Tips To Help Organisations With Reverse Auctions


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Tips To Help Organisations With Reverse Auctions

  1. 1. An Introduction to Purchasing Auctions Tips to Help Organisations
  2. 2. Product Suitability for Reverse Auctions Increasing Cost £ Increasing Risk Low High High Tactical Profit Tactical Acquisition Strategic Critical Strategic Opportunity
  3. 3. <ul><li>Suitable products have the following characteristics: </li></ul><ul><ul><li>Strict and unambiguous specifications that ensure a level playing field </li></ul></ul><ul><ul><li>A competitive market </li></ul></ul><ul><ul><li>Price as a primary selection criterion </li></ul></ul><ul><ul><li>Low strategic relevance or impact (green on the previous chart) </li></ul></ul><ul><li>Products or commodities which have proven suitable include: </li></ul>Product Suitability for Reverse Auctions Administration Fees Pallets Telecommunications Transport Oils and Lubricants PPE Bespoke Manufacture Office Supplies Steel Navigation Equipment Construction Food Tools Chemical Products Medical Supplies Paper Products
  4. 4. Benefits of using Purchasing Auctions Account managers who have successfully used the site have said:    “ We were very impressed with the auction site. It is one of the best we have used. Easy to use, clear information and quick” Karen Hardy, Polestar “ I found the Purchasing Auctions tool extremely easy to use and appreciated the guidance offered. We will definitely be using this valuable service again, especially as we saved 33% on our spend at our first auction!  It is great to find a medium created by purchasers for purchasers. Thank you Purchasing Auctions!” Pauline Sumner, Peel Ports Saves Money Widely accessible and easy to use Increased transparency & honesty Increases small business utilization Saves time in negotiation Improves awareness of opportunities Gives purchasers more control at contract renewal Improves competitive process
  5. 5. How Reverse Auctions can help everyone! <ul><li>Savings over previous contract value </li></ul><ul><li>Drives Improvements to the preparation and planning for the tendering process </li></ul><ul><li>Opportunity for suppliers to submit revised bids for a contract (as opposed to the formal tendering process) </li></ul><ul><li>Increased market knowledge for buyers and suppliers. Suppliers particularly benefit from increased awareness of competitor pricing </li></ul><ul><li>Provides a level playing field for suppliers </li></ul><ul><li>Purchasing Auctions offer training and support to both suppliers and purchasers </li></ul>
  6. 6. The Auction & Procurement Lifecycle Only a small part of the cycle, but done properly realises significant savings with very little hassle!
  7. 7. Introducing Purchasing Auctions <ul><li>As a purchasing consultancy our role is to advise companies and part of our remit has been to run reverse auctions on their behalf.  </li></ul><ul><li>Unfortunately, our experience of market providers of online auction capabilities is that they are expensive to use and their products are invariably all-encompassing, complex and intrusive </li></ul><ul><ul><li>We have recently created an auction site that is: </li></ul></ul><ul><ul><li>Web-based and delivered at a competitive price </li></ul></ul><ul><ul><li>Attractive to both purchasers and suppliers in its ease of use </li></ul></ul><ul><ul><li>Reliant on competitive bidding at live on-line auctions to reduce prices </li></ul></ul><ul><ul><li>Run and owned by procurement professionals with real knowledge and understanding </li></ul></ul><ul><ul><li>Offered With training and support throughout the Auction to ensure a smooth and effective process </li></ul></ul>
  8. 8. Preparation for Auctions <ul><li>Preparation is so essential for Success: </li></ul><ul><ul><li>Preparing detailed product or service specification. </li></ul></ul><ul><ul><ul><li>The fewer parameters allowed to vary: the better. This will help suppliers in bidding and also make the post-auction evaluation more straightforward. </li></ul></ul></ul><ul><ul><li>Recruiting suppliers </li></ul></ul><ul><ul><ul><li>Some suppliers are not familiar with electronic reverse auctions, so may not be immediately willing to join in. Suppliers will need validation in the normal way. . </li></ul></ul></ul><ul><ul><li>Training purchasers and suppliers </li></ul></ul><ul><ul><ul><li>Purchasing Auctions can provide training </li></ul></ul></ul><ul><ul><ul><li>assistance on use of the website. </li></ul></ul></ul>
  9. 9. Tips to Help Organisations <ul><li>We have found the following tips can help organisations run effective reverse auctions: </li></ul><ul><li>Select and Train the Right People </li></ul><ul><ul><li>Prepare internal stakeholders and obtain senior leadership sponsorship. </li></ul></ul><ul><li>Ensure Sourcing Professionals Take Ownership of the Process </li></ul><ul><li>Get the Right Tool for the Job </li></ul><ul><li>There are many different reverse auction platforms offering alternative solutions. </li></ul><ul><li>Have a Back Up </li></ul><ul><li>If the auction doesn't go well, it is important to have the ability to default back to the traditional paper-based RFP process. </li></ul><ul><li>Sell it Internally </li></ul><ul><ul><li>In promoting the concept for the first event, emphasize things to internal customers that </li></ul></ul><ul><ul><li>will resonate specifically with them e.g. R & D speed. </li></ul></ul><ul><li>Explain the Rules and Process </li></ul><ul><ul><li>Another key to building acceptance among internal customers is to explain that </li></ul></ul><ul><ul><li>they aren't obligated to accept the lowest bid in a reverse auction. </li></ul></ul>
  10. 10. Tips to Help Organisations Cont. <ul><li>Prepare the Supply Base </li></ul><ul><ul><li>It is essentail to prepare internal customers for the negative supplier reactions that may </li></ul></ul><ul><ul><li>occur in connection with an e-auction. However transparency can be used to encourage </li></ul></ul><ul><ul><li>suppliers to participate in the events . Supplier training prior to an event is paramount! </li></ul></ul><ul><ul><li>It is also important to provide clear specifications and service level requirements to </li></ul></ul><ul><ul><li>suppliers ahead of the event so that there is a common understanding of what is being </li></ul></ul><ul><ul><li>bid. </li></ul></ul><ul><li>Invite Only the Right Suppliers </li></ul><ul><li>There's a fine line when it comes to how many suppliers to invite to an e-auction. While </li></ul><ul><li> too few can mean not enough competition, too many suppliers invites those with less </li></ul><ul><li> than true intentions, so pre-event qualification is key. </li></ul><ul><li>Get RSVP’s </li></ul><ul><ul><li>Obtaining clarification on which suppliers are bidding is important to plan the </li></ul></ul><ul><ul><li>event properly. </li></ul></ul>
  11. 11. Tips to Help Organisations Cont. <ul><li>Watch the action </li></ul><ul><li>A successful reverse auction should have realistic bid decrements. It is important to set </li></ul><ul><li>up parallel communication routes during the auction, so suppliers can communicate with </li></ul><ul><li>hosts if there are problems communicating via the reverse auction. </li></ul><ul><li>Talk it up! </li></ul><ul><ul><li>The energy and appreciation Senior Management gain from watching procurement </li></ul></ul><ul><ul><li>manage live events has been very beneficial in marketing future events. Assuming the </li></ul></ul><ul><ul><li>first event is a success, it is important to publicize the event as a procurement win that </li></ul></ul><ul><ul><li>can in turn market future events. </li></ul></ul><ul><li>Track the Data </li></ul><ul><ul><li>Ensure that you obtain a percentage saving made through using the site. Where </li></ul></ul><ul><ul><li>contracts are short diarise the following years auction to ensure the process is repeated </li></ul></ul>
  12. 12. Purchasing Auctions Cost Options <ul><li>Pay as you go </li></ul><ul><li>The buyer can purchase individual auctions. Consulting services may be required to train, set up and manage the first auctions. Price will depend on the number of suppliers taking part in the auction. Prices start from £3,000 per auction </li></ul><ul><li>Multibuy </li></ul><ul><li>The buying organisation can purchase a number of auctions as a package for a set price. The package usually includes support and training for both users and suppliers. Annual subscriptions start from £14,000 </li></ul><ul><li>Commission on the realised savings </li></ul><ul><li>Purchasing Auctions takes a % of the savings realised by the buyer on the agreed contract. </li></ul>
  13. 13. Thank You! To view an auction please go to: / For further information or to discuss different options for your auction please call the team on 0845 603 8161