Siemens cuts costs with intranet auctioning

Siemens Business Services is holding internal intranet based auctions to cut costs.

The IT giant will go live with an internal auction system in 190 countries next month, having successfully tested the software in Europe and at one site in north America.

The software works on a principle similar to consumer auction sites such as eBay, but is open only to certain employees of Siemens, such as purchasing or logistics professionals.

The bidding software is also linked to related systems, such as warehousing and export control. If a Siemens division in the UK needs spare parts that are in stock in a German division, it can bid for them through an internal portal.

Hans-Günter Thonemann, senior ecommerce project manager at Siemens Business Services, said that Siemens developed the system itself because most packaged software is aimed at the business to consumer market.

"This has some similarities with consumer bidding systems," he said, "but it is much more complex because the software must be integrated with internal business processes and the underlying IT infrastructure."

Jonathan Steel, chairman of researcher the Bathwick Group, believes that internal auctioning is an area that large companies should be considering. "The whole business to business auctioning space is starting to make a lot of sense," he said.

"With the creation of profit centres, divisions can compete with each other as much as they do externally. Companies may well make great cost savings."

In the US, computer distributor Ingram Micro is auctioning returned goods which it previously sold through liquidation channels.

Ingram says that it recoups 20 cents on the dollar for returns through liquidation, but by auctioning returned goods to businesses it claims it can redeem as much as 60 cents on the dollar.