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Centralised tendering

This is the opposite of an auction sale. It involves not a seller who offers his services to buyers, but a buyer who encourages several suppliers to compete.

The biggest and best-known tendering distribution system is that created by General Electric to satisfy its own needs in 1994 : GE Trading Process Network- GE set up this site in order to save money on its purchases : by standardising the electronic tendering process, GE not only simplified and rationalised its buying policy, but also reduced by 30% the cost of distributing and managing tenders, as well as reducing the average processing time from 23 to 9 days, by encouraging competition between its suppliers, resulting in annual savings of several million dollars.

The TPN project, which was invented by marketing, buying and productivity director Orville Bailey, was traditionally based on industrial products (metallurgy, plastics, chemical products, packaging, computer and electronic components). Already in 1995, GE spent 250 million dollars, buying from 800 suppliers via this system. The following year the volume quadrupled, to exceed a billion dollars. By 2000, GE's 12 business units will be spending $5 billion a year through this system.

The success of TPN encouraged General Electric to expand this service, and since 1997 it has been possible for industrial buyers to purchase online, via the TPN Mart electronic catalogue, and in the case of certain companies, under the definition Fortune 1000, to pay with an electronic credit card, known as a Procurement Card. GEIS offers small companies the opportunity to include their range of products within TPN Mart, thus creating a mini online store within a matter of hours.

The TPN concept is an interesting one, as it has become a market place once it opened up to external companies wishing to use TPN's tender distribution facility. Since 1996, thanks to General Electric, in return for a subscription and a publication fee, any company can submit a tender to thousands of suppliers who are listed on the site and allowed to bid.

Tendering is particularly well adapted to the world of business-to-business, as it allows sellers to locate customers who are often difficult to identify by traditional means, and to manage complex requirements, including in the context of international commerce.

But tendering and similar processes can also be used for a sector of the general public : Cybion search- is a method of making known the demand for old and rare books to hundreds of bookshops throughout the world, which works extremely well.

This is one of the forms of mediation which accentuates the new purchasing power of the customer, who is finally able to put a significant number of suppliers in competition one with another.

A few tendering distribution systems

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