If there was ever a catch-phrase for today’s financial environment it’s “do more with less.” So it comes as no surprise that any plan that will cut a company’s costs and time reflects positively on personnel and budgets.
What better way to accomplish that than with positive benefits for the purchaser in online auctions.

Simply put: Reverse auctions can be positive in that they can act as a “wake-up call” to suppliers. The reverse auction charges the supplier with the responsibility of thrift spending, waste elimination and a sense of supply chain management that actually works for its clients.

In simplest terms, reverse auctions can define the processes of an organization’s procurement system by using web-based applications. Unlike enterprise resource planning systems that enable businesses to automate their internal processes, reverse auctions enable globally dispersed buyers and suppliers to work together to interact and execute transactions directly over the internet.

E-auctions provide significant benefits for those involved: transaction costs can be slashed and bulk discounts can be determined to name just a few. And while most of the research surrounding e-procurement is positive about the savings that can be made, some of the bad press surrounding the topic has arisen because the various approaches taken by companies have not suited their environments.

Within the reverse auction process, an organization can post tenders in real-time online. Suppliers can in turn submit bids in a controlled and internet-secure environment. Likewise, when a company posts a reverse auction, the intention isn’t to sell but rather to purchase — either goods and/or services. The benefits for buyers? Substantial price savings plus a traceable and transparent sourcing process.

In order to guarantee that the reverse auction model will generate the desired results for your organization, it’s crucial that you consider where exactly the reverse auction stands in relation to your overall procurement strategy. And it’s just as important to set a limit on how much you will spend during the auction process.

It’s no secret that the reverse auction model allows for radical savings in price per unit. But at the same time, it’s never a good idea to reverse-auction your entire agenda. Diversification is the key: supplier relationships at times need to be handled with kid gloves as the supplier should be kept in the loop on the progress of reverse-auction activities.

The key factor regarding supplier-selection has a lot to do with how establishes the lowest bid. But certainly it is just as important to base your selection criteria on other factors such as past performance in overall quality, flexibility and support.

Suppliers in turn can ready themselves for reverse auctions by establishing specific “response-strategies” and they can further set themselves apart from their competitors by deciding what their main objectives are within the perimeters of the reverse auction.

The great regarding reverse auction services is that the model can be adapted and used by pretty much any business. Which means the chief benefit: allowing organizations to take advantage of a fast and economical way of establishing a simple, internet-based and web secure auction- environment that allows for real-time pricing and bidding. And don’t forget that reverse auction services allow for global bidding and trading thanks to multiple language- currency-time-zone functions.

Which brings us back to step one: are there positive benefits for the buyer in online auctions? Absolutely!