This is a significant question? If you are not using e-procurement tools the answer is most likely NO!
Todays post is by Ronald D. Southard, CEO at SafeSourcing Inc.
If you are not sourcing at least 30% of your cost of goods and services using e-procurement tools, you are lagging your industry leaders as well as being significantly behind other industries. As such; you are not getting the best costs and not driving the best margins for your company.
Reverse auctions since their inception more than a 16 years ago haven driven healthy competition amongst supplier companies. As such the results of a reverse auction can provide a great benchmark for both the buyer and the supplier. For the buyer the results can be used as a tool to evaluate how to best source other products and services. Additionally suppliers that are not the low quote or winning bid now have the opportunity to evaluate why that is and what they need to do in order to improve or to be more competitive in the market place. This of course is all happening without the need to collect, collate, compare or negotiate during the process. In other words it is happening transparently to the normal sourcing process. I watched a reverse auction today where 4 suppliers placed 180 quotes for a dozen line items in under 30 minutes. No buyer can do that. Additionally reverse auctions provide the opportunity for suppliers that are outside of your business area or knowledge base to bid for your business.
Possibly the single largest area of benefit to reverse auctions outside of price compression for procurement professionals is that it offers a significant opportunity for process improvement since most solution providers offer a standard process for hosting reverse auctions. Everything is done in one place using standard processes in building the event to the final analysis of the bids collected. Information availability is immediate for evaluation and is archived for easy access in the future. This reduces the overall procurement life cycle, eliminates or reduces the opportunity for human error, and provides a standard way to conduct and award business.
Please contact a SafeSourcing Project Manager in order to learn more.
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