- Reverse e-Auction
8MSaaS provide tools such as Spend Analysis, Purchase Plan/Request (PR), Quick Quote (RFQ), Formal Tender (RFI/RFP/RFQ), Contract Management, Purchase Order Management and Supplier Management for sourcing and procurement processes. Reverse e-Auctions play a key role when it comes to ensuring that you are being quoted the current market price for the goods and services you are procuring and also improve supplier relationships due to increased transparency. Mainly used for procurement spend related to indirect goods and services, auctions can play a critical role for potential buyers in streamlining the bidding process, increasing transparency and compliance between the buyer and suppliers involved. Additionally, sourcing goods or services using the 8MSaaS Reverse e-Auction bidding format can generate significant cost savings, thereby adding bottom line value to your overall procurement spend.
Reverse e-Auction can be a useful tool for spend management in many industry verticals such as:
- Healthcare - Consumables such as gloves, syringes, cleaning supplies
- Manufacturing - Maintenance and services. Purchasing of indirect goods and materials
- Retail - Marketing, advertising, merchandising, retail space maintenance, Store fixtures, Signage
- Government - Government reverse auction generate significant savings for spend related to maintenance, services, fleet vehicles, insurance, temp labor, IT services, IT equipment, Software, Office supplies
- Financial - Reverse auction Legal Services
- Banking - Office supplies, maintenance and services, IT Equipment, etc.
The following is the common Reverse e-Auction process:
- Savings generated via Reverse e-Auction are only good if those savings are realized. To ensure that you capture the savings generated by implementing the Reverse e-Auction procurement strategy, be sure to follow through on your award as well as proactively track all purchases made, to fully realize the reverse auction supply chain benefits.
- Spend Analysis - Conduct a Spend Analysis of your current Indirect Procurement Spend. Identify Goods or Services where you have a significant spend volume and are purchasing from multiple suppliers, ideally three or more incumbent suppliers per category. The higher the number of suppliers, the better.
- Spend Patterns - Once the product or service is identified, conduct an in depth study of the spend volume and spend patterns related to that spend category. This would include identifying the total spend for the past 12 months as well as the overall volume annually as well as per transaction.
- Spec Document - Create detailed specification documentation related to the product or service you plan on purchasing using this auction format. Specifications should include drawings, spend value, spend patterns, quality and delivery requirements, supplier capability requirements, etc. Detailed product and service specifications are key to a successful outcome in an auction process.
- Supplier Identification - Identify the suppliers you wish to invite to the auction process and provide sufficient training and documentation to the suppliers so that they are fully aware of the overall purchasing process via e-Auction. This should include, ensuring that suppliers have reviewed and understood the specifications, auction rules, participation terms and conditions, legal terms and conditions, etc.
- Setup & Execution - Plan, setup, start, monitor and end the Reverse e-Auction session(s). In reality, after the user plans and setup the Reverse e-Auction, everything is automatic. It might be still desirable for the user watch the e-Action screen during the bidding process.
- Communication - Communication prior, during and after the e-Auction is key to ensure that the auction is successful and you are able to award business. An integrated chat and messaging system is critical for any auction software to ensure that all communication channels are open at all times between the Buyer and Supplier to clarify any questions related to the auction process as well as any specifications documentation. Set realistic opening prices for all items and services that are part of the reverse bidding process.
- Awards - Once the e-Auction is over, ensure that you communicate award timelines to the participating suppliers. Make award decisions as soon as practicable and thank all participating suppliers. Typically the award decision is based on a combination of factors such as price, quality, delivery capability, etc. It is not necessary that the lowest price supplier win the auction.
Savings generated via Reverse e-Auction are only good if those savings are realized. To ensure that you capture the savings generated by implementing the Reverse e-Auction procurement strategy, be sure to follow through on your award as well as proactively track all purchases made, to fully realize the reverse auction supply chain benefits.
There are many benefits of Reverse e-Auction as listed below:
- Save time in collecting bids from suppliers
- Increased transparency in the bidding process; improving supplier relationships
- Cost savings ranging from 18% to 40%
- Increased compliance and data security