Any organization needs to purchase raw material in the form of goods or services to run their business operations. Generally, there is no shortage of suppliers in the market and organizations look to procure their supplies from the supplier who can offer them the best terms in terms of price or delivery. So, how does an organization choose a supplier who offers them the best price? Reverse auction is one of the processes that helps organizations choose a supplier who offers the best price.
Let’s discuss a simple 5-step procedure through which you can implement the reverse auction technique at your workplace using online procurement software:
Step 1: Identify and list-out business needs
Make a list of all the products that you want to purchase and create a requisition. Based on the organization policy, the requisition will be approved by the higher authorities of the organization.
Step 2: Make sure your business needs reach suppliers
Once you finalize the requisition, create a URL and publish it in the areas where your suppliers could identify and reach out to you (in this case, publishing the URL in social networking sites could be preferred).
Step 3: Time for suppliers
Your suppliers can simply click on the URL, view the requisition order, and review the product list. Interested suppliers fill the product sheet with their own best prices and submit the form.
Step 4: Analysis
The price of those suppliers who have submitted their details can be compared using online procurement software. This helps you identify and choose a supplier who offers the best deal (in price, or less time in delivery, or benefits). As it is a smart solution, depending on the software set up, the best supplier can be picked out automatically by the solution.
Step 5: Confirm a supplier
Online procurement solutions allow users to choose the best supplier based on the organization’s requirements, and register the same to send a purchase order. In this cycle, the organization may contact the respective supplier to find out if any adjustments could be done; if these adjustments are made, price is knocked down a bit more which helps organizations save on expenditure.
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