1 Reply Latest reply on Sep 23, 2014 5:00 AM by David Morel

    Start Sourcing - First Reverse Auction Assistance

    Phil DelDebbio Newbie

      I am working towards doing a reverse auciton via the Start Sourcing function.  Looking for tips or guidelines. Intention is just to include a handful of participants via direct invite.  Does anyone have experience with that approach?

        • Re: Start Sourcing - First Reverse Auction Assistance
          David Morel Master

          That is a pretty broad subject, but let me try to assist. Here are some things to think about before running your first auction:


          1. Is the spend a good candidate for an auction?  Is there a lot of competition between the suppliers? Will they fight for your business?  Is the spend something that can be clearly defined so they are bidding on the same thing? Make sure you are good with using either of the suppliers if they bid the lowest. Have at least 4 hungry bidders? If not, consider a RFP.
          2. Build your event as a test event first, then practice bidding as a supplier to make sure it functions the way you expected.
          3. Build your event early so you have time for Discovery suppliers to respond before the event bidding starts. All StartSourcing events have to have a Discovery post and you can find some good potential suppliers.
          4. Make sure you have bid increments set in a way that suppliers make meaningful moves with each bid, .5% to 2%. Smaller increments will lead to more bids in an event, but if you make the increment too large, they will leave money on the table.
          5. Make sure you set the event for automatic extensions when a bid comes in late in the event. Typically, setting it for a 2 minute extension if a bid comes in in the last 2 minutes is good. 
          6. Set reasonable starting bids, don't make them too low or you might not get all suppliers to bid.
          7. Show what you want them to see.  Do you want to show them low bid? Or just rank?  Usually, just showing them rank is good.
          8. Run a practice auction with the bidders to make sure they understand how to use the system.  You can just make a copy of the existing event and change the items a little bit. If you are bidding out machined parts costing $15 a piece, make the practice items cupcakes at $1 each with properly adjusted bid increments. Make it clear to the suppliers that waiting to the last second is not of any value due to the extensions, that way they don't miss getting a bid in.
          9. On the day of the real event, make sure you know how to get a hold of the suppliers and they know how to get a hold of you. 
          10. Don't let suppliers game the system by giving you bids offline after bidding closes. You should have made it clear that the low bid wins the auction.  Also, don't you ruin things for future auctions and go to the suppliers that didn't win and ask them to lower their price.


          Overall, be prepared, organized and make sure they suppliers are prepared for the bidding event.  Good luck! 


          Have you ran a RFP yet? If not, might be good to do that first.


          David Morel