Royal Mail keen to develop savings

22 January 2004
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22 January 2004 | Simon Binns

The Royal Mail plans to channel up to £100 million of goods and services through e-auctions in the next year after trials saved it an estimated £2.5 million.

Eventually, the troubled company wants around half of its annual £1.5 billion budget to go through online auctions.

Peter Stevens, its head of purchasing's technology exploitation and development, told SM:

"E-auctions are now part of business as usual in Royal Mail Group.

"This technique has saved Royal Mail millions of pounds since we started using it 18 months ago and the tool is now being used by buyers at their desktops as part of their daily toolkit, rather than being run as a central project."

US firm FreeMarkets will provide auction software and manage Royal Mail's e-auction services for goods and services from international scheduled air freight transport to first-aid supplies.

But Stevens said Royal Mail will not look to buy everything with e-auctions as they weren't suitable for all purchases.

"Suppliers have been largely positive and we have had some extremely positive feedback from some of our global suppliers.

Stevens said savings to date were "commercially sensitive" on a commodity basis, but Royal Mail had saved as much as 80 per cent on individual deals.

In the public sector, the main procurement advisory body for government, the Office of Government Commerce, has also been urging all departments to consider using e-auctions.



SMjan2004

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