In an article by Matt Chafkin from Inc Magazine, the writer provides some tips for competing to win in a reverse auction.  He also includes a history and opinions from both buyers and suppliers regarding the technology that is quickly becoming industry standard for businesses that want to remain competitive in America today.  Below is an excerpt.  The full article can be found here.

How to Compete in a Reverse Auction

A growing number of large companies are forcing suppliers to bid through reverse auctions. Here’s how to survive one with your margins intact

By: Matt Chafkin

On days when Gartner Studios is trying to lock down a major sale, Greg Gartner turns his employee lounge into a war room. An arsenal of laptops and phones and reams of data are brought in for employees to use. Shouting matches among workers are common. So is heavy perspiration. If Gartner’s team wins the deal, there’s a lot of whooping and the boss hands out tequila shots. These back-breaking dealmaking sessions can last for eight hours or more.

For Gartner, a company that supplies stationery and related products to mass market retailers and office superstores, selling paper ain’t what it used to be. Deals that 10 years ago would have started with a cold call and ended months later with a handshake are now governed by a process that was virtually unheard of when the Stillwater, Minnesota, company was founded in 1998: the online reverse auction.

During a reverse auction, a customer allows suppliers only a short window of time to bid down the price on their products or services. The practice was pioneered by automotive and aerospace buyers, which used reverse auctions to procure commodity parts. Today, many large companies use them to buy everything from paper clips to their employee health care plans. Reverse auctions are loved by corporate purchasing managers, loathed by suppliers, and rarely discussed publicly by anyone involved.

Click here to read the full article.