Purchasing Professionals

E-auctions & E-procurement

How to get started with E-auctions

The way reverse auctions or electronic tendering work is that you decide on a suitable product or service, prepare and publish a detailed specification and invite suppliers to attend your auction. Name the date and time, usually no more than a couple of hours, and sit back and watch suppliers compete on price. The prices are posted up for all to see as they come in but the suppliers names are coded so only you know who they actually are. As the Internet is used for all communications you need an interactive website page for each auction.

 

You can buy the software to do this, or maybe your market sector already has a market place you can join. We have auctioned a huge range of products on behalf of clients and achieved savings of up to 40%. If you want to learn more then contact our auction agent at:
info@horizon-associates.com

Use online auctions for:

  • Obtaining new commodities or services
  • Renewing existing contracts
  • Offering new consolidated spend opportunities
  • Buying significant spot purchases
  • Benchmarking and awarding contracts for frequently tendered commodities and services

Advantages for buyers

  • Transparency. Enables you to find out what the real market price is maybe for the first time
  • Drives competition amongst suppliers - and how!
  • Quick, efficient and paperless method of buying
  • Can identify efficient new suppliers
  • An alternative new practical tool
  • Cut costs, saves money

Advantages for suppliers

  • For inefficient suppliers – there are no advantages because the process weeds out inefficiency very quickly.
  • Transparency - suppliers are able to benchmark themselves against the market place
  • Efficient, best in class suppliers will obtain more business

Action plan

  • Just like negotiation the more you put into the preparation the better the result
  • Only invite suppliers you would confidently use. There must be at least three, preferably more.
  • Select something in which price makes up at least 25% of the decision making process
  • A decent amount of money has to be involved, say £50,000 and upwards
  • It is important to effectively sell your auction plan to suppliers. They may also need some training. Your objective is to obtain their commitment.
  • Suppliers need to be light on their feet to win at an auction so they will also need to plan thoroughly to be able to maintain the commercial flexibility that an auction demands.
  • Commercially inept suppliers will ruin the process
  • Have a technical helpline up and running to sort out queries as they arise
  • Obtain a senior management champion to drive the changes in organisational culture required
  • Use the process to market purchasing expertise, invite Board members to watch the process live
  • Follow up with all suppliers so that everyone keeps learning
  • Resist the temptation of bidding yourself to encourage a lower price
  • It is very helpful to all parties if suppliers also understand e-Commerce and reverse auctions. This is why we also organise training for suppliers and sales forces. See our training page under e-Commerce Courses.

Online ordering is the easiest way to reduce your ordering cost and achieve compliance with your corporate deals. There are many different providers out there who provide many different solutions. If you want help in choosing what is right for you contact:
info@horizon-associates.com

 

You are welcome to use the information in these pages, but please remember to credit Horizon Associates as the source.