source: Electrolux

Centralising International Freight Purchasing with E-Tender

Electrolux puts European Transport Orders out to Tender using TICONTRACT

All the international transport for the whole of Europe, a freight order volume of over 100 million Euros, more than 50,000 FTLs, distribution from 20 into 35 European countries, all adds up to a massive project. Especially for Michael Blumentsev, Director Transportation Purchasing & Structure at Electrolux, under whose leadership a project team was set up. Its remit was to analyse all European transport tenders for Electrolux and put them back out to tender. The tenders were to be standardised and carried out in parallel for all 20 countries taking part. “The European Tender 2009 was a project of huge dimensions”, states Blumentsev. “My main priority was to bundle data and create a joint structure. At the same time I wanted to guarantee uniform procedures and end-to-end documentation.”

A redesigned tender process
“We introduced a new standardized and transparent tendering process that we redesigned”, says Blumentsev. “The new process catered for the interests of our internal customers and ensured that the Group leveraged on both central purchasing power and local market awareness.”
While local teams identified and contacted the current transport service providers, to ensure their participation in the tender, the central Transport Purchasing function co-defined strategic suppliers, and implemented a transport-specific e-sourcing tool, a platform to manage the tender process from beginning to end.

“Within this new tendering process, we decided to implement an electronic freight tendering platform. We chose TICONTRACT for several reasons: its huge database of carriers, the enormous possibilities in the analysis and the profound knowledge and experience of the whole company within the logistics sector, just to name a few“, explains Blumentsev. “Besides the high quality of the tool, I mostly appreciate the team´s personal support: On the one side, the sales staff also acted as consultants and discussed with us all strategic aspects to identify the best approach. On the other side, their international carrier support constantly followed up all the invitations and was permanently at their disposal for any kind of questions.“ The system is available in ten languages and the support team grants multi-lingual assistance throughout the whole process.

Record number of offers
Electrolux invited more than 1,200 carriers to the tender. Over 100,000 offers were received. The platform enabled Electrolux to handle the large amount of offers by several mouseclicks within the analysis tool.

“Facing such a vast audience of suppliers was quite an effort, but the result we could deliver to the Group is definitely satisfactory”, says Blumentsev. “That would have been impossible to handle without the electronic support through the tendering platform. The best part of this whole exercise”, he adds, “was the effective and valuable interaction with our colleagues based at different Group locations: we worked as a great team, and I got fantastic feedback from many of them.”

Transparency through detailed analysis
In addition to the standardized tender process the platform also offers functions for the shippers to evaluate the quotations internally. “This evaluation tool is the real attraction for us”, says Blumentsev. “Using different simulations we can display best prices, rankings and scenarios. That gives us a huge amount of visibility on the whole process and allows us to make a much better comparison between the individual quotes.”

A good platform for the future
“The positive impact of the primary transportation tender helped not only to reduce our cost base for 2009, but also to install a European standard process with a high-end purchasing tool specialized for transportation”, says Ulf Harring, Head of Supply Chain Europe. “In addition, we had the possibility to reach out to a multiple number of new and potential service providers.”
Blumentsev adds: “The outcome? A record reduction in transport tariffs of more than 10%! At the same time, we achieved to raise our supplier´s reliability as well as their quality. Once the general economic situation improves we expect capacity and price pressure to increase. However, we are confident that with the new setup we will be able to continue providing Electrolux with quality services at very competitive rates.”

July 2010