The auction system earned the St Louis based company the prestigious CIO 100 award from CIO magazine, which recognises organisations around the world that excel in positive business performance through resourceful IT management and practices.
Arch Coal’s early adoption of the reverse auctions in June 2000 through a partnership with Perfect Commerce/BayBuilders, helped win the award. Arch has conducted 30 auctions over the course of the last twenty-four months with savings ranging from 5-17% per auction. Estimated savings were in excess of US$7 million.
Reverse auctions encourage competitive pricing and have proven exceptionally effective in procuring everything from oil filters to conveyer belts. Underground products secured by Arch include conveyor belting, roof bolt resin, lubricants, longwall chain, connectors and flights.
“In simplest terms, we tell the marketplace what we need - and vendors compete on the Internet in real time for the opportunity to meet those needs. The reverse auction puts Arch in the driver's seat, encouraging competitive pricing from interested bidders,” said an Arch spokesperson.
Arch signs an agreement with all bidders that it will not negotiate outside the auction to ensure a fair auction.
“All bidders during the auction see all others pricing so they know how they measure up.”
Arch will continue their program of reverse auctions and expect to hold about four auctions a year.
