e- Auction

Business benefits:

 Reduction of paper and streamlined processes.

 Shorter negotiation cycle
 Achieve more competitive prices
 Increased transparency of the contract award process
Reduced paperwork, short procurement cycle and increased transparency of competing bids
are clear benefits for suppliers.
Negotiation of contracts with your suppliers can be a lengthy process that is costly for both
the buyer and the supplier. In addition, negotiating with suppliers individually will not always
achieve the best deal.
By conducting contract negotiations on-line, the process is much quicker than the normal
negotiation process, and as a result the overall procurement cycle is significantly reduced.
Vendors report up to 30% savings in time and therefore cost of process.
e-auctions create an environment where suppliers bid against each other for a contract. This
environment encourages competition with the result that goods and services are offered at their
current market value. Vendors report price savings ranging between 5% and 20% on non-reverse
auction derived pricing.

A Typical E-Auction Process –

Reverse auctions tend to be used either as hosted services or in house applications. The main effort
involved in carrying out each online reverse auction is usually focused on the set up activities.

Stage 1: Analysis of spend categories

1.1. Identify possible auction category
1.2. Determine item auction-ability (Application of frameworks)
1.3. Determine unit/extension value per line item
1.4. Determine lead times of items
Stage 2: Develop unambiguous specification/ Vendor Listing
2.1 Perform procurement block for items selected
2.2 Detailed descriptions / Specifications
2.3 Determine weights and extension weights per line item
2.4 Establish date and prices as items were last purchased
2.5 Determine current supplier contact list & (e-mail addresses)
2.6 Obtain approval of e-Auction vendors from Executive Chairman

Stage 3: Approval of e-Sourcing service provider

3.1 Contact e-Sourcing service providers: Review offerings
3.2 Obtain Executive Tenders Committee (ETC) approvals for e-Sourcing service Provider
3.3 Draft E-Sourcing service provider contract agreement
3.4 Create service purchase requisition

Stage 4: Develop e-RFP / Conduct pre-qualification

4.1 Send the e-Sourcing service provider kick-off package (item list, suppliers’ email
addresses, terms and conditions associated with items, prequalification questions and general
conditions of purchase)
4.2 Create, launch, test, receive and score RFP responses
4.3 Determine lot strategy

Lot strategy

A lot is the term given for the item or items that engage suppliers to submit bids. Lot strategy on
the other hand is the strategic combination of these items to increase competition thus deriving
best prices. By analyzing the market and supplier pre-bidding, lots can be structured to increase
cost reduction opportunities.

Stage 5 - Confirm E-Auction event training & E-Auction event time

Stage 6 - Train participants

Holding a pre-auction training session allow suppliers to overview the tool, answer any
questions, and hold a mock auction that allows suppliers to become familiar with the use of the
too before the real live auction begins.

Stage 7 - Conduct and monitor the e-Auction

Monitoring the auction carefully to make sure bidding activity is running smoothly is of
paramount importance. A buyer or company representative should be ready to intervene to solve
possible problems.

Stage 8 - Evaluation of bids- Event Analysis

The sourcing team and user departments conduct post auction analysis based on pre-defined
criteria.

Stage 9: Award

9.1 Confirm e-Auction results, deliveries, prices and terms

9.2 Value proposition analysis and ETC approval
9.3 Place purchase order(s) with supplier(s) and create service entry
9.4 Payment to the e-Sourcing service provider

Value proposition analysis (9.2)

The supplier with the lowest e-auction bid price does not necessarily receive the contract to
supply. A post-auction analysis is required to select the supplier that is considered to minimize
the buying firm’s total cost of ownership (TCO) and or deliverance of best value in terms of
delivery and conformance to terms and conditions pre qualification.
Key things to look for and think about:

Typical features of available e-auction solutions include:

Buyer Features:
 Secure environment for setting up business rules, approving supplier participation and
monitoring events
 Ability for buyers to upload images, specifications and other documents, re-usable auction
facility which permits editing and reposting of saved auctions as new auctions
 Customized buyer screen
 Analysis tools for bid evaluation
 End of auction management information reporting
 Audit trail
 Open transparent process
Supplier Features:
 Facility to upload product specifications and images
 Customized supplier screen
 Event log showing a minute by minute bidding activity with a graph
 Automated award notification to the successful bidder

Effort and Cost:

The main effort involved in carrying out each online reverse auction is usually focused on the set
up activities:
Preparing detailed product specification – it is very important to produce a clear product or
service specification as it will help suppliers in bidding and also make the post-auction
evaluation more straightforward.
Recruiting suppliers – Some suppliers are not experienced in taking part in electronic reverse
auctions and therefore may not be immediately willing to join in. Reverse auction service
providers may be able to help with supplier recruitment.
Training suppliers in using the software/website – reverse auction service providers will
provide training assistance. This may be included in the price.
Local authorities should make a careful assessment of the likely cost of the process before
proceeding.
There are a number of cost options available:
Software license purchase - the auction software is bought and installed on the council’s server.
The council can then use the software and organize an unlimited number of events at no extra
cost. The additional cost involves consulting services required to set up and manage the first
auctions and train users to be able to manage auction independently in future.
Pay as you go – the buyer can purchase individual events from a third party auction provider.
The price will depend on the number of suppliers taking part in the auction.
Multibuy – the buying organization can purchase a number of auctions as a package for a set
price. The package usually includes support and training for both users and suppliers.
Commission on the realized savings, where the vendor takes a percentage of the savings realized
by the buyer on the agreed contract.
Supplier pays – in some cases, the suppliers of the product or service to be auctioned pay to be
able to take part in the auction on a “no win, no fee” basis.

7 Steps to e-Auction Success:

There are many components to e-Auction success, including good strategies, best practices, and
inscrutable ethics. However, this post is going to overview another set of good process that
you can follow to make sure the auction runs smoothly, efficiently, and delivers on it’s
expected benefits.

 Define Requirements and Goals

As with every other step of the sourcing process, good requirements, along with clear goals, are
keys. Be sure to understand what the strategy is for lowering or controlling costs, for optimizing
the supply base, and for process improvements.
 Invite all Potential Suppliers to an Open RFI
Do not limit the organization’s supply base to current suppliers as sometimes the best process
and cost savings can come from new suppliers with streamlined processes, innovative production
technologies, and lower production costs.
 Pre-Qualify Capable Suppliers
It is critical not to invite suppliers to an auction that are not capable of meeting the organization’s
needs. This will only garner resentment from other suppliers and possibly cause significant
production delays if it is only discovered after the award that the supplier cannot deliver.

 Clearly Document All Requirements

Good documentation is the key to a successful sourcing project in general. With a global supply
base, staffed by individuals of distinct cultures, each with their own internal understanding of
what a (foreign) term or requirement could mean, there are really no common terms or
definitions – but detailed documentation can avoid this problem and avert potentially costly
misunderstandings.
 Hold a Q&A Training Session
Don’t assume the auction tool is easy or natural for your supplier. Whereas your buyers have
probably been trained on it, used it, and are accustomed to using it as part of the process, it might
be a new tool, concept, or even business paradigm for one or more of your suppliers.
 Monitor the Auction
It’s important to make sure that things run smoothly. If one or more suppliers fail to bid
relatively promptly or the refresh rate is sluggish or non-existent, either the buying organization
or one or more supplying organizations might be experiencing problems. A buyer should be
ready to step in and offer help or remedy the situation at an instant.
 Follow Through and Award Promptly
It’s important to be prepared to allocate awards and follow through on negotiations promptly and
within the promised timeframe.

E-auction of CPC Dust, RPC Dust and Bagged CPC contaminated with
Refractory in NRL:
During the process of CPC production and in order to meet the market requirement, there is
generation of CPC dust. CPC dust so generated is disposed off by selling the same through
tendering after advertisement once the accumulated quantity is sizable. Apart from CPC, there
are accumulated RPC dusts and bagged CPC contaminated with refractory.
CPC dust and RPC dust are by-products of production process and do no meet product
specification. CPC dust cannot be corrected to product specification with available NRL
facilities and RPC dust if used as feed in CCU will result in higher dust content in CPC.

Lot Item Details of NRL for e-auction:

Seller Details
Auction Details
Auction No MSTC/ERO/Commercial Deptt., Numaligarh Refinery Limited/5/Numaligarh/09-10/4633[23029]
Seller/Company Commercial Deptt., Numaligarh Refinery Limited
Opening Date &
Name 31-03-2011::01:01:00
Time
Location Numaligarh
Closing Date &
Scheduled Time 31-03-2011::01:02:00 Closed At 31-03-2011::01:02:00
Time
Street PO : NRP, Dist: Golaghat
Inspection From
31-03-2011
Date
City Golaghat - 785699
Inspection
31-03-2011
Closing
CountryDate INDIA

Telephone 03776265678

Fax 03776265562

Email pankaj.saikia@nrl.co.in

Contact Person Beda Nanda Das

 Total No of Lots = 4

QUANTI ED/
LOT NO[PCB GRP]/LOT NAME LOT DESC LOCATION
TY (ST/VAT)

Lot No: 1 CPC (CALCINED PETROLEUM

COKE) DUST
Note : The material is packed
in 50 KG capacity HDPE bags. MARKETIN
Lot CALCINED PETROLEUM 779 7.21 / G
Name: COKE MT 4% TERMINAL,
NRL

Lot No: 2 RPC (RAW PETROLEUM COKE)

DUST
MARKETIN
128 7.21 / G
Lot MT 4% TERMINAL,
RAW PETROLEUM COKE
Name: NRL

Lot BAGGED CPC

3
No: (CONTAMINNATED WITH
REFRACTORY). MARKETIN
807.6 7.21 / G
Lot BAGGED CALCINED MT 4% TERMINAL,
Name: PETROLEUM COKE NRL

Lot BAGGED CPC (CALCINED

4
No: PETROLEUM COKE)
1. Payment in four installments
@ 15, 30, 45 and 60 days from
Lot BAGGED CALCINED the date of AL;
Name: PETROLEUM COKE 2. EMD to be paid is 10% of the MARKETIN
full material value and same 10000 7.21 / G
shall be adjusted against the MT 4% TERMINAL,
4th installment / final payment. NRL