FOCUS E-AUCTIONS AT MPP CONVINCING BY PERSEVERING STAY TUNED-CONVINCED F or around ten months, I have been trying to establish electronic auc- tions more and more. At first, I had great difficulty persuading suppliers here in Brazil to participate in my e-auctions. Many work according to a "monthly price list model" and have never had any experi- ence with electronic auctions. I had to do a lot of persuading and convey the neces- sary knowledge to them as simply as pos- sible. That was a big challenge. On the other hand, these tools also offer advanta- ges to suppliers: They have many more opportunities to win orders. At the same time, of course, there is also increased pressure to be undercut by other compa- nies and to lower their asking prices. Different types We have various types of e-auctions at our disposal, but we use reverse e-auc- tions most frequently. In this process, we set a maximum price, and several compe- titors submit descending bids to win the contract. This is a flexible solution. During the auction, suppliers can view their bids and their position online. Suppliers usual- ly know their ranking but not the actual bid prices of their competitors. The big advantage of this auction is that we al- ways end up with an offer. The outcome of the Dutch auction stra- tegy is somewhat more uncertain. We generally use it when there are fewer approved suppliers. In this case, the auc- tion starts at a low price, which is gradu- ally increased. The starting price is based on the supplier's reference price and the average price of the previous year. However, such auctions are tricky. I once planned eleven rounds for an auction and took a very aggressive approach, but the offer was only accepted at the 10º bid. So, there is always a risk that there will be no offer at the end and the deal will fall through. That's why the planning for this type of auction must be much more deci- sive. The pressure to accept the offer is on both sides. If a supplier accepts the current offer, the auction automatically ends with a winner. Strategy worked But it can also work out well. When I had to buy a raw material for which there were only three approved suppliers, I decided to use the Dutch auction strategy. In the first step, I requested a reference price (RFI: Request for Information) to define the auction target. We had also planned to reduce the price by 15 percent. So we set our minimum starting price. With each bid, we gradually increased our of- fer, and the supplier had time to accept or reject it. In the end, we were very satisfied with the result. We were able to reduce the price by 11 percent compared to the reference price and even by 18 percent compared to the average material price in 2024. Extensive preparatory work However, preparing for this auction was time-consuming. First, we had to inform the three suppliers about this different form of e-auction. We arranged a meeting with each supplier to remind them of the date and time of the auction. It was also important that only employees with decision-making authority on the supplier side participated in the auction. We estab- lished auction rules and coordinated with the stakeholders. These suppliers had al- ready been trained in the use of the tool. E-auctions have led to significant cost savings for us in Latin America. This method currently covers around six percent of the total expenditure of the MPP site in the IPEL portfolio. Key factors for maximizing the effectiveness of e-auctions include defining suitable ma- terials, maintaining a qualified supplier base, training users of the tools, educa- ting bidders, coordinating stakeholders, establishing clear rules, and ensuring clear communication. Although this requires some effort initially, it usually leads to significant time savings and better decision-making processes later. The exchange of experiences has proven to be extremely valuable for me. I was en- couraged to continue down this path. Un- derstanding the process, learning from initial attempts, and adapting the concept to my specific requirements were crucial to my success. It was also important to me that questions about e-auctions, such as choosing the right type or using the right tool, were answered directly by the Center of Excellence (CoE) or the Am- bassadors team. This has created a truly global community. Overall, e-auctions bring greater transpa- rency, competitiveness, and more dyna- mic negotiations. The next step for me now is to work with the sales team to share knowledge and insights. Our goal is to develop a variety of strategies that will open new business opportunities for the company. MAURICIO BUCHDID Senior Procurement Manager, GF GPL, MPP BU 8 Xpress | 03.2025