Risks associated with e-auctions – how to deal with them?

Purchasing e-auctions, also known as reverse auctions, are an interesting solution that can bring significant savings. It is not surprising, therefore, that they are gaining more and more fans.

It is generally believed that e-auctions can improve price effectiveness. They can also allow partial elimination of time-consuming and often complicated business negotiations with suppliers.

However, e- auctions carry some risks. What kind of?

Deterioration of relationships with current suppliers

Critics of e-auctions often emphasize the fact that they have a negative impact on the relationship between buyers and suppliers. It is typically believed that e-auctions are aimed only at applying price pressure on suppliers.

So what can buyers do to improve their position while maintaining proper relationship with suppliers?

The key to effective use of e-auctions is a proper analysis for which groups of materials, goods or services they should be applied. It turns out that in the case of accurate selection, e-auctions do not cause negative reactions of suppliers.

The second important issue is the smooth implementation of the results of auctions and the contact with suppliers outside of the tender processes. This applies both to purchasing and purchasing’s internal stakeholders.

Introducing clear e-auction rules and compliance  with them helps to build appropriate relationship with suppliers.

Increased workload in the purchasing department

The third serious threat associated with e-auctions is an increasing workload of buyers. Performing e-auction and , if they are not integrated, uploading results into systems is an additional non-value adding task for the purchasing department.

However, there is a very good solution for this problem – the implementation of the agile IT tool. Modern integrated solutions of e-auctions are reducing workload and also save time of buyers. As a result they can concentrate on activities that bring higher value to the company, like preparation for business negotiations, implementation of suppliers’ development programs or engagement in the upstream phase of the  process – work on the needs definition.

Feel free to contact us to discuss capability of the Eveneum Strategic Sourcing Application [ESSA] in the area of e-auctions.