Sterlite T echnologies has developed
an in-house auction portal that
supports and links existing SAP and
partner portals, providing key
functional requirements like
negotiation, RFX events and a userfriendly ecosystem for operations.
By Ankit Gupta
An auction portal is an online market
for buyers and sellers to bid and win
products as per their industry
requirements. Sterlite was also looking
at creating an auction portal that
suffices the need for transparent
collaboration with partners while
deskilling the negotiation pr ocess.The
auction portal was required to provide
innovative solutions to customise
various processes as per the changing
business requirements, thus, creating
healthy competitive environment
among Sterlite's partners.An
emergent need to improve process
compliance, maintain confidentiality
and reduce the cost of auction on
other available tools also arose.One of
the major requirements was to
establish end-to-end integration from
RFI to awarding the auction to its
release through SAP .
The Challenge
Even the best global auction portal
presents issues such as:
- End-to-end integration: Starting
from RFI to awarding the auction,
integration to available ERP platform
was difficult, with many manual
interventions.
- Confidentiality of information:
Despite a robust contractual
framework with auction portal
partners, there is a threat of flowing
of leakage of sensitive information.
This information may not be only
related to price points but also
business strategy and policy.
- Cost per auction: All outside portals
come either with annual lump sum or
as per auction basis payment models.
This presents a cost saving opportunity.
- Engagement of internal manpower:
In any case, even for external auction,
one extra resource is required, to
liaison with internal and external
(auction portal provider) resources.
Approach
Though Sterlitehad worked with
auction portals for a long time, the
team had limited experience of
designing one.T o start with, the team
mapped Sterlite'scomprehensive
requirements of additional
functionalities and features over all
past portals used, as well as fixing the
defects of those portals.The members
also pooled in their own experiences
of conducting auctions.
The Solution
A team of Supply Chain and IT was
formed which worked in collaboration
with external IT development partners
to evaluate the technology options
available.The team developed a web-based solution that was
integrated with backend systems like
SAP . This strong IT backend with Tier-4
data centre ensures security and
availability of the information.T o
implement this solution, a workflow
was created with specified roles for
buyers, central purchase department,
partners and commercial,finance &SCM
heads.Some of the main features include creation of platform for
RFX events, reverse & forward auctions,
registration of potential partners,
separate login details for internal
&external stakeholders, separate buyer
&partner screens, generation of online
reports, low maintenance costs with
immediate payback, no restriction on
license and access rights matrix.
Measurement of success
- Reduction in negotiation cycle:
Based on the time of project
undertaken, auction eliminates long
negotiation periods, reduces the
purchase period, and the purchase
closing date is known.
- Transparency in purchase and award
decision: Buyers know they are
competing fairly and on the same
terms as all other suppliers.
- Target Qualified Buyers: The success
of auction is ensured due to the
selection of an appropriate audience
for the products offered.
- Reduce Ownership Costs: As soon
as the choice of buying & selling is
made, the faster the selling & buying
process can be done the better. Usual
costs linked to ownership of property
such as maintenance, interest, taxes
and insurance can be lowered
drastically .Auctions lower ownership
costs through quickly getting
response of the products & services.
Impact on business
After the development &
implementation of the in-house
auction portal, Sterlite conducted 41
auctions with addressable spend of
around Rs.202 crore so far, resulting
into an expected saving of Rs 9.59
crore with average 4.73% since April
2015.
This has also helped build long-term
strategic partnership, improved
transparency & efficiency in purchase
and award decision, increased process
efficiency and de-skilled the
negotiation process.Other benefits
include improved compliance to
internal process and creation of an
established platform for long-term
saving
Impact on business
- Total auction conducted: 41
- Identified spend: Rs 202,56.08 Lakh
- Identified savings: Rs 958.74 Lakh
- Identified savings Percentage: 4.73%
- Categories covered: Logistics, scrap,
consumable items, electrical items
- Buyers from plants trained
- Plan for future: To make 100%
implementation & develop more
auction strategies for negotiation across STL for raw
materials, Capex items, etc.
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