Challenge

One of Europe's largest grocery retailers had used the same supplier for more than 80 years, and spend was €3,750,000 annually. The category had not been renegotiated for many years, and spend had not been managed centrally. Internal stakeholders were reluctant to switch suppliers because some were brand-specific making it difficult for other companies to bid. The project included cleaning chemicals and equipment like clothes, mops, and brooms, and there were no common units or case sizes for suppliers in the industry.

It was decided to go out to tender for renegotiation of unmanaged spend.

Solution

The buyer preferred not share ranking information as they wanted to be free to choose the most suitable supplier. A Japanese eAuction was conducted with 8 lots designed so suppliers with different units of measure, case sizes, and brands could be compared accurately. 70 suppliers were contacted, and 9 suppliers were pre-qualified based on a thorough RFP process.

Result

The Japanese eAuction received 633 bids in less than 4 hours saving the buyer €1,850,000 (49.3%) annually.