2 Replies Latest reply on Jul 26, 2012 4:56 AM by Aniket Taral

    Reverse Auctions in Ariba

    Ethan Sincoff Newbie

      I  really enjoy using the Ariba tool for reverse auctions.  However, I still have some difficulty w/ the following procedures: Front and Back buffers, and bid decrements. What is the proper formula for these?  I  don't know how to figure this out.

        • Re: Reverse Auctions in Ariba
          Tim Fabiniak Master

          It depends on your pricing, but a good guideline is to make the bid decrement somewhere between 0.25% and 0.5% of the item price. The front and back buffers are usually equal to each other and half of whatever you make the bid decrement (so 0.125% to 0.25%).

           

          Suppliers often find it easier if you do these as an amount (as opposed to a percentage), but you can convert them over pretty easily. Here's an example.

           

          Your starting price for an item is $143. That means your bid decrement should be between $0.36 (143 * 0.0025) and $0.73 (143 * .005). I would use $0.50. The front and back buffer would each be $0.25.

           

          Hope that helps!

          • Re: Reverse Auctions in Ariba
            Aniket Taral Novice

            Hi Ethan,

             

            I would suggest using the percentage option because when you use the normal value option, it is a fixed value.

            for eg: if a supplier starts with a price of $1000 and the bid decrement is $20 (2%) then when the supplier reduces his price from $1000 to $800, the bid decrement still remains $20 which is 3% of 800 which may be not possible for the supplier.

            Whereas if you are using the percentage option than the supplier has to reduce the $16 which may still be possible.

             

            Regards,

            Aniket