Ensuring you are able to get the right eyes on your reverse auction services will be crucial for you to develop and maintain lasting relationships with suppliers and vendors.
To assist you further, we have broken down for you the four key steps you will need to execute and implement in order to successfully attract the right people to your reverse auction.
Step One: Preparation phase
The first thing to be mindful of is that some vendors will be hesitant to partake in a reverse auction if the company has the reputation of solely attracting the lowest possible price. According to a study, the effect of a reverse auction on relationships will “depend on the extent to which buyers employ the auction as a price weapon, or whether it is used primarily as a process improvement tool.”
To this end, doing your homework and background research will be key to getting the right eyes on your reverse auction. Ideally, you will want to target new suppliers, as well as ensure that previous suppliers have the chance to participate.
Creating detailed specification documentation for the product or service will be crucial for the success of your reverse auction. Variables and value points must be clearly defined so suppliers can be sure they are able to meet your criteria, allowing you to identify key bidders to invite.
The rules of your reverse auction itself should be capable of being understood by a range of parties. Do not deviate from your criteria, as this will undermine your credibility later on. Having these guidelines clearly understood from the outset will help generate maximum participation from bidders, as all qualified vendors receive the same information and will be given equal opportunity to take part.
Furthermore, having a period of pre-bidding will allow you to sift out qualified bidders while troubleshooting technical problems, which in turn promotes only the most competitive bids.
Step Two: Software
Having reliable, easy-to-use and cloud-hosted reverse auction software in place typically enable users to save at least 40 percent on their purchases. Unfortunately, a 2018 CBIS report found that only 56 percent of companies surveyed were using a centralized Procure-to-Pay software system, suggesting that many companies are still relying on outdated manual processes. Online cloud hosted software such as the system provided by ProcurePort can help you achieve this end.
Without having these systems in place, you can damage supplier relationships in the long run as processes can be delayed. A good software system will also enable you to assess bids, the speed of delivery and the quality of the goods to be delivered.
Step Three: Event execution
The next thing to bear in mind is that some bidders may have never taken part in a reverse auction service before. Therefore, having robust, user-friendly reverse auction services is a sure measure of attracting the right eyes to your reverse auction. This will cut down your costs and ensure you will get the lowest possible price, as well as enable you to be paired with a supplier that is based on the specifications of your company, helping you generate the best value.
Communication with your relevant stakeholders during the auction process, both internally and externally, will be key to ensuring you get the right eyes on your reverse auction. This can effectively be done through an integrated chat and messaging system which allows all communication channels between the Buyer and Supplier to be open at all times.
To read a real-world example of how strong communication systems can ensure an affect your reverse auctions services, click here for more information.
Step Four: Post-event execution
Following through on your commitments will be key to maintaining credibility within the market. Once the reverse auction is complete and a successful outcome has been achieved, communication is still critical. Start by communicating award timelines to the participating suppliers, make your award decisions as soon as practicable and thank all those who participated. Utilizing your reverse auction software will ensure consistency, save time and minimize errors.
Securing the lowest bid is not the be-all and end-all of a successful reverse auction. Your award decision should therefore be based on other relevant factors, such as quality and delivery capability of the bidder.
An Industry Leading Reverse Auction Software
ProcurePort’s user-friendly reverse auction software has helped our clients achieve up to a 44 percent reduction in costs. Not only can ProcurePort provide you with the reverse auction technology you need, but we can go one step further and manage the bid process for you using our reverse auction service.
Register for a Free Demo or contact our solution specialists today for a consultation to see how we can help you generate cost savings while maintaining and developing the credibility of your company.