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Implementing Reverse E-Auctions: A Learning Process The Cutting Edge in Auctions: Dutch Auctions. MIS 434. Reverse Auctions. A reverse auction (also called procurement auction, e-auction, sourcing event, e-sourcing or eRA) is a tool used in industrial business-to-business procurement.

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implementing reverse e auctions a learning process the cutting edge in auctions dutch auctions

Implementing Reverse E-Auctions: A Learning ProcessThe Cutting Edge in Auctions: Dutch Auctions

MIS 434

reverse auctions
Reverse Auctions
  • A reverse auction (also called procurement auction, e-auction, sourcing event, e-sourcing or eRA) is a tool used in industrial business-to-business procurement.
  • The role of the buyer and seller are reversed, with the primary objective to drive purchase prices downward.
    • In an ordinary auction (or also known as forward auction), buyers compete to obtain a good or service.
    • In a reverse auction, sellers compete to obtain business.

Source: Wikipedia

focus of the reverse auctions paper
Focus of the Reverse Auctions Paper?
  • To illustrate how firms using e-reverse auctions have succeeded
  • The main focus is to illustrate how organizational learning is important in managing the auction process and the relationships this creates with suppliers
build e auction competencies
Build e-Auction Competencies
  • All five case study firms initially used third-party service providers to explore and gain experience with the e-auction process.
  • Once e-auctions became a permanent fixture, supply managers had to decide between continuing to outsource e-auctions and developing their own internal e-auction competencies.
    • All firms eventually developed competencies
build e auction competencies6
Build e-auction competencies
  • Two factors influenced the decision to build competencies:
    • Third-party e-auction administration costs
    • E-auction and supply market knowledge.
e auction competencies summing up
e-Auction Competencies: Summing Up
  • All case study firms started with a third-party service provider to acquire e-auction knowledge and experience.
  • As their internal competencies developed, the firms reduced their reliance on full-service providers and moved e-auction processes in-house.
    • The direction in which they move depends on their knowledge and the auction administration costs
organize for knowledge management
Organize for knowledge management
  • Organization-wide learning of e-auctions occurred when the pertinent experience and knowledge of supply managers is captured, accumulated, and shared within the firm.
  • The Point? Firms need to organize processes and personnel around the e-auction function
create a holistic sourcing process
Create a Holistic Sourcing Process
  • The e-auction must be considered as a holistic process that extends from the first step of selecting the items or services, through all other steps required to implement and realize the savings
  • The Point? As with other supply chain sourcing activities, the full value chain must be considered
focus on total cost of ownership tco
Focus on Total Cost of Ownership (TCO)
  • The TCO philosophy emphasizes that sourcing decisions should consider all costs associated with acquisition, possession, use, and disposition
    • The lowest price doesn’t always win
    • TCO is influenced by switching costs, infrastructure issues, and trust
experiment with e auction designs
Experiment with e-auction Designs
  • Supply managers explored new auction designs
    • Multi-lot e-auctions
    • Changing the type of real-time information visible to bidders (price feedback versus rank feedback)
    • Using different pricing rules
    • Enabling multi-attribute auctions that focus on more than just price.
the future of e auctions
The Future of e-Auctions
  • Most Supply Chain Managers thought e-auctions were helpful
    • Greatest savings occurred earlier
    • Moved from standard items to more specialized
    • Price declines would occur if…
      • New suppliers, in particular, from foreign countries participate in the bidding
      • Suppliers\' costs are reduced, due to raw material price reductions, new process changes, and/or product innovations
      • Industry-wide excess production capacity or inventory exists temporarily, and/or
      • Suppliers focus on revenue generation rather than profit maximization, such that they are willing to lower prices below their break-even levels.
benefits of e auctions
Benefits of e-Auctions
  • Save time
  • Reduce the number of suppliers used
  • Standardize the sourcing process
  • Help organizations standardize contract terms and conditions
  • Buyers can be assured the obtained price is competitive
the cutting edge in auctions dutch auctions
The Cutting Edge in Auctions: Dutch Auctions
  • Dutch auction: the auctioneer begins with a high asking price which is lowered until some participant is willing to accept the auctioneer\'s price, or a predetermined reserve price (the seller\'s minimum acceptable price) is reached

Source: Wikipedia

the cutting edge in auctions dutch auctions15
The Cutting Edge in Auctions: Dutch Auctions
  • Dutch Auctions are a fast way to dispose of materials
    • Bidding is easier
    • There is typically only one bid
    • Bidders typically bid earlier
  • Dutch Auctions tend to generate higher prices
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