Continuing along the same vein of interesting applications of Web 2.0 technologies in procurement is the Evidence Warehouse project for the District of Columbia. For this project, the District has posted all communications including documents and video to a Wiki. There is even a Q&A section available for everyone to see. The Wiki can be seen here:

www.evidencewarehouse.ocp.dc.gov

It has been reported that this process enabled the District to reduce the process from 6 months to 3 to 4 months. I have to imagine that this also furthered the public procurement maxims of openness and transparency.

Another interesting development I’ve become aware of is the use of YouTube in procurement. For instance, there is a great video that provides and overview of the eVA e-procurement system.

A few years back we did some work with Oxford University. They were interested in how procurement auctions fitted into the bigger auction picture. We were interested in finding out how in line with auction theory we were. I was looking through my old material from that study and I want to share a neat graph from that work that models how expected savings rise the more suppliers you include in an auction.

If you assume that all suppliers in a marketplace have a price evenly distributed between a low price and a high price then, on average, the savings you would get increase as shown in the graphic above. This helps emphasise that 4 bidders is a good number for a reverse English auction, as I have often said. But one thing to clarify: this is a model - you can do better than the model by ensuring that when you select potential suppliers that you are selecting suppliers who have a lower price rather than selecting suppliers at random from the marketplace.

Read more about eAuctions at Alan Buxton’s eSourcing Place

An interest of mine is evaluating opportunities to apply some Web 2.0 technologies to the procurement environment.

Recently, I discovered a service provided by Ning. This service allows you to create “social networks” (a la Facebook) for different community groups.

Most procurement communities are closed shops. They are regionally based associations that charge membership dues. Now, granted, they provide more service than I envision - but what about a free service to allow us to connect?

Furthermore, I have a hypothesis that the Water Dept. in NYC has more in common with the Water Depts. in Dubai and Melbourne than with the other departments in NYC. Shouldn’t someone bring these people together?

So, The Procurement Exchange Community can be found at procurementexchange.ning.com or via the home page of The Procurement Exchange.

I will leave it as open as possible so that members can create groups, start discussion threads, etc.

Let me know what you think!

It’s been a while since my original post, but I’ve come across some interesting developments that I’d like to share over the next few weeks. So stay tuned!

Many of our Partners’ clients are demanding tangible savings from procurement. Although there are several options, many come to the Best and Final Offer (BAFO) process as an option.

Although fairly well established in the US, this practice is virtually non-existent in Canada. And implementing a BAFO policy is sure to upset a few suppliers. Before you embark, you may want to check off a few things:

• Do you have legitimate reason to suspect that you will be able to receive better proposals, especially for price?
• Are you managing your whole-of-life costs effectively? Implementing BAFO processes will be easier if it’s seen as an action of last resort.
• Have you thoroughly examined all opportunities to drive down costs through the specs? Again, this will aid the “case” for choosing BAFO.
• Can you sustain non-bids by your legacy suppliers?
• Have you figured out which projects are best suited for BAFO? As it introduces additional cost for the proponent, you should probably establish some cost and complexity thresholds.

There is a chance that some of your suppliers will be receptive to a BAFO policy. After all, they might rather know about deficient areas in their proposals before the selection of the winning proponent.

Our Partner Michael Asner has some great information on BAFOs. They can be found here:

http://www.rfpmentor.com/bestandfinaloffers.html

I was recently asked if reverse Japanese auctions are only appropriate when there are just a few suppliers bidding.

Briefly the answer is that in theory a reverse Japanese auction will work just fine all the time. But in practice you’re best off keeping to Japanese auctions where there are fewer suppliers. (more…)

Always good to see some  (positive) coverage of eAuctions in the trade press. Here’s an article from Purchasing.com about BlueBird’s use of eAuctions. For non-US readers, Blue Bird make those iconic yellow N. American school buses. (more…)