This week's Knowledge Nugget will touch on the benefits of auctions.  This 3 part post will cover why auctions work, auction decision making,  tangible benefits of auctions, proof of savings, when not to used  auctions, and common misconceptions of auctions. Part 2 will discuss tangible benefits of auctions and proof of savings.


Tangible Benefits of Auctions


  • Improved Competition: Price transparency enhances the competitive bidding
  • Environment to generate additional savings
  • Faster Execution: Auctions speed bid response time by providing real-time feedback to suppliers
  • Efficient Decision Making: Auctions improve efficiency and facilitate group decision-making
  • Flexibility: Auctions can support a variety of bid formats


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The Savings Proof is in the Pudding


9-9-2010 2-34-14 PM.pngAuctions drive incremental savings of five to seven percent on average versus RFP alone 10 years of Ariba data shows that:

  • Our customers historically average 17 percent savings using eSourcing practices that include auctions
  • Auctions drive incremental savings of three to four percent from incumbent suppliers over RFP
  • Reductions in the cost of products/ services go straight to bottom line
  • Has a significant impact on organizational health
  • Reduced cycle times for resourcing activities (up to 90%)

*Data based on all Ariba-managed sourcing projects run on Ariba software





Did you know...


Within your Ariba Sourcing application you can do the following types of Reverse Auctions:

  • Reverse Auction
  • Extended Reverse Auction
  • Reverse Auction with Bid Transformation
  • Total Cost Auction
  • Dutch Reverse Auction
  • Index Based Auction by Amount of Percentage


Don’t forget in the cloud there are buyers and sellers:

You usually use Ariba Sourcing to collect information or pricing on things you want to buy. So sellers, don’t forget in a forward auction, you want to sell rather than buy. Instead of inviting suppliers to compete to offer you the lowest cost, you invite buyers to compete to offer you the highest price.


Next post covers alternative strategies and common misconceptions of auctions. The link below will take you there.

Ariba Knowledge Nuggets: Ariba Sourcing - Why Auctions Work! (3 of 3)




This has been another Knowledge Nugget post brought to you by Beverly Dunn.

For more information or details please feel free to contact me!