The e-auction is a great solution not only as a quick price negotiation, but also as a supplier market research. Selected companies that participate in the auction can be divided into two categories: CURRENT SUPPLIERS (with whom we have relations) and NEW SUPPLIERS (who have the potential to cooperate in the future). All bids submitted in the electronic auction are saved in the system. This allows for quick collection of offers from the market and analysis of potential savings on the purchase of goods in a given company.
What do Current Suppliers think?
Before conducting the first electronic auction, the Buyer usually has a concern: what if the current and verified supplier does not take part in the auction?
Unfortunately, Suppliers often express initial reluctance to participate in the auction. What it comes from? First of all, for fear of the risk of losing volume, reducing the margin or compromising on the background of other price offers. What’s more, they emphasize the uniqueness of their own offer and that it is the best of all possible on the market.
However, in practice, despite initial difficulties, they usually decide to take part in the auction. The prescription is to present arguments and benefits for both parties, as well as to familiarize Suppliers with the system and regulations before the actual auction.
What are the opportunities for New Suppliers?
The perspective of New Suppliers varies considerably because they are more likely to want to participate in the auction. They know that this is an opportunity to gain valuable knowledge about competitors’ market prices. They also gain a chance for potential sale and acquisition of a new customer. The electronic auction for new suppliers is attractive because they appreciate the clear bidding rules and this way of competition.
Why do more than two Suppliers usually participate in the auction?
The answer to this question is very simple! Both current and new suppliers have the same goal: selling products and establishing further / new cooperation. Competition is at stake, which is an integral part of a competitive market.
It is worth emphasizing that conducting the auction requires proper preparation. This is a careful process preceded by a preliminary market and price survey. From this it follows that Suppliers are informed much earlier about the intention to conduct the auction. What’s more, Buyers ensure that all Suppliers have equal chances to get acquainted with the purchasing system and the rules for submitting offers.
The biggest advantage of auctions is that Suppliers can react dynamically during the process. The correction of the offer, change of its terms or withdrawal is immediate. There is no error element. Feedback on the price offer is guaranteed!
If you don’t try, you’ll never find out! Electronic auction is a tool that above all saves your time. Of course, you can carry out the negotiation process in Excel and choose a traditional form, but you can improve and speed up your work. The purchasing system allows simultaneous negotiations with several suppliers in a short time. It also provides a sense that Buyer took care of every detail in the negotiation process.