Reverse Auction: Who, Why and When to Use It

Reverse Auction

So, the idea of reverse auction is no news to you. The market has been implementing Reverse Auction for at least a decade and now you are considering it too. To make things simpler, let’s take a quick TRUE or FALSE look.

 

Only large companies (like car manufactures where this is a common practice) or public sector companies can organise reverse auctionsFALSE

Although Reverse Auctions were initially run by big companies, now they are successfully implemented in all size companies, across all market sectors. All you need is a product and suppliers to compete on price.

FACT: Reverse Auction opens up the procurement process in/to small firms.


Only big companies can afford Reverse Auction, because you have to invest a great amount of money and time. Also, you need to create the Reverse Auction structure FALSE

Today, SAS (Software as Service) platforms are a user-friendly platform that can help you set up a Reverse Auction with no additional costs.

FACT: A Reverse Auction doesn’t results only in cost savings, but also in time savings, which we all know is one of the most important element you daily juggle.


Reverse auctions are a short-term tactic, for companies that want a boost in savings – FALSE

Reverse Auction opens up your business to new dynamics. Imagine your business like a surgeon’s platform kit: you have to be equipped with different instruments, in order to choose what best suits your needs.

FACT: Reverse Auction is time and cost efficient. By saving time and money you can focus on your business long term development.


Reverse Auctions are used only for commodities and raw materials procurements. Reverse Auctions are not appropriate for services. – FALSE

Back to the platform kit analogy: you can’t use a scalpel where you should use a hammer. Reverse Auction may not be appropriate for all kind of acquisition, but both goods and services with clear requirements can be easily procured with Reverse Auction.

FACT: With reverse auction you can successfully procure any product or a service with a firm-fixed-price basis and multiple suppliers.


Reverse auctions apply only to significant budget procurements. – FALSE

There is no minimum amount for organizing a Reverse Auction. Of course, there is no point of running a Reverse Auction for a pencil. But when an amount is meaningful to your business, you should choose what gets you the best price.

FACT: Reverse Auction provides a real time assessment of your companys’ standing in the marketplace.


As you can see, there are a lot of misconceptions about reverse auction.

Give it a try with Prokuria, an online platform for fast and easy procurements. In less than 5 minutes you can have yourself the first Reverse Auction!

Alina

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