4-Steps to get Best Prices in e-Auctions

Posted on by procurEngine

– Anupam Aggrwal, Director AgileApt Solutions (procurEngine)

e-Auctions are one of the most effective ways to negotiate with suppliers. They get savings anywhere between 4-17%. Your e-Negotiation is a platform for your organizations to create faceless, un-biased negotiations resulting in best prices – always.

Not only this, e-Auctions also record a complete trail of the negotiations like who all were invited and participated in the negotiations, initial price, reduction trends and final price comparative etc and it is available for future audits.

However, organisations need to create an eco-system to get maximum benefits of the e-Auctions. Some of the key essentials to make e-Negotiations successful are as under:

1. Motivate and Encourage Suppliers Who Bid Aggressively in e-Auctions

It is most important that you promote the culture of aggressive bidding by suppliers during e-Negotiations. You can motivate their behaviour by some very simple steps like:   

  1. No Negotiations after e-Auctions
  2. Immediate PO/LOI
  3. Some rewarding term for contracts negotiated using e-Auctions

2. Reward employees Who Create Innovative e-Auctions

Our team members can do wonders by bringing creativity in e-Negotiations. It can as simple as using a combinatorial auction in place of itemized auctions or using Dutch Auctions in place of standard English Auctions or appropriate usage of λ-Factor etc.

The organization must reward employees who bring maximum value for the organisations. The employees can be rewarded by measuring:  

  1. Savings achieved using e-Auctions
  2. Purchase Orders placed on new vendors (e.g. Min 10% of total purchase on new vendors approved in current and last financial year)
  3. Best e-Negotiation Strategy
  4. Special weightage for e-Auctions

3. Quantify, Measure and Display Savings    

It is important to align all members of the Supply Chain in bringing this value. Common goal and its daily tracking help team to put a bit of extra effort in extracting more value from the e-Negotiations without by-passing the system.

4. Improve e-Negotiation Experience for Suppliers

Lastly, it is very important to take feedback of the suppliers on their experience of the e-Negotiations. Any constructive feedback must be recorded and corrective actions be taken to improve the suppliers experience. A good platform is an asset for the organizations’ long term growth strategy.

Ever thought about a smart e-Negotiation platform to improve your business profitability?

ProcurEngine is an advanced digital cloud based e-Negotiation platform hosted on Microsoft Azure. For more info, please click here.

8-Benefits of Digital Reverse Auctions You Should Know About

Posted on by procurEngine

A Reverse auction is an event, conducted physically or electronically, where technically equal or equivalent sellers compete commercially in a fixed time frame to obtain a business, and prices decrease in each bid as per the rules defined by the auctioneer or the buyer.

In Indian B2B space, Reverse Auctions are gaining momentum with substantial improvement in internet connectivity even in remote locations and with the successful advent of e-Commerce websites like Amazon, Flipkart, e-Bay, Alibaba etc in Indian consumers lives. 

The 8-benefits of Reverse Auctions over physical negotiations are:

  1. Lower Cost Discovery with real-time Competitive Forces: Since final price (L1) arrives through auction participated by all the techno-commercially suitable parties, it creates a platform for vendors to work out the best deal for your requirement to grab the order. It cuts all fat hidden in the process.
  2. Suitable for Products, Services or any offering: The single platform of digital reverse auctions, is useful for negotiating any offering whether it is a product, service or any other offering.
  3. Fair & Transparent Process: As a digital reverse auction is a real-time event, vendors have to take final decisions at the time of auction only. As they know their competitive ranking instantaneously, and all process getting captured in the system, there is an extremely low scope of manipulation. It builds trust between buyers and sellers and puts pressure on the organisations to create a level playing ground for vendors.
  4. Extremely Fast and Robust Process: Unlike physical negotiations, where it takes days to finalize a deal, in Reverse Auctions even very large deals can be finalized in a few minutes. A large number of deals can also be processed simultaneously for further advantage.
  5. New Supplier Discovery and Global Sourcing: As online bidding does not require physical travel for offer and negotiation; it encourages Global vendors and other large vendors to participate.
  6. Create better vendors management: The existing vendors can be classified based on Michael Porters’ 5-forces model. The vendor industries where competition is high, Reverse Auctions are extremely successful. In customized and engineered solutions, it puts the onus to the designers and technicians to create more options or ask vendors to offer the most competitive techno-commercial design to meet end objectives.   
  7. Complete record of Negotiations: When buyers do negotiations using reverse auctions, the complete records of negotiations are available like who all were invited to participate, who participated, how prices reduced within auction period etc. This is a completely audit-able document any time in future.
  8. Low cost of ownership: The cost of ownership of using Reverse Auction is extremely low. A cloud-based model costs a few Lakh rupees for an annual subscription, and you can start using it with just basic training. There is no other hardware or software required for this.

Ever thought about a smart e-Procurement software to grow your business?

ProcurEngine is a digital e-Procurement negotiation tool to schedule and conduct reverse auctions utilising any device, at anytime and from anywhere. ProcurEngine is cost effective, innovative and is concerned with the needs to the customers.