Supplier Relationships and E-auctions

August 23rd, 2016

Do you have a really good relationship with your supplier? And….


Today’s post is from our  SafeSourcing Archives.

Do you have a really good relationship with your supplier? Do you think an e-auction will harm that relationship?

If you said yes to any of the above questions, you are not alone. This is a common misconception within companies.

Research carried out by telephone interviews by CIPS  (Chartered Institute of Purchasing and Supply) in conjunction with Oracle and The University of West England, I-ADAPT (Independent Assessment of Development of Auctions as a Purchasing Tool) concluded that buyers and sellers, both interviewed, had shown no negative impact post e-auction. It helped organizations lower their purchasing costs by improving transparency and forcing buyers to be upfront with all purchasing requirements. Online auctions have strengthened supplier-buyer relationships without negatively affecting quality.

However, that may not always hold true if an online auction is thought to be executed unfairly or unethically. There are a few steps a buyer should consider before executing an online auction to maintain a strong supplier relationship post-auction.

1. Initiating the process:
• Assign a lead for the auction
• Select a commodity that is a good fit for multiple suppliers
• Ensure all specifications and terms for products/services are clear to a new supplier

2. Planning the Process:
• Decide what details you will need to make a decision (price, quality, service level, etc.)
• Develop an award strategy and criteria
• Set and agree on an auction schedule
• Notify the incumbent of your intention of the online auction. Nobody likes surprises!

When an e-auction is prepared in its entirety and has buy-in from the appropriate parties within the company, the live event will run smoothly without harming any supplier relationships. SafeSourcing is experienced with running the live events. We have the staff to provide all suppliers with direct communication and training. We want to make suppliers feel comfortable with the e-auction format, and based on our experienced SafeSourcing supplier database- we are doing just that!

If you are interested in seeing how an e-auction can bring great value to your company, please contact a SafeSourcing Customer Services Account Manager or call us directly at 888-261-9070.

We look forward to your comments.

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