Here is some more on the value of reverse auctions.

September 19th, 2008

Is reverse auction utilization up or down

Is reverse auction utilization up or down, do they save money? There has been a lot written lately which shows there is interest, the answer again depends on who you ask and what industry you are speaking about.

I was reading Spend Matters today and the title of Jason Busch’s blog was Reverse –Auction-Quantifying-the-Savings-Delta. Jason also quoted a blog by David Bush on E-Sourcing Forum posted recently of a case study which according to Jason does as good a job as any at showing the incremental value an auction can bring on top of other negotiation techniques.

This author posted a blog on September 2nd titled E- Auctions success road blocks. What are your true savings opportunities? This blog discusses the roadblocks to successfully understanding and gaining savings in a reverse auction. As we all know there are a number of different types of auctions that are part of the overall RFX process. I discussed this in There are all types of reverse auctions on June 6th.

In complex retail procurement events that require very complex information review, it is normal to begin with a Request for Information or RFI in order to narrow the field of qualified suppliers or to try and understand whether or not your actual goals and requirements can in fact be adequately met by the marketplace. This might include projects such as a major point of sale software replacement. Once the RFI has been reviewed and supplier’s that meet your criteria are selected a Request for Proposal (RFP) which includes pricing is generally submitted. At this point a reverse auction need not be run in order to compress pricing because you are negotiating directly with a limited number of vendors, visiting headquarters to view product demonstrations as well as a variety of other detailed event activities. In this process where the reverse auction may be used is on some of the more commoditized components of an open platform such as terminals, scanners, check stands etc. However this is only one person’s opinion. Hopefully your provider will have a variety of well authored strategies to share with you by individual category.

We look forward to your comments.

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