Make The Reverse Auction Format Work
With companies and organizations touting as much as 32 percent savings on their purchasing costs by using the reverse auction format, many others are wondering if this unique way of buying can really work for them. The simply reality is that e-Procurement does work if buyers play their cards right.
So, what can buyers do to ensure a successful reverse auction? A lot depends on how much input and work buyers put into the process. Don’t worry though; a big time commitment isn’t necessarily required to see real success. To help ensure strategic sourcing works in a company’s favor, buyers can:
Carefully define their auction – Reverse auctions operate like a basic RFP process. This means buyers need to clearly define their needs so bidders can quote reasonable prices. If writing specifications for a project is not feasible in-house, the best online reverse auction facilitators will often help on this front.
Examine the scope of the auction – The reverse auction format enables buyers to set bidding parameters for their purchase. For example, a buyer might only want to invite vendors that are personally known. In some cases, this is a smart way to go. The best auction facilitators, however, can help buyers widen the field greatly. When facilitators’ own lists of pre-qualified bidders are also invited to take part, buyers can see the competition level rise.
Keep auctions open – Buyers who want to have a lot of fun with the reverse auction process will allow bidders to see the low bid. This can result in some major competition among bidders and even better prices for buyers.
Pay attention to the final details – Good reverse auction facilitators will provide reports that help sum up the bidding process to assist buyers in making a final selection. Do pay attention to these and other fine details of the process to select the right vendor for a job.
The reverse auction format is a form of e-Procurement that can save company buyers time and a great deal of money. When the right steps are taken to ensure success, this format works extremely well for outsourcing buys of all kinds.
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