10 June 2004 | Eloise Seddon
The NHS Purchasing and Supply Agency (Pasa) is set to buy more commodities using online auctions in a deal with e-auction specialists TradingPartners.
Fifteen commodities have been identified for e-auctions, including foodstuffs, medical products such as bandages, and laboratory equipment and supplies. TradingPartners will provide software as well as buyer and supplier training.
Pasa's target is for 50 per cent of the appropriate contracts to go through an e-auction.
It hopes to make big savings with the system after 13 pilot auctions last year with provider Emptoris saved 23 per cent on an £83 million budget.
But Joe Walsh, Pasa's associate director of e-commerce, said: "We have no targets for achieving a certain percentage in savings because they will depend a lot on fluctuations in the market and on events outside the market," he said.
He highlighted the need for suppliers and buyers to be clear about the rules of operation.
"There's no room for misinterpretation or mispricing on the buyers' part. If you can't clearly specify your requirements, then it's best not to use e-auctions," said Walsh.
There were also plans eventually to introduce e-auctions for some pharmaceuticals and temporary staffing, he added.
TradingPartners beat Bravo Technologies, BT, Achilles and Wipro in an Office of Government Commerce-organised tender for the exclusive Pasa contract, which is scheduled to end in March 2005.
But Jamie Anderson, programme director and lecturer at the Centre for Management and Development at London Business School, warned e-auctions were a short-term fix for cutting costs.
"A lot of purchasers see a saving in the short term as they focus on price rather than total cost of ownership.
"But in a third of cases they go back to their original supplier within six months," he said.
Anderson added that longer-term measures to monitor supplier performance would reap the same rewards for purchasers as using e-auctions.Feature: Do services suit e-auctions?