Is it a good strategy to allow suppliers to pre bid in a reverse auction?

August 4th, 2008

In the retail market

In the retail market, preliminary price quotes are normally used as part of a Request for Information or RFI process. The actual reverse auction event is normally the Request for Quote phase or RFQ and used for final price compression.

In large retail events with dozens of products such as a prescription drug event, retailers may allow early quoting just do to the magnitude of the information required by suppliers. This process normally takes place several weeks prior to the live reverse auction event. At times, this may also a good practice when there are a large number of new suppliers participating in order to familiarize them with the use of the tool set. For a new supplier auction day can actually be a little stressful. There are many don’t believe that there is a strategy to participating in a revere auction. Seasoned suppliers would argue that point. It is the responsibility of the e-procurement providers to train all suppliers on the use of the tool set. This is generally accomplished with mock training events. This does not however include strategy sessions. I have heard that in other industries preliminary events can be held to help whittle down the participants. I have never really agreed with this process. There really are a specific number of participants that drives the best possible result set and e-procurement providers should be aware of this and suggest a mix during the training phase that supports optimum participation…

Should an RFI be developed for all e-procurement events? This author does not believe so if the proper planning is done prior to the actual event.

We look forward to your comments.

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