In an OpEd today’s New York Times, David Yarkin, the former deputy secretary of the Pennsylvania Department of General Services, highlights the efficiencies and cost savings the State of Pennsylvania has achieved through strategic sourcing and urges other states to follow suit.

While I commend his leadership in procurement innovation, I wonder if Pennsylvania and other states have considered adding reverse auctions to their procurement strategy.  The reverse auction is an online web-based online, like eBay, but instead of buyers bidding a price up, suppliers place lowering bids, driving the price down.

States such as Indiana and South Carolina have used reverse auctions to purchase over $50 million of goods and services, saving approximately 8% or $3.9 million.  Online reverse auctions save an average of 10-25% and have been used by most Fortune 500 companies since the early 1990’s.

Mr. Yarkin is right- strategic sourcing is an excellent way to create efficiencies and savings in purchasing.  But I challenge Pennsylvania and other states to take this a step further and incorporate online reverse auction procurement to their purchasing process!