Reverse Auctions

• A reverse auction (also called procurement auction, e-auction, sourcing event, e-sourcing or eRA) is a tool used in industrial business-to-business procurement.

• The role of the buyer and seller are reversed, with the primary objective to drive purchase prices downward.– In an ordinary auction (or also known as forward auction),

buyers compete to obtain a good or service. – In a reverse auction, sellers compete to obtain business.

Experiment with e-auction Designs

• Supply managers explored new auction designs – Multi-lot e-auctions– Changing the type of real-time information visible

to bidders (price feedback versus rank feedback)– Using different pricing rules– Enabling multi-attribute auctions that focus on

more than just price.

Benefits of e-Auctions

• Save time• Standardize the sourcing process• Help organizations standardize contract terms

and conditions• Buyers can be assured the obtained price is

competitive