Since the late 1990’s, reverse auctions have revolutionized purchasing through the competitive bidding environment and transparency.

While the case for reverse auctions is obvious, many are challenged by determining the best items to purchase through the process, as not every item is a fit.

In order for an auction to be successful, ask the following questions:

1. Are the specifications neutral and open to competition?

2. Does more than one supplier or company provide this good or service?

Below is a story highlighting the success for a purchase that had open specifications and was able to bring more than one supplier to the able to compete for the business.

A mid-western company needed to purchase furniture to outfit a new facility. BidBridge operations staff worked with the purchasing organization to establish open and neutral specifications and bring additional suppliers to the table.

During the reverse auction event, the suppliers competed aggressively with one another, placing 55 bids through the event and first place changing hands 27 times. 

At the conclusion of the event, first and second place suppliers were separated by a mere 0.23%, indicating true market value had been achieved. Based on the company’s budget, the final pricing was 40% lower than expected. 

This case study is yet another example of how the competitive bid environment is achieving true market value for buyers and gives suppliers the opportunity to place additional bids in order to win new business.