REVERSE AUCTIONING
By: Rajat Rathore(91042) Pragati Saraf(91040)
Reverse Auction
Suppliers
Buyer
Defining the concept ³Reverse´ Auctioning«.
An acquisition technique which allows prospective buyers to list any item(s) they wish to buy, and the sellers bid to provide the best price
Short History
Reverse auction buzz started with the success of www.priceline.com. The success story continued with numerous vortals doing huge business in their area of specialization. The first Indian vortal on tea www.teauction.com had revolutionized the contemporary business practice of Tea Auctions.
Reverse Auction
Suppliers pre-screened and approved. Suppliers are issued passwords. Only suppliers with passwords can participate in the auction Offerors are anonymous to all participants see a bidder number, not the competition¶s names. Evaluation criterion can be price or best value. Interested Suppliers apply online and get approval
Reverse Auction Process
Company Posts a Purchase Request Company Selects Time Frame For Auction Sellers Bid On Purchase Request ± New Bids Going Lower and Lower Auction Ends Company Contacts Seller to Purchase Product or Service
Does the lowest bidder always win the bid?
No, All purchases are up to the sole discretion of the Company. Factors which influence Companys may include but are not limited to: Seller¶s Capability Seller¶s Reputation Seller¶s Location Seller¶s Price Seller¶s Quality Seller¶s Delivery Date Seller¶s Terms
Offerors Competing can be anywhere in the world«just need to have Internet access
Bidder 1 Bidder 2 Bidder 6
Bidder 3
Bidder 5
Bidder 4
Bidder 7
Purpose of this mechanism
To ease the transition to doing your business over the Internet. To maximize the purchasing power of the company. To maximize the negotiating power of the company. To find alternative sources of supply.
Intimation about an action
The company will send complete information about its adoption of internet as buying mechanism to world¶s leading exporters. The approved sellers will be intimated through email (once data base is set up).
Cost Savings
The admistrative cost saving of finding new sources of supply The cost saving in form of fast order placing Lower costs through competitive and cooperative bids
Results
100% Paperless Process
Auction and issuance of Purchase Order completed in less than 1 hour Virtual competition Best Price/Value For Buyer