Category Archives: Auctions

April Planning Prevents May Panning (for Gold)

Let’s face it, once May comes around, you’re under the gun to identify significant savings before the end of June when you, or more importantly, your bosses want to take some time off during the summer (and know that suppliers do the same and results will likely be limited until people get back to work full force in September).

But if you wait until May to identify those categories you are going to go after for quick wins, you’re better off panning for gold … it will have a better success rate. Even if the best method to capture those savings is identified as a reverse auction, and even though it can be run in a day, by the time you

  • run a spend analysis across categories not significantly under contract or where the contract is expiring
  • collect market / should cost pricing and demand across the categories and estimate savings opportunities
  • rank the opportunities
  • evaluate each opportunity and identify the best strategy
  • extract those where auction is the best choice
  • identify the appropriate supply base for this subset of categories
  • get the suppliers onboarded in your SRM/Sourcing system
  • send the invites and get commitment
  • run the auction
  • cut and sign the contracts

… it’s mid to late summer. But if you start this process now, limit the quick-hit projects to those where you already have most of the suppliers in the system, and get going just on those, you will have time to finish a few of them before summer hits. Otherwise, if you wait for May, you’re better off packing your pans and booking a ticket to Alaska.

The UIX One Should Expect from Best-In-Class Auctions, Part II

Last week we dove deep into the basic general requirements for any e-Negotiation platform, namely e-RFX and e-Auction, and called out the need for easy template creation and easy starting bid population and validation as two necessary key requirements (among a set of requirements). (See: Best-in-Class e-Sourcing Part I and Best-in-Class e-Sourcing Part II.)

However, as we explained in our last post, the requirements for auctions go quite deeper than the requirements for RFX. In our latest article over on Spend Matters Pro [membership required] on What To Expect from Best-in-Class Reverse Auction Technology and User Design (Part 2), the doctor and the prophet dive deep into specific capabilities required of modern e-Auction platforms in order for a user to have a great experience.

In our article, we define three absolutely requirements, as well as two requirements that will soon be absolute, for every e-Auction platform that wants to be a modern platform, including real-time connectivity monitoring.

As we state in our article, internet and software connectivity should never be taken for granted. This is a lesson one of the authors originally learned over 15 years ago (first hand) when helping run early online sourcing events at FreeMarkets. However, even today, many platforms still take this for granted, assuming that everyone has the reliable, redundant internet infrastructure of a modern first world data center. This is still simply not the case. Your supplier representatives are probably located at their factories in the middle of Nowheresville in the Lost State of Third World Country and might still be on a 1.54 Mbps T1 connection, which is only up on good days. Their data centers might be located in the nearest city, which barely has enough electricity to meet demand on a good day (when the AC or Heat is cranked up in every home and building), and subject to occasional rolling brown-outs. And so on.

The fact of the matter is the software should assume that suppliers can, and at least one supplier representative will, lose connection during an event. And if this happens, the supplier still needs to be able to bid. A modern platform allows for each supplier representative to designate one or more proxy bidders, in priority order, and if the main rep is unable to establish, or maintain a connection, the software will detect that and automatically switch the bidding designation to a proxy (who will be view only until he or she needs to take over bidding). In addition, the loss of connectivity and change of delegate will be noted and the buying organization notified.

In addition, it will detect if multiple supplier representatives lose connectivity, assume there is a major issue, automatically suspend the event, and notify the supplier representatives through other means (e.g. backup emails, fax, and/or even SMS) that the event has been suspended and will pick up either the designated back-up time or at a time to be communicated by the buying organization as soon as the issue has been identified and resolved.

This is necessary not just to maintain good supplier relations, but to prevent costly legal challenges, especially in the public sector, if an organization lost because it couldn’t bid through no fault of its own (and could prove that it was willing to make the lowest bid which, in many jurisdictions, requires the award to be given to that organization). But yet, a [large] number of auction providers (of the 50+ that the authors collectively know about) do not provide this capability.

Curious to know what the other four requirements are? Then check out our full piece over on Spend Matters Pro [membership required] on What To Expect from Best-in-Class Reverse Auction Technology and User Design (Part 2).

The UIX One Should Expect from Best-In-Class Auctions, Part I

In our last two posts we dove deep into requirements for e-Negotiation platforms, namely e-RFX and e-Auction, in general, highlighting the need for easy template creation and easy starting bid population and validation as key requirements. (See: Best-in-Class e-Sourcing Part I and Best-in-Class e-Sourcing Part II.)

However, the requirements for auctions go quite deeper than the requirements for RFX. In our latest post over on Spend Matters Pro [membership required], What To Expect from Best-in-Class Reverse Auction Technology and User Design (Part 1), the doctor and the prophet, dive deep into specific capabilities required of modern e-Auction platforms in order for a user to have a good experience.

In our article we discuss three key requirements that every platform must meet, one of which is extensive format selection and parameterization.

As we lay bare, there’s a reason there are more than half-a-dozen different auction types. One of the co-authors of this report first wrote about the application of advanced auctions models (e.g., Vickrey) to strategic sourcing back in 1999 and the other co-author has been developing, consulting on, and/or writing about auctions since 2001. Auction types include Yankee, Dutch, Japanese, English, Vickrey and Brazilian. One format doesn’t suit all category, supplier, supply market or procurement organizational needs. In fact, the ideal format(s) may change over time, even for a similar event.

Furthermore, as we point out the application of different auction models is not just a question of categories or supply market conditions. It also needs to be a cultural consideration within the buying organization itself. In different parts of the world, different formats are more accepted and just work better (even within the same company). As a result, if these auction formats are not supported out of the box, the configuration capabilities should be sufficient to more or less to mimic the core of most of these formats.

And all of these need to support extensive configuration. Because, not only is it not one-format-fits-all, it’s not one-kind-of-format-fits-all. For more details, check out our deep dive over on What To Expect from Best-in-Class Reverse Auction Technology and User Design (Part 1).

The UX One Should Expect from Best-in-Class e-Sourcing, Part II

Yesterday, as we continued our series on what makes a good UIX (which followed our posts on Smart Systems and Mission Control Dashboards), we went from generic Source-to-Pay system wide requirements to specific e-Negotiation, specifically e-RFX and e-Auction, requirements.

Specifically, in yesterday’s post, we noted that creating an RFX or Auction from scratch is a lot of work. From defining the need through selecting the suppliers through evaluating the responses to making an award, an average event typically consists of at least a dozen (or more) steps, each of which are arduous and time-consuming. That’s why the first core requirement we focussed on in yesterday’s post was easy template creation as a great template can jump start event creation, initiation, and execution over and over again (especially if it is work-flow enabled and driven by an underlying smart system).

But that’s just one core requirement. Another, as we dove deep into our follow up piece on What You Should Expect from Best-in-Class E-Sourcing User Experience and Functionality (Part 2) over on Spend Matters Pro [membership required], is easy starting bid population and validation. If there are a lot of products that need to be bid on, or a lot of bid fields that need to be filled out, and the data, or most of it, is already available in the system, or a connected system, it should be pre-populated for the supplier so that all the supplier has to do is make updates. This will not only decrease turn-around time, but potentially increase participation. If the event is run every six months, the buyer could pre-populate with the supplier’s previous bids or allow the supplier to pre-populate with their previous bids plus or minus a mark-up/mark-down and if an auction was preceded with a qualifying RFX, the starting bids can be automatically loaded. Either way, not pre-populating (or given the supplier the option to pre-populate) from existing data just doesn’t make sense.

And neither does not validating to the extent of data available. Bids can be compared to market rates and tolerances and suppliers or buyers alerted if the bids are outside of expected ranges and bids can be compared against each other and alerts given if a bid is detected to be an outlier which is off more than one deviation from the average, even if market data is available and it is within a normal tolerance. The bid might be right, and that’s okay, but buyers and suppliers still need to be alerted because erroneous bids lead to wrong awards (especially in optimization-backed events) and a lot of bad feelings in negotiations, especially if one side expects the other to live up to the bid.

These aren’t the only requirements for a great user experience, but they are additional core requirements that no modern platform should be without. For a deeper dive into this requirement as well as other core requirements, see the doctor and the prophet‘s piece on What You Should Expect from Best-in-Class E-Sourcing User Experience and Functionality (Part 2) over on Spend Matters Pro [membership required]. When combined with the rest of our series, it’s the best definition of what a modern e-Negotiation platform should contain that you’re going to find.

The UX One Should Expect from Best-in-Class e-Sourcing, Part I

As we continue our series on what makes a good UIX (to follow our posts on Smart Systems and Mission Control Dashboards), we go from generic Source-to-Pay system wide requirements to specific e-Negotiation, specifically e-RFX and e-Auction, requirements.

As the co-authors of this series, the doctor and the prophet, laid bare in our next deep dive on What You Should Expect from Best-in-Class E-Sourcing User Experience and Functionality over on Spend Matters Pro [membership required], creating an RFX or Auction from scratch is a lot of work. A lot of work. At a minimum:


  • Define the basic need that consists of products, services or bill of materials

  • Define the requirements for those products

  • Define the requirements for doing business with the organization

  • Define the information needed from the suppliers

  • Select (or define) the suppliers

  • Select (or define) the contacts

  • Set up the timeline (and milestones)

  • Send out the RFX invitations or launch the Auction

  • Receive responses back

  • Verify completeness and correctness

  • Evaluate, collaborate with teammates

  • Make an award

If all of this has to be done, from scratch, for every RFX or Auction, very few will get done. Considering that real benefits from these platforms only materialize if a lot get done, obviously this has to be as quick and easy to do as possible — and the platform will, thus, only have a good U(I)X if it is as quick and easy to do as possible.

So, what are the core requirements? Many, but in this post, we’re only going to focus on one of the core requirements — easy template creation. Given that the basic needs for a category don’t change much from event to event, the supply base doesn’t change much from event to event, the business and insurance requirements don’t change much from event to event, and so on. Thus, the ability to quickly and easily define templates that can be used over and over again is key. What should this template creation look like? Check out the doctor and the prophet‘s latest piece on What You Should Expect from Best-in-Class E-Sourcing User Experience and Functionality over on Spend Matters Pro [membership required]. (Vendors, this is the best description you’re ever going to get.)