BayanTrade auctions boost sales of paper firm

A supplier of paper products boosted revenues five percent in just two months after participating in online auctions organized by BayanTrade. Eighty percent of the transactions accounting for the increase involved new customers.

According to Kerwin Haw, his company, Advance Computer Forms, Inc., has participated in six bids since BayanTrade began offering online auctions late last year, and has won all of them. In transactions ranging in value from P800,000 to P5 million, the company has sold large volumes of bond paper, continuous forms, and fax paper. The company expects to do more business in the future.

"Based on the inquiries we’re getting, we expect to continue expanding our client base on BayanTrade," said Haw, who is managing director of his firm. He said that 80 percent of the transactions were with new customers.

Total BayanTrade e-bidding transaction values are approaching the P500-million mark, according to company executive Cherokee Chamorro. Transactions generally range from P2 million to P25 million. While most transactions involve immediate fulfillment, Chamorro said longer-term agreements also result from them.

E-procurement involves transactions from an approved group of suppliers who place online catalogues on the BayanTrade e-marketplace.

BayanTrade is a partnership among some of the country’s biggest conglomerates — Ayala Corp., the Lopez group of companies, Philippine Long Distance Telephone Co., JG Summit, Aboitiz and United Laboratories.

In one case, William Gothong and Aboitiz (WG&A) assistant vice president for materials management Connie M. Magat arranged a two-year fuel supply agreement for their land-based fleet.

"That auction was significant for a couple of reasons," Chamorro said. "First, there’s this perception that the oil industry is a cartel, but everyone signed up for the bidding, including small players. Second, despite the volatility associated with fuel prices and exchange rates, an arrangement was reached for a medium term agreement. This was possible because comprehensive specifications were hammered out in pre-auction conferences with all sellers."

The specifications included provisions for adjustments when prices or exchange rates exceed or fall above or below pre-agreed limits. The advantages of online bidding, according to Magat, include better planning because of dependable supply, lower costs, and lower operating expenses. For Haw, the principal advantage for sellers, aside from increased business, is transparency.

But Haw said lower costs are also an advantage for suppliers. "In traditional bids, we have to send representatives to our clients. That’s inefficient and costly for a number of reasons. First, there’s no guarantee that the briefing our representative receives is the same, or understood in the same way, as the briefings provided to competitors’ representatives. So we have no way of knowing whether we are bidding apples to apples," he said.