Introduction to e-Auctions
e-Auctions are one of the most effective ways to negotiate with suppliers. They get savings anywhere between 4-17%. Your e-Negotiation is a platform for your organizations to create faceless, un-biased negotiations resulting in best prices – always.
Not only this, e-Auctions also record a complete trail of the negotiations like who all were invited and participated in the negotiations, initial price, reduction trends and final price comparative etc and it is available for future audits.
However, organisations need to create an eco-system to get maximum benefits of the e-Auctions. Some of the key essentials to make e-Negotiations successful are as under:
Step 1: Motivate and Encourage Suppliers Who Bid Aggressively in e-Auctions
It is most important that you promote the culture of aggressive bidding by suppliers during e-Negotiations. You can motivate their behaviour by some very simple steps like:
No Negotiations After e-Auctions
Immediate PO/LOI
Rewarding Terms for Contracts Negotiated Using e-Auctions
Step 2: Reward Employees Who Create Innovative e-Auctions
Our team members can do wonders by bringing creativity in e-Negotiations. It can be as simple as using a combinatorial auction in place of itemized auctions or using Dutch Auctions in place of standard English Auctions or appropriate usage of λ-Factor etc.
The organization must reward employees who bring maximum value for the organisations. The employees can be rewarded by measuring:
Savings Achieved Using e-Auctions
Purchase Orders Placed on New Vendors
(e.g. Min 10% of total purchase on new vendors approved in current and last financial year)
Best e-Negotiation Strategy
Special Weightage for e-Auctions
Step 3: Quantify, Measure and Display Savings
It is important to align all members of the Supply Chain in bringing this value. Common goal and its daily tracking help team to put a bit of extra effort in extracting more value from the e-Negotiations without by-passing the system.
Step 4: Improve e-Negotiation Experience for Suppliers
Lastly, it is very important to take feedback from the suppliers on their experience of the e-Negotiations. Any constructive feedback must be recorded and corrective actions be taken to improve the suppliers' experience. A good platform is an asset for the organization's long-term growth strategy.