The steps involved in running a successful eAuctions

 Last week I went through the various forms of eAuctions available to the procurement professional; from the traditional reverse English through to Japanese, Dutch and Multi Stage variations.

Choosing the most appropriate auction for your commodity or category area will help ensure a successful outcome but when it comes to actually setting up an event and seeing it through to completion there are a few simple steps that I would suggest are followed.

1.       In the beginning

·         Make sure there is a single point of contact responsible for the auction. Suppliers don’t like having to deal with a range of different individuals and it ensures that the communication channels are clear. This single point of contact also needs to be reciprocated on the supplier side

·         Choose the right auction type (if it’s applicable at all)

·         Communicate a process plan for the auction both internally and externally

·         Make sure that the specifications for the products or services being auctioned are as clear as possible and there is no room for ambiguity

·         Decide on the selection criteria as to who is going to progress through to the eAuction – assuming that RFI etc. has been run beforehand.

2.      Design

·         Decide award criteria. Does the lowest bidder win in all circumstances? Make it totally clear that the lowest price may not always win.

·         Plan and agree timescales for live auction both with your internal stakeholders and the suppliers.

·         Design and build the auction as well as the bidding strategy including the rules, extensions and award criteria.

·         Ensure that all suppliers are operating on a level playing field (eAuctions are transparent) by standardising the communication and training you provide.

·         Plan in the eAuction to run at a time that will suit you but also allows everyone to fully participate. This may involve considerations of multiple time zones for example or setting an auction to close past standard working hours to speed everyone up.

3.      Communication and Training

·         Make sure that the Supplier is fully briefed on the eAuction process, including both the format of the event and the timings. Timing will include both the actual event and the expected steps post event

·         Train, train and train again. There is nothing more frustrating than having to halt an event because a supplier makes a mistake or doesn’t know what to do. Suitable training ensures that there are no excuses on the day of the event.

·         Run a test eAuction as part of the final training consisting of all the same rules, extensions etc. This gives suppliers an opportunity to familiarise themselves with the format and also gives you a chance to make any last minute changes should they be required.

4.      The Live eAuction

·         Log in in advance to make the eAuction available to all participants and check they are logged in prior to the actual event.

·         Provide contact details for a technical helpline for suppliers during the live event and arrange for a support team to enter buds on the supplier’s behalf on account of any technological issues.

·         Only send out messages that have been agreed and vetted prior to the event

·         Get your stakeholders involved! eAuctions can be good things to watch and drum up some excitement

·         Don’t be afraid to make changes to the event as it happens however ensure that the possibility of those changes was communicated in advance.

5.      Post eAuction

·         The responses should be assessed against the initial criteria agreed with the stakeholder team and the winner selected accordingly.

·         Conduct your post auction negotiation if it is applicable and was specified as a possibility at the outset.

·         Inform participant of results and provide them feedback about their performance in the sourcing process and where they missed out – it can’t hurt and they will want to hear it.

·         Request feedback about the sourcing process from your supplies and your stakeholder team. Anything that can be learned for an improved future performance is useful.

6.      Watch Outs

·         Do not allow suppliers to increase their bids (unless it’s a forward eAuction obviously) and be quite explicit in the rules about this. Suppliers can ‘fish’ by lowering their bids to see where the winning position is and then request that their bids are raised again.

·         Do not allow suppliers to participate who have not been through any prior training or the prior evaluation process – everyone should be on a level playing field at an eAuction

·         It goes without saying really but don’t bid yourself!

·         You may have suppliers in the event that have no intention of honouring their bid and only wish to drive down the price for other participants. You need to be conscious of this before the eAuction but be wary…although a better result may be obtained it may not be sustainable and may also demotivate others in the event and derail any supplier – buyer trust.

·         If you state that the lowest price or the highest score in a multi variable auction will win, do not then pick a different supplier to win the auction if this was not achieved by that supplier.

·         In a multi variable auction, display the position of suppliers taking into account all the criteria, and don’t display price positions only

·         Don’t select an eAuction as the most appropriate route for the sake of it. Consider whether it is appropriate and if so the form of the event.