The Reverse Auction celebrates its 15th birthday this year (I know, they grow up so fast don’t they). At Ariba LIVE in Orlando recently, Harikrishnan Shankaranarayanan of Aegis Limited shared how their approach and results have evolved over the 10 years the company has been doing reverse auctions.
Justin Fogarty is Managing Editor of Supply Excellence [...]
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by Dr. David Howie, Director, TPI
Winning bidders in auctions often experience buyer’s remorse, a gnawing sense that they have paid too much for something that they don’t need and perhaps no longer want. Something similar can happen in reverse when…
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The fifth and final category in the recent Top 5 Categories to Source Now webinar was metal stampings (full replay here). With commodity prices rising, any strategy that alleviates some cost pressure in metals will be greeted with open arms.
So, what were Category Manager Tom Arbogast’s recommendations for reverse auction strategies for metals?
The full [...]
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As a sourcing professional, my most difficult negotiations aren’t with suppliers but rather with internal customers. Based on conversations with my colleagues, that experience is not unusual. One measure of this challenge is “savings leakage”…
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Despite the widespread use and success of reverse auctions, Ellen Terchila, a consultant in the Spend Management Services group at Ariba, says many procurement pros still struggle with when to use them, when not to use them, and what categories to target. So, I asked Ellen to recap the key take-aways from a session she held on reverse auctions this week in Nashville.
***This video was shot at the Ariba User Conference in Nashville on 10-12-09. All of the video from the event can be found in a Playlist here.***
Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.
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Another topic has gotten a great deal of feedback in the Strategic Sourcing & Procurement Group on LinkedIn. A member asked:
“Is post tender negotiation acceptable? To what extent? Please share from your experiences what are the advantages and the risks of conducting a negotiation after a sealed-bid tender.”
Touchy subject to say the least, so the viewpoints expressed by the Group members provide a bit of perspective on how this impacts their organizations and relationships. A few of the highlights:
State your intentions up front:
“What does the tender say? Is negotiation talked about, at all? I would expect having some clause in the tender starting with ‘We reserve the right to negotiate with all/short-listed/top X proponents…’, that clause would tell you what you can do without having any issues.”
Costs savings sometimes have a price:
“I have seen a key project fall down because sealed bid tenders did not produce savings anticipated (and promised up the chain) and so the buyer tried to negotiate with the winning bidder – whilst it reduced the cost of the project it caused service levels to be compromised and opened leeway into the specification. Key learning in the post evaluation – any negotiation will always be 2 sided.”
Check the regulations:
“If you go by World bank Procurement policy, it is not allowed. If the said buyer is Government entity, than you will have to check Govt. Norms. In India for eg. Post Tender Opening, negotiation with L1 is not allowed. However, if you are not sure about the L1 price that you will get in Sealed Tender, you can choose to go for Reverse Auction.”
It can work…very well:
“From my experience? Procurement was forbidden to negotiate at all and just accepted bids. I became a procurement manager at the end of a contract cycle (just after contracts were signed) and noticed one supplier’s prices were way out of line with the others. I called the supplier and told them, and they said “we know, we’re going to lower them.’ That was a $300K phone call that took 30 seconds.”
Consider other approaches:
“If you want to negotiate than why limit to one Bidder, You can very well negotiate with L2, L3. If you are aware of market rate than why not go for Reverse Auction. If you are not aware of the same, than it is better that you go for Tender & heavily promote the tender such that more & more bidders participate & competitive drives the price down.”
What have been your experiences? Do you have any insights that might help other Supply Excellence readers or LinkedIn Group members?
Join the LinkedIn Strategic Sourcing & Procurement Group here.
Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.
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Should the government bailout the financial institutions or should they let them fail? While this issue is debated, those with a strong strategic sourcing background may see a significant opportunity.
While there is risk with the Government taking over these assets, this risk is minimized if they are purchased at the current true market [...]
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There is an economic storm brewing and its called a recession. I believe Zig Ziglar once stated that experts have predicted 36 out of the last 2 recessions. The problem is, that nobody actually knows if we are in a recession until the economy is already pulling out of it. To start, [...]
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Charles Dominick had a good story about purchasing a new vehicle, which reminded me that I was going to blog about my own process of buying a new car. Last month, we decided to go through the same assessment in my own purchasing department which includes me starring as CPO, Director and Buyer. [...]
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SCDigest ran a commentary recently which spelled out five recommendations for improving your results for eSourcing.
Prioritize The Trinity Of Reliability, Quality And Price
Very true, eSourcing does not change what you would normally do when going through a sourcing exercise, it just enhances it. If you sense the loss of a critical milestones, recalibrate and [...]
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