What is an eAuction?
eAuctions, commonly referred to as "electronic auctions" or "reverse auctions" offer buyers the opportunity to achieve significant savings of time and money through an online live negotiation. When managed properly, eAuctions produce not only savings for the buyer, but also overall process efficiencies, an audit trail for negotiations, and identification of a pool of new suppliers.
The benefits don’t end with the buyer, though. Well-managed eAuctions can provide some significant benefits to suppliers, as well, including the ability to see and react to competitor pricing, reduced time for new client acquisition, project transparency and a level playing field for all.
When managed properly, eAuction projects deviate only slightly from traditional procurement methods. Similar to traditional models, eAuctions require careful consideration and documentation of specifications, thorough market research of the product or service being auctioned and qualification of all suppliers through a rigorous evaluation process in order to be successful.
Using eAuctions
Many people think that eAuctions are solely about price, when in fact, eAuctions can be used for any quantifiable element required by the buyer, such as payment terms, delivery times, product quality, etc. To facilitate this, there are several different types of eAuctions available to suit virtually every possible procurement situation. Multi-Attribute eAuctions, for example, take into account a predetermined and transparent scoring system that is used to translate each bid – in real-time – into an overall score that takes reflects both quality and price.
Another common misconception is that eAuctions can’t be used to purchase both goods and services. The fact is that eAuctions should be considered for every situation where:
- There is a competitive supply market with several suppliers (successful eAuctions usually require at least three suppliers)
- The products or services being purchased can be specified in detail
- The size of award is sufficient to stimulate competition and interest
- The demand for the product is low so that suppliers will be prepared to negotiate
10 Tips for running a successful eAuction
Tip 1 - Don't be afraid! If you have support from a good service provider, eAuctions are relatively easy to use, and they can deliver great results.
Tip 2 - Engage a service provider early in the process to best utilize its experience and maximise the benefits.
Tip 3 - Select appropriate sourcing categories. Can you define what you want to buy? Is there a contested market with three or more suppliers?
Tip 4 - Set a realistic time-line for all major steps in the process, and stick to it.
Tip 5 - Get the best spend data available prior to starting the project. You do not need complete data, but it does help.
Tip 6 - Ensure that products and/or service specifications are detailed, clear, and concise so suppliers know what they are bidding for.
Tip 7 - Cast a wide net in your search for suppliers. When more suppliers are identified, more can be qualified. When more are qualified, more will participate in the eAuction and the higher your savings will be!
Tip 8 - Clearly communicate the eAuction process to all suppliers and internal stakeholders, alike.
Tip 9 - Ensure that all stakeholder groups understand and are supportive of the eAuction process and will honour the project results.
Tip 10 - Invite your key internal stakeholders to watch the eAuction event and share the successes together.
Potential Categories for Reverse Auctions
Below is a sample list of the products and services that have recently been procured by way of eAuction the public and private sectors for the UK and the US:
- Temporary Staff
- Architectural Design and Drawing Services
- Bathroom Suites
- Bottled Water
- Car and Commercial Vehicle Hire
- Cleaning Services
- Construction Services
- Court Reporting and Transcription Services
- Electrical Cabling and Installation
- Food and Beverage
- Food-Related Consumables
- Furniture
- Heating Systems
- Hotel Accommodation
- IT Hardware
- Land Line Telephony
- Major Electrical Components
- Medical Products
- Masks and Headgear
- Mobile Phone Service
- Monitors
- Office Supplies
- Oxygen Therapy Products
- PC Consumables
- Personal Protective Equipment
- Photocopiers
- Printing Paper
- Rock Salt
- Roof Maintenance
- Scaffolding
- Security Fencing
- Security Pass Machines and Consumables
- Stationery
- Surgical Instruments
- Telecommunications
- Topical Irrigation
- Ultrasound Equipment
- Waste Management
- Water and Vending Services
- Windows and Doors
- X-Ray Scanning Machines
Contact us to learn more about how The Procurement Exchange and its eAuction partner can benefit your organization.
