This is part 2 of a 4 part guide to setting up eAuctions. To view parts 1, 3, and 4 please follow the links at bottom.

 

1. Bidding Rules

 

Revised Bid Improvement Rule

 

  • Will shorten the length of the event
  • Forces downward pricing
  • .25% good rule of thumb

 

Preview time

 

  • Provide adequate time for quote development
  • Supplier Training
    • Most likely a first-time experience
      • Software training, practice event
      • Online Open RFQ bidding strategy

 

Q&A Discovery

 

  • Suppliers may identify missing information
  • Buyers must have time to gather and respond

 

Prebids


Key strategic tool
Provide time to exploit it’s use (more to follow)

 

2. Timing Rules

 

Open Bidding Time

 

  • All Lots to start at same time
  • 45 minutes for 1st Lot tends to be optimum
  • 10-15 min. for next lots to be closed after 1st lot.
  • Depends on complexity of bidding calculation

 

Provide time to resolve supplier technical issues

 

  • Bids will generally gravitate to the end of the event
  • Longer events do not increase competition/bidding and generally only increase the waiting

 

Extension Time

 

  • Extension time of 5 min. means that a bid placed or revised within the last 5 minutes resets the time remaining to 5 min.
  • Allow enough time for a supplier to comprehend a newly revised bid and react to that change
  • Extension periods that are too long are not recommended
  • Short extension periods can limit savings by excluding activity
  • 3 to 6 min. is typical

 

4 Elements to an eAuction setup parts 1, 3, and 4

Part 1: Pre-Bids

Part 3: Event Testing, Setting Ceiling and Reserve Prices

Part 4: Supplier Visibility Formats