There are many components to e-Auction success, including good strategies, best practices, and inscrutable ethics. However, this post is going to overview another set of good process that you can follow to make sure the auction runs smoothly, efficiently, and delivers on it’s expected benefits.
- Define Requirements and Goals
As with every other step of the sourcing process, good requirements, along with clear goals, are key. Be sure to understand what the strategy is for lowering or controlling costs, for optimizing the supply base, and for process improvements.
- Invite all Potential Suppliers to an Open RFI
Do not limit the organization’s supply base to current suppliers as sometimes the best process and cost savings can come from new suppliers with streamlined processes, innovative production technologies, and lower production costs.
- Pre-Qualify Capable Suppliers
It is critical not to invite suppliers to an auction that are not capable of meeting the organization’s needs. This will only garner resentment from other suppliers and possibly cause significant production delays if it is only discovered after the award that the supplier cannot deliver.
- Clearly Document All Requirements
Good documentation is the key to a successful sourcing project in general. With a global supply base, staffed by individuals of distinct cultures, each with their own internal understanding of what a (foreign) term or requirement could mean, there are really no common terms or definitions – but detailed documentation can avoid this problem and avert potentially costly misunderstandings.
- Hold a Q&A Training Session
Don’t assume the auction tool is easy or natural for your supplier. Whereas your buyers have probably been trained on it, used it, and are accustomed to using it as part of the process, it might be a new tool, concept, or even business paradigm for one or more of your suppliers.
- Monitor the Auction
It’s important to make sure that things run smoothly. If one or more suppliers fail to bid relatively promptly or the refresh rate is sluggish or non-existent, either the buying organization or one or more supplying organizations might be experiencing problems. A buyer should be ready to step in and offer help or remedy the situation at an instant.
- Follow Through and Award Promptly
It’s important to be prepared to allocate awards and follow through on negotiations promptly and within the promised timeframe.
For more information on the e-Auction process, it’s benefits, and associated best practices, see the e-Auctions in Sourcing: The Strategic Sourcing Equalizer wiki-paper over on the e-Sourcing Wiki. In addition to more detailed information on a successful e-Auction process, it also overviews some of the internal and external pressures that the e-Auction process can address in addition to benefits, barriers to success, success strategies, ethics, and some foundations for next-generation auction solutions.