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Anybody can acquire the technology to run online auction. But running successful online auction – auction that drive top-performing suppliers to lowest market prices, takes both experience and deep commodity knowledge. Below are some important lessons we have learned. |
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Saving Opportunity Analysis |
- Online Bidding (Auction) is not a replacement for a strategic sourcing process - sourcing strategy becomes more important
- Is now the time to hit the market? Is it a buyer’s or seller’s market? What is driving the suppliers?
- Challenge your “strategic supplier” relationships – Are you really benefiting? Are they competitive? To what part of your business strategy do they contribute? How?
- Use of a reverse auction is not necessarily an alternative to catalog buying or strategic relationships; it may be a precursor.
- Online auction may be a transitioning device for a relationship commodity – from one relationship (from which you may not be benefiting) to one with greater benefit for you.
- Use online auction to test the competitiveness of long-term supplier (make sure that there is competition and excess capacity in the market)
- Establish criteria and authority to decide, together with your commodity team. Get that buy-in before the auction.
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Best Practices