The 6 Pitfalls of Reverse Auctions

Wednesday, April 20, 2011

The 6 Pitfalls of Reverse Auctions

In a white paper published by ThreeCore Purchasing Consultants, the author highlights six common pitfalls of reverse auctions.  Below each pitfall, I address the objection and how our services complement each roadblock.

At eBridge we work hand-in-hand with our clients to not just avoid pitfalls, but achieve remarkable results. Take a look at these pitfalls and let us know what you think.

1. Lack of supplier preparation: Prior to the event, eBridge gives one-on-one tutorialsto each pre-approved supplier.  Our procurement team is available throughout the process for additional training and to answer questions that will naturally arise.

2. Inviting the wrong suppliers:  Although a key part of our process is supplier sourcing and recommendation, the buyer always reviews and approves which suppliers will participate.

3. Including too many suppliers:  A common misconception in reverse auction procurement is that the number of participating suppliers determines a successful event.  Through eBridge’s sourcing and recommendation process, our team brings an average of 32 suppliers to the buyer for their consideration.  On average, 6 suppliers participate per event.  A competitive environment is the ultimate goal for our customer.  

4. Starting with difficult materials:  At eBridge, our team provides the expertise to determine which items are appropriate for the process.  Our comprehensive Spend Analysis report provides customers with a full view of the items on their upcoming purchasing schedule that will fit the process.  Our analysis clearly defines the items that fit the reverse auction process- and those that do not.

5. Not enforcing the rules:  Reverse auction software companies and third party providers do not provide the leadership and guidancenecessary to integrate reverse auctions into your purchasing strategy.  At eBridge we recognize that leadership is an integral part of the solution.  Our mission is “to provide leadership in reverse auction procurement and process change that creates meaningful value for our customers.”

6. Setting artifically low targets:  At eBridge, the cornerstone of our services is to allow the free market to reign.  The competitive environment created through our process yields an average net savings of 14%, but ultimately gives customers assurance they are purchasing at market.