Reverse Auctions• A reverse auction (also called procurement auction, e-auction, sourcing event, e-sourcing or eRA) is a tool used in industrial business-to-business procurement.• The role of the buyer and seller are reversed, with the primary objective to drive purchase prices downward. – In an ordinary auction (or also known as forward auction), buyers compete to obtain a good or service. – In a reverse auction, sellers compete to obtain business.
Experiment with e-auction Designs• Supply managers explored new auction designs – Multi-lot e-auctions – Changing the type of real-time information visible to bidders (price feedback versus rank feedback) – Using different pricing rules – Enabling multi-attribute auctions that focus on more than just price.
Benefits of e-Auctions• Save time• Standardize the sourcing process• Help organizations standardize contract terms and conditions• Buyers can be assured the obtained price is competitive