Auction saboteurs?

June 19th, 2008 at 06:45am David Bush - Iasta

UK based Supply Management magazine, had a summary level article regarding suppliers attempting to disrupt the e-auction process. I think the title was a little misleading because, generally speaking, suppliers cannot disrupt a good auction with adequate competition. However, that statement is heavily loaded, and the article does point out some auction best practices that have been around since Tron, or so.

According to Huthwaite International, supplier disruption tactics include: refusing to participate, submitting bids outside the auction process or offering their lowest price at the start of the auction, limiting its effectiveness.

These are all accurate observations and some suppliers do attempt to sabotage an auction event. Many times this gets dangerously close to collusion. In some cases, supply bases decide not to participate in any auction activity – a calculated gamble, for sure. However, probably a decent one because their auction experiences have likely been very unfavorable and executed by sourcing teams that had no idea what they were doing before cocking the hammer.

I think the value that this article brings, is in the recognition of the basics, when it comes to reverse auctions. Give the suppliers enough time, quality specifications and EXTRA communication and you will discover most will take the opportunity to win easy business, even if the margins do compress.

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Entry Filed under: General, Reverse Auctions, Supply Management Best Practices, Technology / SaaS