Internet-based e-auctions have been a feature of procurement technology since 1995, when McKinsey pioneered the technology with FreeMarkets, and it was well-adopted in the parts and automotive industries, as well as much of manufacturing. Since then, eAuctions have represented a small portion of enterprise sourcing, with widespread adoption in very limited sectors and companies, but limited use in most mainstream procurement organizations.
Traditional e-auctions tend to be very complex to set up and support, and while they absolutely produce remarkable results, they are often unpopular with suppliers and difficult to coordinate with stakeholders. Setting up an e-auction through existing technology is time consuming and highly nuanced, with dozens of auction types and settings, to the point where many e-auctions must be supported by professionals at the software company in order to launch properly.
Fairmarkit has embarked on a journey to change how auctions are perceived and executed. We want to make reverse auctions simple, straightforward and easy for everyone involved. So we did!
Fairmarkit makes it easy for our buyers to configure and execute auctions on our platform. By leveraging auctions on high value items or high value events, you can get increased engagement from your suppliers and ultimately better outcomes from the event. Events with low complexity in the items being sourced are great candidates for an auction via Fairmarkit. Our goal is to help you to improve your relationship with suppliers, and to maximize the outcome from your sourcing event.
To configure an auction, a buyer can leverage the same familiar experience they use to configure a Request-for-Quote (RFQ) in Fairmarkit. At the top of the page, buyers will see a new toggle option that allows you to convert a RFQ into an auction. Once the toggle is flipped, buyers can now provide additional details related to the auction. Typically, it is advisable to inform suppliers about the duration of the auction, and the duration of the preview period for the auction. Buyers can also describe how your suppliers can engage in the auction with options that include:
Via a chart, buyers can get a real-time view about the progress of the auction to see how the suppliers they invited are responding. You can also choose to include partial bids in the chart. The reverse auction functionality provides suppliers with additional visibility into bid activity, with live updates, so they can see exactly how competitive they are throughout the entire event.
Fairmarkit’s auction capability provides buyers with competitive prices for the goods and services you are procuring. It also streamlines the procurement process and saves time, since each supplier is not required to submit a full proposal. Similarly for suppliers, Fairmarkit’s auction allows smaller businesses to compete in the process. A winning bid can lead to more business, as most buyers will look to source their ‘non-core’ products via auctions.
Interested in seeing a demonstration of how to use the Reverse Auction functionality? Watch here