Case Study: Wooden Packaging

The case

A major global manufacturing company was to renegotiate wooden packaging material at a total value of some $25,000,000.

The case concerned some 600 products with some 10 delivery points.

The approach

The buyer was provided with an electronic iterative bidding process. In this process the suppliers could supply quotes for the different products as well as expressing synergies between the different products. The latter could e.g. be synergies in manufacturing and/or transport.

The result

The project was very successful with savings of 5 to 10% in the different product groups. This was beyond all expectation as the segment was relatively well analysed in previous negotiations and e.g. open calculations had been used for years.

The number of suppliers was reduced from 15 to 6 - a great saving on its own merits.

To our knowledge, this was the world's first iterative combinatorial procurement auction on the Internet.

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