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Cost Saving

Gabriela Anca Aust

In 1999 the co-founder of ebidtopay Eberhard Aust  had the chance to work as engagement manager of a purchasing project for Peter Kraljic in Slovenia. Inspired by the witty and exceptionally smart Peter Kraljic we therefore recommend that you apply the Kraljic Matrix to your spend, before even thinking about cost saving. If you have the time, it is worthwhile reading the original article "Purchasing Must Become Supply Management" of September 1983 in the Havard Business review to discover all the subtle details of Peter Kraljic´s revolutionary approach of how to really become great in purchasing.

There is no shame in being a great negotiator and getting the best price

The winning formula is very simple:

  • have a serious review of your specs and eliminate all overspecification and go for "quality fit for use"
  • do a serious global sourcing exercise qualifying not only the usual suspects but also those hungry suppliers that have proven they can do the job and that have all the basics (low labor cost, modern facilities, etc.) going for them
  • ponderate all potential bidders before the negotiation and then let the free-market forces play, e.g. using our many auction formats
  • have a well planned and continuously loaded RFX/Auction calendar, in order to have maximum pace and progress

There is so much money to be gained. Even if you only focus on the leverage items and do what is necessary on the non-critical items, too many CEOs and CFOs have no adequate understanding of how important purchasing potentially can be for the bottom line.

Just a couple of non-critical examples of what money is potentially left on the table. With ebidtopay negotiation technology:

  • Interbrew has saved 25,56% buying € 160.000 of photocopiers
  • Sara Lee has saved 11,44% buying € 200.000 of office equipment
  • Coca Cola has saved 71,06% BUYING € 163.000 of office material

Our benchmark database has more than 28.700 examples of similarly successful negotiations facilitated by our technology.

Obviously, you as a purchasing professional know all this and you need no convincing. This being said - we love to make available for you our negotiation technology and our know-how. If you  need support in change management  we are happy to provide professional services (portfolio review/opportunity identification, sourcing of additional vendors, review of negotiation strategy, negotiation support, etc.)

Incredible, but true:

  • top-5 automotive manufacturers have managed to bring down the prices of direct materials by significantly over 50% without any quality compromises
  • top-5 US companies have managed to improve their bottom-line by hundreds of Millions annually using reverse auctions
  • even retailers considered best in purchasing save big, if they use tools like ebidtopay

This is not only about making the already most successful global companies even more successful. ebidtopay has also supported many public institutions and smaller enterprises to make ends meet.

Using our technology we have achieved that:

  • our reverse auctions have facilitated that sport facilities for the children of Hungarian cities have been built, that before our price negotiation have been beyond budget reach
  • significantly more intensive care beds have been created in Prague hospitals now helping to sustain COVID today
  • energy bills of schools have been brought down, so more money has been left for teachers and new books for the pupils
  • endangered animals have found sponsors to sustain their habitat
  • hospitals could buy the medication even for patients that had no insurance to pay

There is absolutely no shame in being a great negotiator. Orchestrating competition and letting the better vendors win, is actually making this world a better and more efficient place.