How can I benefit by implementing Reverse Auctions as part of my procurement process?
This is a question asked by many procurement and sourcing managers across different industry verticals. Granted, reverse auctions are not suitable for all industry verticals or for all procurement situations but used in the right situation for the right category of spend, there are many benefits of reverse auctions and they can generate significant cost savings.
4 key benefits of reverse auction software implementation within your e-procurement process
Increased Supplier Competition
Reverse auction software, such as the one provided by ProcurePort, provides many controls to create unique bidding strategies. This creates a higher sense of competition between the participating suppliers. Rank only or Lead Bid visibility is an example of the controls available for use to ensure participating suppliers provide their best possible price to win your business.
Increased Transparency
In order to conduct an effective reverse auction, it is imperative to have clear and concise participation instructions as well as detailed specifications of the product/service you are looking to procure. Ensure that all participating suppliers have the same information and are aligned on the procurement requirement. Since all this information is stored and disseminated via an online platform to all participating suppliers, there is consistency in communication.
Increased Efficiency
The use of online e-Sourcing software greatly reduces the prep time as well as the execution time of a successful reverse auction. ProcurePort provides comprehensive software complemented with service to ensure that your auction event runs smoothly. Since communication and participation all happens online, the process significantly reduces phone calls and emails to participating suppliers. Additionally, since reverse auctions are time-restricted, the buyer gets all their pricing from all their suppliers instantly and in real-time. No more haggling over the phone and chasing suppliers for quotes.
Increased Compliance
More and more companies are required to keep detailed records of transactions for compliance and audit. Using an online reverse auction software not only saves time and money but also captures all the necessary transaction information to stay compliant. The solution provided by ProcurePort captures all login information along with the date/time stamp. All bids from all suppliers, whether valid or invalid, are tracked and stored with date/time stamp, IP address, and the identity of the user submitting the bid. This eliminates any controversy during the selection process. Additionally, all information is available at your fingertips 24/7/365.
Increased Cost Savings
Reverse auctions when used appropriately and for the appropriate spend category can generate significant cost savings of up to 40%. Reverse auctions are most suitable for your indirect spend categories such as Office Supplies, Computer Equipment, Janitorial Services, Building Maintenance, Equipment Rental, Cleaning suppliers, Janitorial supplies, Office equipment & furniture, Utilities, etc.
Talk to a sourcing expert at ProcurePort to find out what categories of your current spending are suitable for reverse auctions.