Last week, I used the disparities in costs of The 12 Days of Christmas to encourage Supply Excellence readers to apply e-sourcing techniques to all spend categories. The use of online sourcing methods — whether e-RFx, reverse auction, or sealed bid — has been proven to provide the competittion and market transparency required to yield additional supply cost concessions above and beyond traditional methods.
Today, I’d like to share a simple litmus test that top-performing supply management organizations (e.g., Sun Microsystems, ITT Industries, Compass, and others) use to assess whether a good or service should be reverse auctioned. I have compiled a composite list of four questions leading organizations use to determine which categories are ripe for reverse auction:
- Can you define clear specification for the category?
- Is there a competitive supplier pool?
- Is the spending or unit volume significant enough to be of interest to suppliers?
- Are you prepared to change suppliers based upon the auction results?
If you can answer “Yes” to these questions, then reverse auction is a viable negotiation method. If not, consider adopting other e-sourcing techniques, such as e-RFx or sealed bid.

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1 response so far ↓
1 Costkiller // Jan 1, 2007 at 11:57 am
Interesting point of view !
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