3. 1
To manage and operate public wholesale marketsTo manage and operate public wholesale markets
founded by Seoul Metropolitan Governmentfounded by Seoul Metropolitan Government
Directing and supervising auction company, intermediaryDirecting and supervising auction company, intermediary
wholesalers andwholesalers and
related traders in marketrelated traders in market
Maintaining the markets’ facilities and supervising distributorsMaintaining the markets’ facilities and supervising distributors
Training distribution specialists and improving the distributionTraining distribution specialists and improving the distribution
structurestructure
Operating Seoul Organic Food Center for School MealsOperating Seoul Organic Food Center for School Meals
EstablishedEstablished 1984.4.10(Capital : 693.6 mil USD, Land & Goods : 669.3 mil USD,
Cash : 24.3 mil USD )
MarketsMarkets
ManagedManaged Garak Market, Gangseo Market, Yangjae Market(3 markets)
OrganizationsOrganizations Headquarters and 1 branch, 1 business office
StaffStaff 302(2 executives, 184 office staffs, 74 field/ technical staff, 42 cleri
assistants)
4. 2
Electronic Auction SystemElectronic Auction System
All products auctioned through fingerAll products auctioned through finger
signal auction systemsignal auction system
Finger signal auction system for certainFinger signal auction system for certain
productsproducts
started(apples, pears)started(apples, pears)
Garak market(SAMACO) openedGarak market(SAMACO) opened
All agricultural products sold by clientsAll agricultural products sold by clients
(consignment sales)(consignment sales)
2000
1995
1991
1985
~1985
6. 4
Problems with Auctioning by
Raising Hands
Unfair transactions
(Collusion by Intermediary wholesalers and the
auctioneers)
Difficult to understand the Finger signal auction
system,
suspicions of unjust transactions
Lower bid than the maximum due to mistakes by
auctioneer
7. 5
Why we choose the electronic auction systemWhy we choose the electronic auction system
electronicelectronic
auctionauction
systemsystem
Elimination of
unfair
transactions
Rapid and Simple
8. 6
Goals in pursuing The Electronic Auction
System
Fair andFair and
transparenttransparent
transactionstransactions
PreventPrevent
transactionstransactions
fromfrom
collusioncollusion
Open PricesOpen Prices
FastFast
transmissiontransmission
of auctionof auction
resultsresults
9. 7
20032003 Sales ledger correction system implemented
Progress of Electronic Auction System
SepSep
20002000 Began executing electronic auctioning for 14
items
MayMay
20002000
Governmental subsidies for auction company to support
electronic auction system
SepSep
19981998 Auction results distributed via internet
19971997 Initiation simulation of electronic auction
system
19941994 Electronic auctioning principle legislat
11. 9
Composition of the Electronic Auctioning
System
Shipper
Verify InvoiceVerify Invoice
Prepare sales ledgerPrepare sales ledger
Shipping Registration
Shipping Site
Shipping Information
Response
Informatio
n
Display
Panel
Display
Panel
Wireless receiver
Auction Company
Electronic Auctioning
System
Sales settlement
System
Transmission Server Electronic auctioning
resources DB
Intermediary Wholesaler
Intermediary
Wholesaler
Large scale buyer who
does business
outside the market
Samaco
Shipping
information
System
Distribution
information
System
Real-time
auction data
Settlement data
Correction data
Relevant organization
Real-time
auction
settlement data
Korea agricultural and
marine products education
cultural information cent
Consumer
Wholesale market
Department store
Retailer
12. 10
Process of Electronic Auctioning
Shipping to Auction Hall Verify Invoice and
prepare sales ledger
1 2
13. 11
Process of Electronic Auctioning
Place a bid
Display the successful bid on
electronic bulletin board
3 4
15. 13
Process of Electronic Auctioning
Send message to shipper
on their bidding results
6
Open to the public of product’s price
and quantity on Samaco’s homepage7
16. 14
Process of Electronic Auctioning
Send message to shipper
on their bidding results
8
Open to the public of product’s price
and quantity on Samaco’s homepage
9
17. 15
Electronic Auctioning Method
Electronic Auctions
Auctioneer
Intermediary
wholesaler
shipper
Provide the
standard
price to start
auction
Ship
agricultural
and
marine
products,
prepare invoice
Place a bid
19. 17
Finger signal auction system vs electronic
auction system
Finger signalFinger signal
auction systemauction system
Electronic AuctionsElectronic Auctions
Takes 22’ per
transaction
Needs 3 persons
Takes more time to
distribute
the auction results/
immediately
distribute the auction
results
Takes 14’ per
transaction
Needs 2 persons
Information disseminated
Immediately after auction
20. 18
Strengths and Weaknesses of Electronic
Auctioning
StrengthsStrengths
More trustworthy
Faster operation
Participate in auction
without
being influenced by others
Service improvement
Easy understanding by
auction
participants
Resistance from Intermediary
wholesalers
Lower bid than finger signal
auctions system
Cost for settlement program
Maintenance and repair costs
will incur
Aged Intermediary wholesalers
will
WeaknessesWeaknesses
21. 19
Implementation Cost of Electronic Auctioning
System
Implementation details of electronic auctioningImplementation details of electronic auctioning
systemsystem
Implementation cost : 550,000$~650,000$ per
400wholesalers
Details
Development cost : Electronic auctioning system implementation,
homepage
build out, linkage with other systems such as sales management
system
Solution purchase : Database management system, Reporting tool,
WAS etc.
Equipment purchase : Server, bidding machine, controlling machine,
electronic bulletin board,
communication facilities, etc.
Others : Bidding table, etc
23. 21
Factors in the success of electronic auction
system
Governmental Acts and SubsidiesGovernmental Acts and Subsidies
Thorough advanced preparation and strong will to executeThorough advanced preparation and strong will to execute
Implementation cost : 550,000$~650,000$ per 400wholesalers
Nov. 1994 : Legislated “For auctioning or bidding, in principle it should be
done
Electronically” the Distribution and Price Stabilization of Agricultural and
Fishery Products Act
May. 2005 : Subsidies from the government for the electronic auction
system(603,636$)
Feb. 1998 : Performed demonstrations and test operations by
auction company
Feb. 1999 : Strengthened evaluation management such as the rate of electroni
auctioning
In evaluating auction company
24. 22
Results of Electronic Auctioning
Secure transaction transparency and fairness
Auction results are provided on a real-time basis through the
internet
Increase task efficiency
By implementing electronic auctioning system, looking up the bidding
prices and payment
settlement are done rapidly and accurately
The intermediary wholesaler can buy the proper quantity to sell
25. 23
Results of Electronic Auctioning
Technical ProblemsTechnical Problems
Frequent Interruption in auctioning
As there are differences in electronic auctioning systems by
auction company, it is
difficult to control auction details
Sensitive system that can be changed by climate and
deterioration
Due to uneven surface at the auction house, when moving the
auction block,
the system may become instable due to shocks
26. 24
Problems with Electronic Auctioning
Operational ProblemsOperational Problems
Price variation by shipper
More severe competition
Problems in processing products when Intermediary wholesalers do not bid
Intermediary wholesalers’ resistance for decreases in sales margin
27. 25
Problems with Electronic Auctioning
Inadequate shared selection and condition by produce location
Problems following shipping from production locationProblems following shipping from production location
typetype
Other IssuesOther Issues
Difficult to adjust shipping considerations
Relatively limited and confined facilities due to inadequate preparations fo
auctioning
Inadequate circumstances for sample auctioning
28. 26
Efforts to improve transparency And fairness in
electronic auctioning
Real time distribution of the results of electronicReal time distribution of the results of electronic
auctioningauctioning
executed through the internetexecuted through the internet
Improving the Electronic Auctioning SystemImproving the Electronic Auctioning System
Distribute 2 hours after auction close(Sept. 26, 2000 ~ Mar.
31, 2002)
Distribute immediately after auction close(Apr. 1, 2002)
Customized information service implemented(May 2004) :
Settlement price
Real-time text message service
Corporate internal search system for auction results implemented(Oct – Dec
2002)
Real-time sharing and search function of auction results prepared between
the SAMACO and auction company(June 2003)
29. 27
Shippin
g
Shipper
Retailer
Large discount store,
Department store
SuccessfulSuccessful
bidder selectedbidder selected
Display PanelDisplay Panel
BiddingBidding
informationinformation
Auction BlockAuction Block
ReceiverReceiver
Auctioning systemAuctioning system
TransmitTransmit
successfulsuccessful
bid informationbid information
Consumer
Shipper
Information User
Other
Institutio
n
Transaction
records
Price
information
Managing
Transaction
order
Distribu
tion
Informat
ion
System
Distribu
tion
Informat
ion
Distribut
ion
Informati
on
Service
Bidding
informati
on
text
service
Shipping
Informati
on
Intermediary wholesaler Samaco
30. 28
Wholesale market trusted by farmers and consumers
Establish a transparent and fair wholesale marketEstablish a transparent and fair wholesale market
transaction ordertransaction order
Establish transactionEstablish transaction
order at transaction sitesorder at transaction sites
Constant monitoringConstant monitoring
of transaction coursesof transaction courses
Assess whether the resultsAssess whether the results
of the transaction reflectedof the transaction reflected
any unfairnessany unfairness
RFID typeRFID type
TransactionTransaction
participationparticipation
certificatecertificate
Recording systemRecording system
of the auctioning processof the auctioning process
Fair transactionFair transaction
detection systemdetection system
31. 29
RFID type transaction participation
certificate
GoalsGoals
Utilizing RFIDUtilizing RFID
type transactiontype transaction
participationparticipation
certificatescertificates
Preventing those unauthorized from participating participate i
transactions and substitution participations
Effective screening of improper auctioning participation using
IT devices
Prevent customer complaints
Establishing site transaction orders at auctioning sites
through
inspection of RFID cards on site
Verifying transaction participants at wholesale market
corporations
32. 30
RFID type transaction participation
certificate
Expected ImpactExpected Impact
Establish order in the auctioning process
Efficient auctions enabled through RFID reader device
Easy verification of suitability to participate in the auctio
33. 31
Auctioning progress Recording system
Establish internal/ external reliability over fairness and
transparency of the auctioning process
1 camera recording the auctioning
computer, 1 camera recording
the auction
GoalsGoals
Recording MethodRecording Method
Improper activities over auctioning prevented in advanced from
the auctioning company and participants by recording the entir
auction process
34. 32
Auctioning progress Recording system
Expected ImpactExpected Impact
Prevention of unjust acts towards the auctioneer and
participants
Verifying auctioning rejection, collusion, as well as
unauthorized
or substitute participants during the auctioning process
Checking the auctioning process when there is complaint from
the producer
35. 33
Auctioning progress Recording system
Implement a detection system for improper auctioning
activities through data mining of auction dataPurposePurpose
Fair transactionFair transaction
detection systemdetection system
diagramdiagram
Used as a method to prevent reoccurrence when unjust acts such
as improper bidding or fixing of bidding price are suspected
for
verification and to prevent further occurrence.
Establish
transaction
data collection
systemBiddingBidding
informationinformation
Winning bid
information
Settlement
information
Correction
information
Analyze abnormal
transactions
/improper data
Detect abnormal transactions
/improper data
Rule Management
Establish rule
management system
Report & Dash Board
36. 34
Fair transaction detection system
Expected ImpactExpected Impact
Efficient detection and prevention of unjust transactions
Establishing fair transaction orders in distribution of
agricultural
and marine products
Secure transparency in and improve reliability of transactions
of agricultural and marine products
Securing basis for providing data for rapid statistical
analysis
37. 35
Fair transaction detection systemFair transaction detection system Fair transaction detection systemFair transaction detection system
Auction recording systemAuction recording system Advancements in distributionAdvancements in distribution
Information analysis systemInformation analysis system
Global Leader in Agro-distribution
