Whitbread reviews supplier deals after e-auction savings

Whitbread is to review all of its purchasing contracts for their suitability for e-auctions, after making savings of more than...

Whitbread is to review all of its purchasing contracts for their suitability for e-auctions, after making savings of more than 15% on a pilot scheme for food procurement.

The leisure company said the willingness and ability of suppliers to use and adopt new technologies will now be a part of its pre-qualification assessment of companies wanting to bid for future contracts.

Savings of £10m over two or three years through the use of e-auctions had initially been identified but the figures are now being reviewed following the success of six pilot projects. Whitbread is also investigating the possible use of e-tendering.

The pilot scheme for the Web-based auctions is being run on BT Ignite's Commerce One auction service. The service was developed by Computer Sciences Corporation as part of its £50m outsourcing contract with Whitbread.

About 30 suppliers have been given half-day training sessions on the use of the e-auction site by Whitbread. They have been advised to have two connections during the auction to ensure that they have a back-up in case of technical problems.

David Weights, head of the Whitbread supply chain, said, "You have to be thorough in the way you do your pre-qualification. You think far more seriously about who and why you are selecting and you widen your net.

"It is shifting the effort into the planning stage rather than worrying about it at the negotiation stage."

Suppliers taking part in the auctions, which last for about one hour, can see the rival, anonymous bids.

"One of the advantages for suppliers is that they are getting valuable market information. They can see what other people are bidding and where they stand in the market," said Weights.

"It also creates a level playing field, which will encourage new entrants. You don't have the incumbent sitting at the negotiating table and scaring the buyers about the dangers of change.

"We are now looking across the contract database for those up for renewal

and are asking if we think they could be right for auction."

Savings are measured by comparing the buyers' estimates of the price they would have achieved with the auction results.

Prices have been lower than buyers' expectations, said Weights.

Whitbread hopes Commerce One can be developed for use on more complicated contracts involving multiple products or services, but it is also looking at other applications.

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