Bid exchange means savings

By By William Atkinson -- Purchasing, 12/22/2000

"In recent years, we have been downsized, reorganized, and every other kind of 'ized' you can imagine," reports David Throop, purchasing director for Joplin-based Missouri Southern State College (MSSC). "I don't even have secretarial support. As such, we are required to be as efficient as possible."

One way the department has increased its efficiency and saved directly on purchases was to team up with Way2Bid (an electronic bidding and auction exchange) about three years ago. One thing that attracted Throop to the provider was the fact they specialized, and continue to specialize, in procurement-related needs.

Here's how the technology works: Throop notifies existing and new suppliers with whom he wants to continue to do business that the Way2Bid exchange is available and he will be posting RFQs on the exchange over time. Interested suppliers contact Way2Bid, register, and are notified of their acceptance into the exchange a day or two later. "There are no registration of monthly fees for buyers or sellers," Throop explains. "However, sellers are charged a small percentage of each bid they are awarded." Throop notes some suppliers build this fee into their pricing structure, while others absorb it in order to beat the competition.

When MSSC needs to purchase something that can be handled through the exchange (most non-specified commodity items, for example), Throop posts the information on the exchange and then sends e-mails (also through the system) to the suppliers whom he would like to have participate in the bidding. "It's not a 'bulletin board' system where all suppliers in the exchange are automatically notified, and where I might end up with 5,000 responses."

Throop also posts the date and time of closing. Upon being notified, the suppliers can access the site, get the bid information, and offer their best price. "Unlike a reverse auction, the suppliers cannot see what someone else's lowest price is," he explains. "The system is totally private and secure." In most cases, Throop notifies about a dozen suppliers for each piece of business and generally receives four to six responses. Once he selects the supplier he wants, he notifies that supplier by e-mail that they will be receiving the order. "I then mail, fax or e-mail the actual order to the supplier," he says.

Throop estimates the process saves the college between 20% and 30% over buying products locally, which is how purchasing at MSSC was handled previously. "For example, we are now able to save between $4 and $5 on Inkjet and toner cartridges," he says. "This may not seem like much, but when you consider we might purchase 3,000 or so a year, the savings can add up."