As previously stated in the many blog entries that we write here on this site, reverse auctions are a useful way to quickly and efficiently identify the lowest possible price of an item. Further, these reverse auctions are used by companies to procure items that we use everyday; such as mattresses, floor mats, desks, writing utensils. In a nutshell, any tangible good or service that we obtain, can be lowered in costs by reverse auctions (or RA) given that a healthy amount of vendors are present bidding for the buyer's business.
Perhaps the most valuable reverse auctions include items that we often take for granted, such as electricity in our homes. For example, one of our most successful auctions was held with the State of Maryland. As seen in the Press Release (which can be found here http://procurexinc.com/files/news/MDDGSEnergyAuction-PR.pdf), the state of Maryland Department of General Services Energy obtained three-year energy contracts for 478,050,000 kWh annually. These contracts will ultimately save the State around 11% of their overall expenses on electricity, which equates to $11 million. Six qualified firms participated in the event, which ultimately help reduce the average contract price from 6.90 cents/kWh to 6.43 cents/kWh. Although the difference does not seem like a whole lot, keep in mind that the winning firms had to serve several cities, towns, agencies across the state, among which include Camden Yards (Baltimore Orioles home field) and many University of Maryland member institutions. Given the amount of electricity these places utilize on an annual basis, it is clear that the savings are immense.
Given the current state of the economy, businesses need to re-evaluate their purchasing methods. Unfortunately, many companies feel reluctant to deviate from their current business practices, for it alters the way business is conducted on a day-by-day basis. However, it cannot be dismissed that the world is changing. This change is accompanied by the arrival of technologies and innovations that greatly benefit us not only on an individual level, but on a corporate level as well. The State of Maryland's partnership with Procurex is a great example of how the business world is being redefined by technology.
