Collaborative effort produces significant savings on nearly $200 million in spending.
FirstEnergy knows first-hand the benefits of using online auctions. Over the past two years, FirstEnergy has sourced almost $200 million in goods and services through Pantellos Dynamic Services, with significant savings identified compared with reference prices.
Pantellos online auctions and associated services have become a key part of FirstEnergy’s procurement process. In fact, the utility has expanded the use of auctions this year and now leads the Pantellos buyer community in spend directed through auctions.
“Auctions help us collect market prices, accelerate procurement cycle time and capitalize on the most current market conditions. As a result, we gain competitive pricing from reliable suppliers willing to meet our high quality standards,” said Brad Tobin, Vice President and Chief Procurement Office at FirstEnergy Service Company. “FirstEnergy has attained significant dollar savings on items purchased through online reverse auctions. With strong participation from our business units, we have collectively turned the auction process into a standard sourcing tool that meets material and services needs while generating significant savings and bottom-line improvement for the company overall.”
FirstEnergy’s Supply Chain Group and Pantellos have collaborated with the utility’s business units to develop a diverse, active auction program. Every sourcing opportunity is first evaluated as a potential auction candidate, which has enabled FirstEnergy to use auctions in more than 45 expenditure categories with awards ranging from $42,000 to $21 million. So far in 2003, FirstEnergy has conducted 51 auction events. In a unique application, FirstEnergy is using online auctions to support its supplier and purchase order reduction effort. This initiative is aimed at establishing blanket contracts to consolidate purchases and the supplier base across the utility’s various business units. Some events have involved up to 4,000 separate line items.
Scott Canady, Dynamic Services manager for Pantellos, attributes FirstEnergy’s success with online auctions to strong executive support, Business Unit collaboration and buyer/supplier relationships, as well as diligent preparation and consideration beyond first cost. In addition, Pantellos has established intent-to-bid processes that have resulted in a 100 percent success rate for FirstEnergy’s online auctions. “Pantellos has conducted more than $1 billion in auctions in more than 120 utility categories for its customers and knows the preliminary work necessary to help ensure a successful auction event,” said Canady. “We use this experience to help our customers generate results that meet or exceed their objectives.”
FirstEnergy built its successful online auction program through Pantellos Premier Dynamic Services, a disciplined, programmatic approach that helps companies maximize their results and achieve the highest possible return on investment. Click here for more details about Premier Dynamic Services, or talk with your Pantellos Development Manager.
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