At Scanmarket, we keep seeing increases in eAuction usage and 2020 was a year of record breaking quarters...
There’s no easier way to start a heated discussion in procurement circles than to bring up the topic of eAuctions. Some love them, some hate them, but nearly everyone has an opinion. While that has made for great content in blogs and conference sessions, it’s also clouded the issue. When eAuctions first started around the turn of the century, conventional wisdom held that eAuctions were only suited for:
- Simple categories and products only (no services)
- Focused solely on price
- Tilted in favor of buying organizations
- Needed each project to be perfect for it to work
- Hard to learn and execute
Each of these reasons were totally wrong. eAuctions have developed into a bidding approach that has wide applicability and acceptability.
Several factors have led to this increased adoption, acceptance and usage:
- The software platforms are significantly more advanced providing new functionalities for incorporating information, process and feedback. This has been done through more structured user design and development approaches
- Much more information is readily available about the process and how to make eAuctions successful and standard process now emphasizes bidder inclusions, information and transparency
- New strategies have been developed to make eAuctions not just viable but successful in areas that previously were more difficult such as limited supplier competition, incorporation of factoring for non-price variables, switching charges and alternative eAuction formats such as Japanese and Dutch
- Non-savings benefits such as compliance, audit trail and efficiency have encouraged usage
- Statistics and intelligence are now widely available to help users identify likely categories for success based on current market trends and what’s been successful for others
Additional read: Get the Latest eAuction Savings Report
- New categories in services, transportation and others have become “hotbeds” of eAuction activity with thousands of events conducted on the Scanmarket platform
- Process improvements have made it even easier for bidders to participate and more bidders means more bids means more savings
Additional read: How to Optimize eAuctions to Boost Savings
- Why not instead of Why? It used to be that the event needed to be perfectly suited in order to be put through an eAuction. Now, the more typical approach is defaulting to an eAuction unless there’s a reason not to. A rule-of-thumb that works well is the 3 C’s. If there is a Competitive supply base, Comprehensive specifications, and Compelling spend, it’s probably a good candidate for an eAuction
These changes in technology, information and process have greatly opened up the acceptability and adoption of eAuctions. As eAuction specialists, we at Scanmarket are involved in events every day. Unlike the early days, it’s rare that we hear participants, especially bidders, express surprise or dismay when they are invited to an eAuction.
eAuctions should be used by all organizations as an important part of their overall sourcing program. While they’re not suitable for every project, they’re appropriate a lot more times than most people think.