In today’s world, time is money. Companies are looking for ways to effectively manage costs during procurement while also getting value. Undoubtedly one of the most time-consuming and laborious processes for many had been the extended negotiations companies had with each vendor. With the advent of technology and procurement software with inbuilt e-auction functionality, the procurement process and e-auction bidding strategy development has been somewhat simplified.
5 Steps to a Streamlined, Successful e-Auction Bidding Strategy
In a single e-auction, a business can pit vendors against each other and within an hour find a supplier with competitive pricing. E-auctions can assist companies to save as much as 10% in overall procurement costs. However, without a carefully crafted e-auction bidding strategy things might not go as planned. So, what are the most effective ways to enhance, strengthen, and fortify your team’s current bidding strategy?
1. Identify and Invite Key Vendors to the Auction
Should your e-auction bidding be free for all or should you only invite select companies to the bidding process? In general, it is preferable to have a few select vendors bidding against each other.
While developing your e-auction bidding strategy, take time to find vendors within a comparable price point that suits your budget, whose products are of good quality and meet your needs, and who can supply the volumes you require. Invite these vendors to the auction. Ideally, five is a reasonable number. You don’t want too few vendors and neither too many.
2. Provide Invited Vendors with a Shortlist of Expectations
The second point in improving your e-auction bidding strategy has to do with preparation prior to the auction. Let the vendors know ahead of time what they will be bidding on: the items you’re looking for as a procurement team, the quality, the volumes, and anticipated price points. This allows them to structure their own bidding strategy, know how much they can provide and what they are willing to accept in payment. This will help speed things up when the auction goes live.
3. Keep Open Communication Channels with Vendors
You will want to keep open communication channels with the invited guests in case they have any questions before the auction and during the auction. Leave sufficient room before the date of invitation and the auction to allow them to prepare themselves properly.
Let them know that there will be someone ready to answer any questions they might have including how to participate in the e-auction if it is their first time using the reverse auction software or platform you’ve chosen to host your auction upon.
During the auction, there must be a chat box that allows vendors to verify any questions they may have during the process. This should be a central room accessible to all to avoid any misgivings or misunderstandings.
4. Decide How Information Much Each Vendor Can See During the Auction
How much information do you want each vendor to see during the live, web-based auction? Do you wish to reveal the names of their competitors? Should they be allowed to see where they rank in the bidding or simply when they are the ones leading? Should suppliers be able to see how much is being offered by the other vendors? Remember that what vendors can see might affect their behavior.
5. Determine How Many Items Will Be Bid Upon During Each Auction
When figuring out ways to improve your e-auction bidding strategy, one consideration you must also remember is to keep things short and straight to the point. If your procurement list is long this can be problematic during an e-auction. The process can get quite exhaustive.
Can you imagine having to bid on over three hundred items and each one is shifting as bids are placed? It can be counteractive to what you’re hoping will happen – a smooth procurement and vendor selection process. Decide on the items you want vendors to bid on and keep them minimal for time savings and a faster auction.
Get Started with Reverse Auction Software
Are you keen to host an e-auction but don’t have suitable reverse auction software? Invest in innovative bidding software from ProcurePort. Our robust, easy-to-use systems are designed to help you save time and money as well as select vendors quickly. Contact us for more information or schedule a demo with one of our procurement experts.