As part of this year’s sourcing process for intermodal in Sweden and Denmark, the final negotiations were done via e-auction.
E-auctions can be an attractive tool when sourcing inland transportation services if implemented well. The process allows each supplier to monitor their ranking live while quoting in response to competing suppliers' quotes. This year the Scandinavia Country Cluster is very satisfied with the results for both countries.
Scandinavia Inland Operations Manager Maria Sturgis explains “[e-auctions can] damage relationships if not handled properly”. This was seen when the programme was first rolled out “without considering the extensive changes” vendors would need to make.
“We learned and re-built these relationships over the last two years where e-auction is just one tool we can use in the negotiation process,” she continues.
She cites the importance of spending time with the vendor to discuss expectations and agreement on service levels aside from good market knowledge “to balance” high demand and lean prices. At the same time, service should “never be jeopardised” while maintaining a healthy and open relationship.
The auctions for each country took place over one week with three auctions per day, covering approximately 200 corridors for Sweden and 150 corridors for Denmark. This translates to a very lean and fast negotiation process for both buyer and supplier. The transparent process and level playing field is recognised by suppliers as contributing to a positive result. The follow-up supplier satisfaction survey showed that suppliers felt that the e-auctions were conducted in a fair and transparent manner.