A New Technique for Success
Purchasing the goods and services a company needs to be successful can be challenging. However, one technique can help simplify the process in many instances. This technique, called the reverse auction, allows buyers to initiate the proceedings and to choose from interested suppliers not just on the basis of price but on whatever specifications they feel are most important to their needs.
The benefits of a reverse auction is best illustrated with an example. If a business needs to have flyer printed, it could send out RFPs to many potential printers. Unaware of what their competitors are providing or charging, each printer takes the time to prepare the offer and to submit it for consideration. Then, the decision-maker for the buying business must review those detailed proposals to choose a supplier. On the other hand, the business could hold a reverse auction. With this method, the business simply alerts potential suppliers that the auction is underway and those interested suppliers bid on the project. Because the suppliers are able to determine what other individuals are charging and offering, they can compete by lowering their price, speeding up delivery times, or providing unique extras. The buyer can then choose from among the bidders, but he is not obligated to choose the lowest bid. Instead, he can pick the supplier who has the best reputation or with whom he has the best relationship. He can also use the existing bids to negotiate with suppliers who bid higher.
Reduce Costs and Save Time
As a result of using a reverse auction, buyers can end up reducing their purchasing costs by as much as 35%. Plus, it gives suppliers an opportunity to truly compete with one another through price, quality, and service. Reverse auctions also save time for both buyers and sellers. Buyers no longer have to spend time reviewing numerous RFPs before making a purchasing decision and sellers don't have to go through the time-consuming process of preparing RFPs for buyers.
There are also a number of time savings benefits related to reverse auctions. For one, the entire time for procurement cycle is significantly reduced. All stages of the process from the listing of the auction, to the placing of bids, to the reviewing of supplier qualifications is faster than with the traditional RFP method. Plus, the buyer has the opportunity to pre-screen suppliers. Instead of requesting the RFP, then going through the qualifications, the buyer can look over those qualifications before giving serious consideration to the supplier's bid.
A Partner to Help Ensure Success
Epiq can assist most companies in running more effective reverse auctions by providing them with software that simplifies the process. For example, Epiq's E-procurement software supports numerous types of auctions, including private, vickrey, Dutch, and hybrid varieties. The software also provides auction templates, specifiable parameters, customizable emails for particular events, buildable lists of qualified suppliers, and many features that assist suppliers in bidding more efficiently such as outbid notifications, upcoming auction previews, and registration areas. Beyond these features, Epiq's software also provides numerous reporting benefits. Users can review the bid history for specific auctions or suppliers as well as RFQ reports and winning bid comparisons. All of these features make it easier for businesses to create an auction, notify potential suppliers, manage and review bids, manually select a winner, and compare statistics related to the process.
Getting Started
For companies interested in streamlining the procurement process and in cutting their purchasing costs, reverse auctions are an excellent idea to consider. While they won't work in every purchasing situation, they can assist businesses in purchasing writing services, business materials, outsourcing assistance, computer-related services, and more. Receiving these benefits is easier for businesses when they use Epiq's software to help them plan, run, and review their reverse auctions.