The premise of reverse auctions is simple—buyers who want suppliers for a specific product or service ask suppliers to submit bids online. To win the bid, suppliers must then compete with the lowest cost, over a defined period of time.
The benefits of Reverse Auctions might seem obvious to many. That begs the question — why aren’t they more common? Perhaps the reluctance to use them stems from the myths that prevent organizations from recognizing how they can improve efficiencies, save money, and build better supplier relationships.
Many companies are leveraging reverse auctions as a way to save money. However, cost savings are just one benefit that reverse auctions can provide.
Topics: Reverse Auctions
Procurement teams...those are the people who find an organization’s suppliers, right? If you’ve adopted this sort of limited view about procurement (or are surrounded by people who have), you’re (or they’re) gravely underestimating the impact of these teams. The procurement processes themselves and the people who are responsible for implementing them, can affect almost all organizational departments directly or indirectly — which is why its role in any business is critical.
Your ability to attract and engage quality bids is dependent on how well you begin your procurement process.
For any business that has used an eSourcing platform, the benefits are evident. Using tailored technology to streamline its procurement needs can provide an organization with significant cost savings, faster cycle times, more transparency, and better control over its sourcing requirements.
The efficacy of procurement teams is tethered to knowing and understanding what they are purchasing and why. Think this seems straightforward? Think again. Large enterprises might have vendor rosters numbering in the thousands that cut across numerous categories. And most of the ongoing vendor engagement is in the hands of stakeholders, who all too often, sit in virtual silos. So what can procurement teams do to address this? Actually, there are lots of things. But for the purpose of this post, let’s focus on maximizing the chances that the best-aligned vendors are engaged. A key tactic to engage involves leveraging procurement’s favorite three-letter acronym — the RFP (request for proposal). An RFP allows an organization to assess whether the supplier’s goods and/or services are actually going to meet the its needs.
Advancements in technology have allowed procurement teams to introduce new sourcing strategies and practices. A reverse auction, for example, can automate and streamline the sourcing process to increase cost efficiency without requiring months of negotiation. Before going further, we want to acknowledge that cost should not, in the vast majority of situations, be the sole driving factor in choosing a supplier. Indeed, sometimes cost and quality can be inversely correlated. Taking a holistic approach where cost is a key consideration will deliver better outcomes. But that’s for another blog post….
Topics: Reverse Auctions