I hope that you have enjoyed the article “What eSourcing Is & How To Get Started.”

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This article is based on a 30-minute podcast I did with Jason Busch, Editor of spendmatters.com. That podcast had lots of nuggets of good information and I only had space for a few excerpts in the article. So, I highly suggest that you check out the podcast on the Next Level Purchasing Association Podcast page.

Though the article took a rather basic look at eSourcing, the podcast did include some even more elementary material that I think could help procurement professionals who really haven’t yet got started looking into eSourcing or reverse auctions for their organizations. Yes, though eSourcing and reverse auctions have been around for a solid decade-and-a-half, there are some (actually, a lot of) procurement organizations who still haven’t added those tools to their toolboxes.

Therefore, I am dedicating this post to an excerpt from the podcast that ended up on the proverbial cutting room floor for the article, but still may be helpful.

eSourcing & reverse auctions save money and streamline the sourcing process. But what is eSourcing? What is a reverse auction? And what’s the difference?

A reverse auction is an online event “in which there is true price-based competition [among suppliers] in real-time,” according to Jason Busch, Founder and Managing Director of Azul Partners and Editor of the supply chain blog spendmatters.com. “So, when a supplier submits a bid, they know where they stand” and is able to quickly adjust that bid downward, producing savings for you.

Reverse auctions are a subset of eSourcing. Busch suggests that eSourcing describes “a broader category of tools” that includes bidding formats ranging from reverse auctions to multiple-round events where bids are evaluated privately to a variety of other types of events. To Busch, the factor that distinguishes reverse auctions from other types of eSourcing events is the “real-time feedback” that suppliers get.

Recommended Reading

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The NLPA Dedicated Member of the Month for August 2011 Is…
Who Owns The Customer-Supplier Relationship?
What is eSourcing? What is a Reverse Auction? What’s the Difference?
Whitepaper Wednesday – The Future of Procurement