Sector: Public Sector

Client: Midlands local authority.

Region: UK

The challenge:

In this age of austerity, organisations of all types are looking to save money - none more so than local authorities. This customer is one of the biggest councils in the Midlands. Investigating various ways to implement budget cuts, the council enlisted the services of supply chain specialists, Procure4. The consultancy was charged with finding ways to make the council’s procurement more efficient.

Telecommunications seemed an obvious area for Procure4 to focus on. This is a highly competitive supplier category with frequently changing tariffs, meaning that savings can often be made.

The solution:

Examining the council’s current procurement process for telephony, Procure4 advised conducting eAuction to take advantage of the competitive nature of the supplier industry. Procure4 then called in Trade Interchange, its eAuction partner.

To ensure that savings were going to be achieved, the Procure4 and Trade Interchange team did two things: first it split the telephony requirements into different categories, for example, calls to mobiles, off-peak calls to landlines, calls to national rate numbers etc. This meant that the council could clearly see what each supplier was proposing to charge in each category and could also benefit from a ‘best of breed’ approach. Secondly the team set price ceilings below the current levels to guarantee an initial saving.

Trade Interchange ran the eAuction on behalf of the council, inviting seven suppliers to participate.

The results:

The eAuction was a success, delivering the following benefits:

• The lowest bid was £267,000, representing a reduction of £80,000 on the original contract value of £347,000 per annum
• The 23% cost saving that the council achieved was higher than it expected
• The £80,000 saving was implemented within a month
• The council enjoyed enormous time savings in the price negotiation phase