Yesterday, a guest blogger on Spend Matters posted a step-by-step method for conducting a electronic reverse auction \u2013 actually, I would consider it more of an online negotiation \u2013 without buying any new software. This individual described how he had suppliers set up chat accounts, had suppliers submit bids via a private chat session with him, and manually used chat and copy-and-paste techniques to provide feedback on supplier rank until the auction ended.<\/p>\n
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You can read about it for yourself. But what was described bordered so much on the ridiculous that I had to check the calendar to see if it was April Fools Day knowing that Jason loves to play tricks on that day.<\/p>\n
Monitoring six different small chat windows, manually calculating bidder rank in Excel, and having bidders wait for you to tell them which place they were in all as more bids are coming in by the second? Sounds quite labor intensive and ripe for errors to me!<\/p>\n
Having said that, I will admit to having been \u201ccreative\u201d with reverse auctions for a previous employer when there wasn\u2019t budget to invest in a system (and before free and low-cost systems like WhyAbe and Ketera\u2019s solution were available). Here\u2019s what I did\u2026<\/p>\n
I set up a discussion board on a free discussion board service. I then had suppliers set up accounts on the discussion board, making sure that they gave themselves usernames that would not serve to identify them to their competition.<\/p>\n
During a predetermined time period, bidders were to submit bids on the discussion board. They could see each other\u2019s bids, so that they would know whether they had to revise their bid to be more competitive.<\/p>\n
It worked reasonably well. We ended up paying about 12% less than the previous year\u2019s price where such previous year\u2019s price also happened to be slightly lower than where the bidding started. And the other advantage was that we didn\u2019t have to pay for any software or external services.<\/p>\n
There were disadvantages, though. These included:<\/p>\n
So, though it was successful, I can\u2019t say that this approach to a reverse auction was the classiest representation of me in my purchasing career. With the tools available today, I would never consider doing something like that again, much less the 6-way chat approach described on Spend Matters.<\/p>\n
Nonetheless, I think it is fun to think about these types of out-of-the-box approaches in purchasing. You never know when you may come up with an effective and less expensive approach to delivering results for your organization.<\/p>\n","protected":false},"excerpt":{"rendered":"
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