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Archive for August 20th, 2007

Auction Award Best Practices

2 comments August 20th, 2007 Agatha Degasperi - Iasta Europe

The success of your auction is not only limited to the results you obtain, but also to how smoothly the process runs. Too often, buyers are very communicative up until the auction runs and then forget about the vendors. For continued success and to increase your chances of having vendors take part in future e-sourcing projects, take into account the following suggestions when awarding your business:

Vendors are informed that the lowest bidder does not automatically win the business. Nevertheless, they should feel like they are being considered (i.e. phone follow-up, possible face-to-face meeting, etc…). If they are not selected (and there may be very good reasons for this), they should receive very concrete feedback as to why they didn’t win the business (preferably not by e-mail).
Always take into account the award strategy that was given to the bidders in the RFQ document. If for some reason this award strategy will change - it is important to notify the vendors and see how they react as this could very well negatively impact their prices since they were bidding according to the possible volume they were going to be awarded.
When establishing who will win the business, it is always good to have a back up plan in the initial phases of the award. For example, if you said you would award to 1 vendor, have a 2nd also go through the post auction negotiations in case your selected vendor cannot stand by their pricing, or experiences some change in the business. Same if you said you’d award to 2, a 3rd one in the sidelines is always helpful.
When your final selections are made, formally notify ALL the vendors of your decision (we’ve had instances where vendors have taken part in auctions and ended up having a very negative perception of the client (and process) because they never received any feedback once the auction was complete - needless to say this does not encourage them to participate a 2nd time).
Make your award decision as quickly as possible to maintain the momentum. Both the winning and loosing bidders do not have to waste time and energy chasing for responses/award decisions. These vendors have to plan future potential income streams and therefore quick responses (even if they are unsuccessful) can leave a positive impression.

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