Also known as a reverse auction, e-auctions are designed to make suppliers and vendors compete to get an organisation’s business. Due to the bidding process, prices offered by the vendors reduce without compromising the quality of the products or services.
Using e-auctions in procurement
While the organisation may have its pool of suppliers and vendors, it is essential that procurement works to find new suppliers. It enables healthy bidding and competition between suppliers so that your organisation benefits without affecting the quality of goods and services.
Many government organisations and institutions are using e-auctions to make the contract-awarding process more transparent. It encourages dynamic bidding, causing the price to move downwards. You control the entire process and select the supplier who should win the contract. It is prudent to remember that choosing the lowest price is not always the criterion for awarding the contract. You need to look at the price in connection with the quality, to ensure that your organisation saves money while benefitting from the quality of products or services.
When using e-auctions for procurement, you should factor in the cost of shifting from an existing supplier to a new one. If the cost is prohibitive, the whole purpose of e-auctions is lost.
Benefits of e-auctions for procurement
Some advantages that procurement enjoys due to e-auctions are as follows:
- There are virtually no negotiation costs associated with e-auctions
- It encourages suppliers to submit a low bid while ensuring that the organisation gets more favourable terms
- It is a transparent method of awarding contracts
- It is a low-cost way to find new suppliers and grow your supplier pool
So, if you are a procurement professional, you should think of using an e-auction platform to ensure cost savings for your organisation without affecting quality. Remember, e-auctions can be used for procurement by all companies, regardless of their size.
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