Reversing Attitudes: Why Reverse Auctions May Actually Be Good For Your Purchasing Practice

Consisting of more than 200 senior executives, the following is just a sample of the comments I received from the audience:

“I do not think that buyers spend any time at all analyzing RFQ’s . . . once they have sent them out they go directly to the price auction and get on a phone and those who cut the price get the business.”

“We spend too much time working on RFQ’s . . . the RFQ process chews up dollars and time for something that is going to bring us no return.”

“It (RFQ’s) will have a negative effect on my business . . . we should charge the issuers of RFQ’s for responding.”

These of course represent only the tip of the proverbial ice berg. There is a general perception that the RFx process is ultimately little more than an elaborate fact finding mission that is geared toward bolstering and justifying a pre-ordained outcome. Otherwise known as an exercise in decision justification.

In the opening from my first book, Your Show Will Go Live in 5 Seconds, I had made reference to the above 2005 “experience” referring to it as a “pitch fork and torch” moment.

I have often joked (with a certain degree of seriousness) that had they not put me at the front of the big hall where my only escape route was at the back of the room, I might have fled the podium to safety.

This being said the sentiments of these senior executives from the supply-side of the auto industry were representative of the attitudes that were prevalent in terms of the introduction of eProcurement solutions such as Reverse Auctions in 2005.

Move ahead to 2010 . . . have these entrenched attitudes towards Reverse Auctions changed since my perilous experience five years earlier?

Joining me on Tuesday, September 7th at 12:30 PM EST to answer these as well as numerous other questions regarding what is a powerful procurement tool that for the most part is powerfully misunderstood is Dr. David Wyld from the Reverse Auction Research Center.

David Wyld

About David:

David C. Wyld (dwyld.kwu@gmail.com) currently serves as the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a noted expert on reverse auctions and e-procurement topics, being widely published on the topic and a recognized expert/consultant in the area. Dr. Wyld is the Founder and Director of the Reverse Auction Research Center.

Remember to use the following link to access both the Live and On-Demand PI Window on Business broadcast “Reversing Attitudes: Why Reverse Auctions May Actually Be Good For Your Purchasing Practice” which airs across the Blog Talk Radio Network.

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One thought on “Reversing Attitudes: Why Reverse Auctions May Actually Be Good For Your Purchasing Practice

  1. Jon – great topic. I am glad to see that some experts are looking at this topic with a more rigorous perspective. Most people have a preconceived idea of what a reverse auction is – one that is solely tied to a graph that shows a declining price per unit over time. There is much more to the technology than that, so, I wanted to share our point of view of what the key ingredients are. I am drawing from some words that one of my colleagues who described better than I ever could. He succinctly explained the four key technical ingredients to a reverse auction: transparent feedback, dynamic bidding, flexible bidding and scenario analysis.

    • Transparent feedback is any technology that provides consistent feedback to suppliers that is directly derived from the bid data.

    • Dynamic bidding is any technology that enables the bidding process to be conducted in real time, typically within a compressed time frame.

    • Flexible bidding is any technology that enables suppliers to fully describe the relationships between their capabilities, pricing and constraints.

    • Scenario analysis is any technology that enables buyers and suppliers to calculate optimal decisions based on sets of inputs and defined objectives, as well as the sensitivity of these decisions to changes to any of the inputs.

    The most effective reverse auction innovations combine these four technologies into the strategy.

    Kevin Potts
    VP of Product Management and Marketing
    Emptoris, Inc.
    http://emptorisinc.blogspot.com/

    Like

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