an industry look at bidding goods and services in on-line reverse auctions

• Industry trends in e-commerce
• What is an online auction?
• When can you use an online auction?
• What are the criteria to perform an action?
• A Case Study
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Pantellos is the leader in supply chain services and solutions in the energy industry
Supply
Management
Service
Dynamic
Services
Business
Process
Solutions
Professional
Services
Strategic Sourcing
(Supply Contracts)
Auctions
Contingent
Workforce
Rapid Business
Assessments
Supply Chain
Improvement
Projects
Electronic Bid
Management
Craft Labor
Training &
Implementation
Market Research &
Benchmarking
E- Settlement
Supply Chain
Consulting
Integration Hub
Transaction Engine
Content Management
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Marketplace Platform
Supplier Adoption
Document Translation
Analytics
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Proven Results & Track Record
Over $ 1 Billion in Volume, 650 Auctions
Over $190 Million customer reported savings
18% Average Savings
Over 20 utility customers, 13 are in programs
Industry Specific Expertise
Energy Industry Focused
Experience in over 100 Spend Categories
Extensive online auction experience
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In 2002 ISM reported that in 84% of Global 2000 use a form of e-sourcing
20 of the top 25 largest US Electric utilities utilize auctions
Studies find that 40% of a utility’s spend is “auctionable”
IDC reported in 2001 $192 billion of goods and services were auctioned,
2002 $ 350 billion
In 2003 est that $600 billion will be sourced on-line
On-line auctions are quickly becoming a standard in sourcing
Pantellos’ customer are experiencing 18% average savings from over
$1billion in auction volume
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2003 Energy Conference

A process which stems from traditional procurement methods allowing organizations to make more informed decisions through an online, competitive bidding format to obtain best available market prices.
On-line reverse auctions are transforming industries into more efficient marketplaces
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Millions
$ 78.0
GSU Transformers Reverse Auction
First Bid $76.6M
$ 76.0
$ 74.0
18%
$ 72.0
Opening Period
Overtime Period
Buyer Goal $72.0M
$ 70.0
10%
$ 68.0
$ 66.0
$ 64.0
9:30 AM 10:00
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10:30 11:00
Closing Price $64.9M
11:30 12:00 PM 12:30 1:00 1:30
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2:00 PM

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Benefits to Buying Organizations
Reduction in negotiation time and effort
Improved pricing, more representative of market
Introduction to new, quality suppliers
Improves internal processes
Shortens overall procurement cycles
Improved decision making capabilities
Provides market transparency
Compliments other supply chain initiatives
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Benefits to Suppler Organizations
More market feedback and competitive position
Typically faster turnarounds and decisions from buyers
Typically tighter requirements
Value added positions stay in tact (MVB)
Introduction to new business opportunities
Fair and ethical process
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When it meets your procurement goals
Currently use a sealed bid process
Cost and/or Process savings
Introduction to new market
Changes in market conditions
Establish a value reference for strategic relationship
Increased pricing clarity
Establish new supplier/buyer relationships
Success Factors
3 or more suppliers
Selection criteria is quantifiable
The good or service has some “margin” or “compressibility” in price
A clear bidding spec and a level playing field can be established
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2003 Energy Conference

Transmission and Distribution
Wood Cross Arms Pole Inspection
Power Transformers
Shut Reactors
Regulators
Distribution Transformers
Pedestals
Insulators
Hand holds
Vegetation Management
Meter Reading
Substation Construction
Underground Burial
Substation Site Preparation
Power Pedestals
Wood Poles
Fiberglass Poles
Metal Poles
Lighting
Luminaries
Lamps
Pole Top Maintenance
Bird Discouragers
Transmission Line Construction
Cable -Low Voltage
Cable - Med Voltage
Cable - High Voltage
Auxiliary Transformers
GUS Transformers
Distribution Cutouts
Fuel
Uranium
Coal
Gas
Compressor oil
Fuel Handling System
Conveyor Belts
Generation
Mechanical Outage
Re- Insulation
CEMS
PVC
Feed Water Heater
Cooling Tower
Remediation
ISO Phase Bus Ducts
Economizer Upgrade
Super Heaters
Precipitators
Stack Repair
Demolition
Test Pitts
Box Pads
Substation Batteries
Coal
Site Preparation
Auxiliary Boilers
Tank Erection
Gas Pipeline
12", 24", 36", Pipe
610mm Sour Services
Boiler Tubing and Fabrication
Mainline expansion Nuclear
Transmission Pipeline Construction Nuclear PVF
Pipe Sales (forward auction) Uranium
Odorants Safety PVF
Corporate
Bill Forms
Envelopes
Hotel
Rental Cars
Dumpsters
Port-o-lets
Roof Repair
Bill Processing
Copiers
Bulk Stock Paper
Fleet Purchase
Building Construction
Landscaping
Security Services
Fitness For Duty
Media Printing
Painting
Fiber Burial
IT
Software Agreements
IT storage & installation
Voice Com Systems
MRO
Welding Curtains
Tools
Safety Equipment
Scrubs
Emergency Sirens
Motor Refurbishment
Electrical Tape
Compressor Oil
Misc. Industrial Supplies
Control Valves
Conduit
Batteries
Gauges
Chemicals
Caustic
Bleach
Odorants
Sulfuric Acid
Bulk Gases
Sodium Bisulphate
Resin
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Statistics for top ten programmatic users of auctions sorted by savings since January 2001.
Utitlity
Utility A
Utility B
Utility C
Utility D
Utility E
Utility F
Utility G
Utility H
Utility I
Utility J
Auction
Events
15
20
38
40
15
9
29
24
9
15
Auction Volume Reported Savings
$ 228,204,587
$ 133,495,906
$ 158,854,310
$ 96,623,038
$ 56,982,380
$ 35,906,000
$ 45,502,097
$ 37,015,026
$ 29,104,432
$ 14,243,700
$ 42,544,990
$ 30,451,786
$ 26,219,722
$ 14,669,393
$ 9,722,606
$ 9,489,500
$ 7,838,847
$ 4,746,826
$ 3,954,432
$ 3,872,700
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It’s not all about the technology
Auctions transform traditional markets into more efficient markets
CAPS research concludes that on-line auctions will be a standard way to source goods and services
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