Private businesses and government entities alike are discovering the benefits of reverse auctions as a powerful procurement tool that creates a competitive market place for the products, services and even complex projects they procure via bids. When implemented properly, reverse auctions support the strategic sourcing goals of lowering the cost of purchases and positively impacting budgets.
EASI reverse auction solutions enable your organization to realize the benefits of reverse auctions via a success-based, supplier-funded model at no direct cost to your organization. As your full service partner, EASI provides the following services:
- Bid Selection to Ensure That Suitable Bids Are Run
- Additional Supplier Sourcing
- Bid Specification Consulting
- Strategies for Supplier Stability and Participation
- Supplier Training
- Event Management
- Web-Based Electronic Sealed-Bid Platform
- Event and Bid Summary Reports
What Is a Reverse Auction?
As the name suggests, reverse auctions are, in many respects, the opposite of traditional auctions. In a traditional auction, a seller offers an item, and potential buyers compete with each other for the purchase. Potential buyers continue to drive the price up until no other participant is willing to bid any higher.
In a reverse auction, multiple suppliers are vying to sell goods and services to a single buyer. The potential suppliers are driving the price down until a pre-established bidding period ends or until no supplier is willing to offer an even lower price. Contrary to traditional tender processes, reverse auctions allow companies to submit multiple prices.
Reverse Auction Benefits
Budget pressures necessitate the investigation of different methods to reduce overall costs. The reverse auction process represents a relatively new procurement tool that offers a range of benefits, including:
- Cost reductions, which offer the opportunity to free up funds.
- Less time spent negotiating best-and-final pricing, which leads to substantial administrative improvements.
- Achievement of true market pricing. Reverse auctions can potentially open up the market for a greater number of suppliers, including those who do not have the sales and marketing resources of larger companies, thereby giving smaller businesses an equal basis to compete.
- A more transparent bidding process. Suppliers are able to submit multiple prices instead of having only one opportunity to submit one “best guess” price. Online bidding allows for a better understanding of prices.
- Encouragement of business efficiencies. As reverse auctions reduce the price of goods and services purchased, they strongly encourage suppliers to improve their business efficiencies and become more innovative. Furthermore, tender specifications are more precise and generally written to a higher standard.