E-auction is the final step of an E-procurement process. In the e-auction process, suppliers, in the same time they are bidding. They are placing, on the platform, the bid, competing one against each other. Usually, an e-auction step has a very limited time length, suppliers are starting to place bidding, they are doing this continuously and when the time has ended, the lowest bid is the winner of the auction. Traditional auction is used to reduce the price and suppliers are competing to reduce the price. But this is not the only way of using the auction. The limit of using the auction is the limit of your imagination. You can use the auction to increase the percentage of discount, you can use the auction to increase the payment term, you can use the auction for whatever you want, as long as you can define it and you can simply and clearly transmit your requirement to the suppliers. Actually, the auction is, if you want, a negotiation in the same time with many suppliers. It’s compressing the time of the process of procurement very very much and you are very sure that in a certain moment in time you get the best conditions. This is the standard auction if you want.
I have also used the Dutch auction. In a Dutch auction there is not a long row of bidding from all the suppliers, it is only one bid. The first bid is the winning bid. So, suppliers are looking in their computers, they are seeing what the requirement from the buyer is, this requirement is scheduled to move as the time is passing. At a certain moment in time one supplier said „this is convenient to me” and he’s bidding. And this is the winner. There’s only one bid. It is strong, it’s a very strong tool. You need to understand that e- auction is a tool and it is producing the results that you want and you plan, but the best result is when you keep this tool inside of an e-procurement strategy, if the entire department is educated to produce the results using all these steps of RFI, RFQ ending with e-auction. This is outperforming the market and getting the very best results.
As examples, I have been part of managing direct auction processes on 3 continents and I have more than 350 projects of e-auction that I have been part of or I have been driven or done by myself; everything that you can imagine you can auction. You an auction maintenance services, you can auction cleaning, you can auction production consumables, you can auction even, if you want, services of translations. So, the limit of using e-auction is the limit of your imagination and the limit of your discipline because e-auction is a very disciplined process. As long as you have a very clear target, as long as you have a very disciplined procurement department, you know exactly what you do. You can use e-auction everywhere and you can be sure that you get the best results out of this process.