Before the internet, auctions were fringe dwellers. Used by flower markets to sell tulips and bankrupt aristocrats selling their silver. But the internet’s ability to connect has built billion-dollar business’ and global marketplaces.
Business customers are reducing costs with eProcurement. Automated RFP’s speed collecting and publishing requirements. eAuctions increase competition. Seven benefits they enjoy are:
- Reduced Prep-to-Contract Time
Online auctions can be scheduled in days and completed in hours. Dramatically reducing traditional offline tender processes. Automated messaging keeps suppliers delivering to strict timelines. Accelerating contract award, and helping suppliers reduce their cost of sale.
- Real Market Pricing
Because suppliers have more certainty their risk is reduced. The result, prices that reflect market pricing. and don’t contain tender-cost-of-sale margins. Price feedback during an eAuction lets suppliers understand where the market is. Letting them adjust where they’re weak to give customers better prices.
- Increased Competition
eAuction with many suppliers find the true market price of the auctioned items faster. Delivering real benchmarks for future sourcing comparisons. eAuctions helps suppliers understand how competitive their offers are. Allowing them to lower them to win customers’ business. Buyer benefit by knowing that they’re receiving real market pricing. Not offers padded with extra supplier margin. Suppliers win by getting accurate market feedback letting them update their pricing model in real time.
- Standardised Offer Comparisons
Suppliers submit their offers in a common format, through a single portal. Letting the eAuction platform compare offers and deliver accurate comparisons.
- Supplier Validation, Validation, Validation
Best practice eAuctions have processes that both ask suppliers to check their offers, as well as confirm with them any of their rebidding. This approach minimises error’s, re-work, and embarrassing wrong selections!
- Process Improvement
eAuctions are clinically efficient in delivering a sourcing result. They help procurement professionals establish comprehensive category management plans and streamline the process of buying. By their nature, eAuctions standardise RFP preparation, publication, and evaluation. A centralised portal allows auditable and repeatable reporting. These features reduce the chance for analyst error. Putting the sourcing process ‘on rails’.
- Cost Reductions
And one last thing! eAuctions deliver cost savings above those of a traditional BAFO tender process. Buyer up-front commitment, pricing transparency, and split award of contracts lead to contracting scenarios that are close to a least cost ‘cherry pick’ outcome.
With the data based telco services becoming the norm, and eProcurement tools automating buying. The call is now, bring on the Auctioneer!
(This article was published at Procurement and Supply. Watch out for eAuction Benefits Part II. Now, if you’ll excuse us, we’ve auctions to run.)