How to Get the Most from Reverse Auction Software
What Is a Reverse Auction and What Is Reverse Bidding?
A reverse auction is an important part of procurement as procurement is vital throughout the entire supply chain. Reverse auctions are becoming more widely used because of their advantages, even for suppliers. A reverse auction is exactly what it sounds like. In a regular auction, a seller puts something up for sale, and those who are interested bid on it. The highest bid wins the auction. Reverse auction bidding is the opposite—a buyer will let suppliers know that they are in need of something, and the suppliers bid against each other to win the bid. Some advantages to reverse auctions include cost and time savings, and discovering new suppliers. Reverse auctions are also of value to the suppliers, particularly those who are trying to get their foot in the door. However, the right reverse auction software is imperative to have the process run smoothly.
Reverse Auction Software: What Are the Must-have Features?
You can find reverse auction software as a standalone, web-based type of platform, or you may have reverse auction capabilities built in through a larger overall procurement suite, which is optimal for procurement’s place in the supply chain. Some of the features you should consider include:
- Ability to watch bids in real-time via the Internet
- Multiple sourcing functions
- Integration with other enterprise applications, such as ERP, central repository, etc.
- Big data and analytics that will help you improve
- A function to determine stability and assess your spend category
- An area for suppliers to offer information other than price, which may make their bid more unique
Reverse Auction Software: Suppliers and Full Transparency
One of the benefits of solid auction software is the full transparency involved, and suppliers should have full transparency with potential buyers. Suppliers should have information such as details of the need, the scalability of the project, and the precision of the demand. Suppliers should also fully understand the contract specifications before proceeding. Full transparency helps suppliers understand what is really needed, and from here, they can show their “uniqueness” to you. The lowest price isn’t the only factor in reverse auctions—you must take into account the lowest unique bid.
Reverse Auction Software: Lowest Unique Bid
The transparency involved with reverse auction software benefits both buyer and supplier, which in turn benefits the entire supply chain. It’s common, in any type of auction, to make the choice that makes the most sense economically. In a regular auction, the highest bid is taken, and in a reverse auction, the lowest bid is taken. Or is it?
No, in fact, there should be more taken into account during the award. In short, the “lowest unique bid” means that sometimes you will award the contract to a supplier whose overall bid was higher than another supplier’s; however, you made your choice based on what was best for your needs.
An area within your reverse auction software for suppliers gives you information about their “uniqueness.” This helps you take all factors into account, not just the lowest bid. For suppliers, especially small-business suppliers, this is an excellent way to build relationships with buyers.
For more information on reverse auction software or to schedule a demo, contact EC Sourcing, a Simfoni Company through our web form located here. We want you to reimagine the way you think about procurement.