If you wish to host a successful reverse auction a robust supplier database is an absolute must if you wish to encourage competitive bidding.
I was speaking to a senior vice president and head of a procurement organization yesterday that said what SafeSourcing really offers us is access to suppliers that we do not know exist or where to find them. He went on to say that his team and himself personally spend all day negotiating contracts and there are just many projects that they do not have the time to conduct the necessary research or solicitation of all the information including bids that SafeSourcing has ready access to.
A logical focal point for hosting a competitive reverse auction is to assemble all of your present vendors for a particular category that you hold in good standing. These would be suppliers from whom you have historically sourced products using traditional means. In general the principal is that the more vendors or suppliers you have participate, the greater your potential results.
However the above does also require strategic thinking because your company is beginning a process that you wish to use on a recurring basis. As such inviting the same suppliers again and again may initially seem to make sense. However this may not encourage the long term results you are looking for; and is a critical reason why it is important to have the most robust supplier data possible available for your regular review.
By way of an example to support the above let’s suppose you can only find six local suppliers for a particular category you wish to take to reverse auction. For the most part they will all show interest in participating in your auction the first time around. However a key issue to consider is what will encourage them to participate the next time and the time after that?
Please check back tomorrow for Part II of Is critical thinking in supplier selection a key to quality and sustainable retail reverse auctions?
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