Sandy Duckett, fleet business manager for Scottish Power, used the power of the internet to slash vehicle acquisition costs through a reverse auction.
Manufacturers put in bids for providing the fleet to the firm during an online auction, although the winner wasn't simply chosen on price. Before the auction took place, there was months of work and paperwork involved in winning support from manufacturers so they would take part. Standard service levels were agreed and bids were weighted according to wholelife costings and service.
Duckett said: 'We needed comprehensive training for us and the tenderers and full testing of reverse auction software.'
Many manufacturers already use internet auctions to source their own parts. Duckett said reverse auctions don't guarantee savings, as prices could go up as well as down. But David Bricknell, managing director of SynerDeal, a specialist in online auctions and acquisition systems, said savings were possible.
He said: 'Overall, we have managed £1.5 billion worth of online purchases and achieved £300 million in savings.'
In one reverse auction for the supply of car batteries, there were more than 100 bids in less than one hour, while an oil filter auction achieved a 50% reduction on the targeted price.
Furthermore, the same method could be used for air and train tickets, hotel, car rental and communications costs.
Robert Albright, purchasing services director for Royal Mail Group said its own e-procurement system was now logging 1,400 transactions per week. Net savings in the past year were £1.2 million.
Disposals can also be handled online. Suzanne Gardiner, new product manager for Manheim Online, said her company had achieved consistent 70% to 80% conversion rates from online sales and had found that prices paid were 6% higher than usual.
However, online sellers should still not ignore the importance of presenting vehicles in the right colour, condition and specification.