Manufacturing client increases profit by 11% on surplus scrap metal through use of forward auction.

Challenge

A Scanmarket client wanted to increase their profits by selling surplus metal from their production. They sell a mix of scrap metal every quarter and have previously conducted their negotiations via email. This is a time-consuming process and does not allow to make use of the market competition. The client ran a pilot auction for a total value of €70,000 with Scanmarket to identify a more efficient way to sell off surplus materials. 

Solution

4 buyers were vetted and invited to the auction. To utilize the market competition, the buyers were bidding with an index representing the % of the current metal price on the day. Scanmarket arranged the 3 different types of scrap metal into a lot auction to clearly show the price/ton for each type, as well as an average for the total bid. The auction used a traffic light per line to indicate to the suppliers on which line they should improve their bid to improve their position on the total. 

Result

The auction drove total savings of 11% with the incumbent buyer and generated an average of 14 bids per buyer in less than 30 minutes.