In the second part of this post, we’ll continue where we left off and see some more benefits of reverse auctions for buyers and sellers.
Not constrained by location: Even though they would like to bid for a contract, many suppliers are often constrained by their locations. With reverse auctions conducted using online procurement software, sellers can break free of this constraint and reach markets they never before could.
Now that we’ve seen the benefits of reverse auctions for sellers, here are some benefits for buyers.
Suppliers do the heavy-lifting: Purchasing is not the easiest of activities for any organization and it involves a lot of work from several employees. Finding reliable suppliers is another major headache. With a reverse auction, though, it is the supplier who does most of the work. All the buyer needs to do is to list the requirements of the organization and publish this list where it is accessible to suppliers. Once suppliers respond, the buyer can then compare the bids and choose the one that best fits the needs of the organization. Instead of the buyer chasing the supplier, here, the suppliers court the buyer.
Savings on time, labor, and money: Procurement is a quintessentially wasteful activity which needs to be made efficient, a process that involves several iterations. With reverse auctions, this path to efficiency becomes easier. As noted in the previous point, it is the supplier who does most of the work. The buying organization can use the software and the automation it offers to reduce the manpower that has been put to use for purchasing. They can also save on time and money spent.
Technology as an equalizer: Just as it is for the sellers, reverse auctions can also help buyers by opening up new horizons for them. Maybe there is a vendor who offers supplies of a better quality for the same price somewhere in China. Maybe a vendor can procure the exact raw material an organization needs. By taking this route, the buyer can bring everyone into the fold.