Reverse Auctions

Optimize savings with eAuction solutions to run effective reverse auctions at the right time.

Level the Playing Field by Facilitating Equal Competition

Velocity helps procurement teams enable true partnerships with their suppliers through transparent processes. Reverse auctions allow you to focus on innovate solutions for your sourcing challenges.

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Reverse Auction Simplified

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Specification

Ensure the requirements and specifications are universal across bidders

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Prepare

Train bidders on rules, procedures and award criteria

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Live Event

Run live auction event with key business users present

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Award

Run award scenarios and select winning bidder

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What’s a Reverse Auction?

A reverse auction is defined as an auction where the traditional roles of both the seller and buyer have reversed. In this type of auction, sellers submit their bids and buyers sit in the driver’s seat. In a regular auction, you will find the highest bidder as the winner, but in a reverse auction, it is the bidder with the lowest price that usually wins the business.

Reverse auctions can deliver large cost savings, reduce cycle times, improve supplier negotiation, and allow a procurement function to focus resources on high value activities. However, in order to realize these benefits, a reverse auction must be set up and conducted with precision. This means you need to use the right system or tool, invite the right suppliers, structure the event optimally, and properly execute the event.

Knowing When the Time is Right for Using a Reverse Auction

Reverse Auctions are not appropriate for all sourcing projects and need to meet certain key criteria:

Competition

Reverse Auctions are best for categories with a strong competitive environment with many qualified suppliers that have a strong understanding of the items up for bid and the cost/price models associated with them.

Complexity

Use Reverse Auctions when there is a low level of procurement complexity and specifications are well-defined industry standards. It is key that you define the level complexity to be able to make apples-to-apples comparisons.

Commitment

A Reverse Auction is not the best time to test a new supplier for a large spend category. When making the final selection based on the eAuction result, price should not be the only factor.

Insight

Infographic

Case Study

Benefits of Sourcing Automation

Some of the other benefits of using eSourcing tools for managing reverse auctions:

Workers Gathered Around Tablet At Meeting

Speed
Using an eSourcing solution for reverse auctions typically reduce the price negotiations timing to less than an hour. This increase in efficiency not only benefits the buyer, but also the participating bidders, making the eSourcing solution an exceptional idea for everyone—not just the buying team. It increases market efficiency and integrity as a whole.
Value
Savings are typically greater that traditional negotiations when we use an eSourcing tool. On average, we’ve achieved upwards of 19% in cost savings for our clients when we utilize reverse auctions. This reductions in procurement costs, allow procurement organizations to achieve a higher ROI.
Integrity
eSourcing solutions offer full market transparency, meaning that all the participating bidders have the same information in real time and can act on as they see fit. The bidder has the ability to modify their bid proposal in a live environment resulting in immediate market feedback.

Reverse Auctions

Level the Playing Field by Facilitating Equal Competition

Reverse Auction Simplified

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02

03

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Ready to Begin Your Procurement Transformation?

What’s a Reverse Auction?

Knowing When the Time is Right for Using a Reverse Auction

Competition

Complexity

Commitment

The Hidden Cost of Leadership Indecision During Transformation

Why P2P Implementations Fail After Go-Live: The Role of Execution Readiness

Why P2P Implementations Fail After Go-Live: The Role of Execution Readiness

Benefits of Sourcing Automation

Speed

Value

Integrity

Spend Analysis

Sourcing Execution

Reverse Auctions

Gain Share

Indirect Spend

Direct Spend

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