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Reverse Auction Approach for Coal Procurement at National Electric Power

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Added on  2019-10-09

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This case study discusses the potential benefits of using a reverse auction approach for coal procurement at National Electric Power (NEP) and recommends that the company should give a chance to new suppliers to achieve sustainable competitive advantage.

Reverse Auction Approach for Coal Procurement at National Electric Power

   Added on 2019-10-09

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Reverse Auction Approach for Coal Procurement at National Electric Power_1
1SummaryNational electric power is an energy company which is multinational with a great assortment of energy assets. The headquarters of NEP is in Columbus, Ohio and the area of service is around 197,500 square miles in Kentucky, Arkansas, Ohio, Indiana, Texas, Virginia, etc. in 2001, National electric power generated revenue around $61.3 billion and it further carried around $48 billion as assets. It further became the largest generator of electricity in the US. The vice president for the NEP is Deon Houston, she was in the procedure of generating the report of an annual source for the three-year plan of the company. While it seems that NEP has had success by utilising the competitive procedure of bidding and moreover, the reverse auction might be the future wave of success. Mrs Houston wondered that if the source of reverse auction approach might work in order to purchase the coal requirements of the company.The option of reverse approach would be beneficial for the company as the cost at which the coalmight be sourced through the suppliers would decline by minimizing the cost of generating electricity for the national electric power drastically. And further, this will minimise the production cost, and as a result, it will maximise the profits. The recommendation can be affiliated to the quality of the supplied coal. Checking of the qualityis also needed at this point in time when the cost of coal would be minimized, and this might affect the quality of the coal which is to be delivered.It has been understood from the case study that the national electric power doesn’t have any quantitative method in order to pre-qualify the suppliers. They don't give a chance to the new suppliers as they only deal with the reputed and experienced suppliers. The company depends on the dealings of the past in order to make the decisions of purchase for present and future.
Reverse Auction Approach for Coal Procurement at National Electric Power_2

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