Definition of a reverse auction is an electronic auction where suppliers

bid online against each other for contracts against a published

specification and pre established criteria

Similar terms:

E-auctions
Onlineauctions
E-bidding

The reverse auction system is used by local governments to procure

goods and services so there are many applications for its use.

Why use a reverse auction?

Reverse auctions create an environment where suppliers bid against

each other for a contract. This environment encourages competition
with the result that goods and services are offered at their current
market value. Vendors report price savings ranging between 5% and
20% on non-reverse auction derived pricing.

Business benefits:

Reduction of paper and streamlined processes

Shorter negotiation cycle
Achieve more competitive prices
Increased transparency of the contract award process

Reduced paperwork, short procurement cycle and increased

transparency of competing bids are clear benefits.

Negotiating with suppliers individually will not always achieve the best
deal and it can be a lengthy process. This is costly for both the buyer
and the supplier. In addition, by conducting contract negotiations on-
line, the process is much quicker than the normal negotiation process,
and as a result the overall procurement cycle is significantly reduced.

Vendors report up to 30% savings in time and therefore cost of

process.

Starting a reverse auction event. Buyer and suppliers access the event
via the web. They can log in and out of the event to view and place
bids. The event can last from two hours (most common in the UK) to a
few days.
Suppliers bid anonymously against each other. Suppliers are able to
see the bids on their personal screens. There is no limit to the number
of individual bids

Reverse auction closes. The bids are analysed using preset criteria.
Some reverse auction systems provide bid evaluation tools and
assessment engines, which automate the evaluation process.

e-procurement and social media

Today’s post is the first in a three-part series by author, PI Window on Business host,
and ProcurementInsights.com blogger, Jon Hansen. We will post parts two and three
next week.

Over the past year I have written extensively about many of the emerging trends that are
shaping or perhaps reshaping the world of procurement and the global supply chain
practice.

From assessing the future of Outsourcing as a viable strategy (something that to this point
in time has eluded many organizations), to the emergence of Software-as-a-Service
“SaaS” and the corresponding technological breakthroughs associated with the utilization
of agent-based application development models, to the mainstream recognition that
Spend Intelligence is not merely the marketing hyperbole that some industry pundits had
once proclaimed it to be.

While each of these as well as other trends are without a doubt significant, the potential
impact or reach is not nearly as broad as the effect that social media and social
networking has, and will continue to have, on the profession and the business world as a
whole.

Over the next few paragraphs I will touch on three specific areas of social media and
social networking that will have the greatest impact on the industry. What is worth
noting is that purchasing professionals appear to be lagging behind their counterparts
from other areas of the business world in terms of collaborative intelligence and personal
branding. This is a trend that needs to change if the role of purchasing is to evolve
beyond the realms of a functional adjunct to a strategic influencer.

Trend #1: Conversational Marketing and the Emergence of the Vendor Blog

In previous articles I emphasized the importance of those involved in the purchasing (and
the logistics and supply chain industry as a whole) to become active participants in the
emerging world of social media and social networking – and no, they are both not one in
the same.

Far too often however, when entering this new realm of one-to-one direct interaction, the
majority of individuals as well as vendors merely attempt to transfer the old “look at me”
broadcast model to this new medium. This of course rarely if ever results in creating any
form of a sustainable brand.

You only need to look at the traditional print media, and in particular the daily newspaper
industry to gain a powerful point of reference.

Long time media industry veteran J. William Grimes predicted that all daily newspapers
in the US would be gone within five years. His prognostication, which was made at a
San Francisco conference in July 2009, was based on some startling statistics.
Specifically, that the daily newspapers only received 15% of the more than $60 billion
spent on advertising over the previous 12-month period, which represented a decline of
10% from a decade earlier.

Grimes also stated that only 5% of the population still read the dailies. This combination
of declining ad revenues and readership is reflected in the fact that venerable publications
such as the New York Times are awash in the proverbial sea of red ink.

Seeing the writing on the wall, the New York Times entered their definition of “the social
media world” through the launch of their on-line version of the printed daily. The
expectation of course was that this new electronic, web-based venue would recapture
readership and subsequently the share of ad revenues, both of which they have been
steadily losing over the past few years.

Much to their surprise and dismay, the electronic edition lost money as well.

The moral of the story, and one that would be best learned by anyone contemplating the
necessary move into the realms of social media is simply this . . . the transfer of static,
non-conversational information to an electronic format such as a blog or social
networking group will not work.

As indicated in my new seminar “Leveraging Internet Radio and Podcasting to Establish

a Sustainable Brand,” the rather pedestrian elements associated with the information
repository framework of a web site will do little to gain and keep market attention. Web
site traffic, which has long been considered the measurement of a site or blog’s presence
and influence, is largely irrelevant in this non-personal, unilateral engagement with the
visitor.

This is why Alexa ratings mean very little in terms of true market reach.

Let me provide you with an example.

In June 2009, I launched the PI Window on Business Blog primarily as an adjunct

support venue or medium for the PI Window on Business Show on Blog Talk Radio.

In that first month, there was a grand total of 217 visitors to the site.

In December 2009, the total number of site visitors grew to 6,144. This past month
(January 2010), we fell just short of the 10,000 monthly mark with 9,894 visitors.

Based on research, this trend in terms of percentage growth will likely continue
throughout 2010.

Using traditional methods of measurement (e.g., Alexa) one might consider this to be a
compelling indication of an emerging, sustainable brand. While it certainly does
demonstrate increasing awareness, it is the behind the scenes story that is most
significant.

I am of course talking about the high level of cross-pollination that occurs with the PI
Social Media Network’s other brands including the PI Window on Business show on
Blog Talk Radio and the Procurement Insights Blog.

This cross-pollination also extends to a growing number of external venues including

social networks, on-line resource sites and internet-based media outlets.

Collectively, these interconnecting venues facilitate a dynamic, real-time interaction

through a conversational technology platform that engages and responds to the individual
first.

Think of it along the lines of David Cushman’s analogy in which the means of
communication have transitioned away from the broadcast-centric many eyes looking at a
single stage, to a one-to-one interaction within communities of purpose.

Much like the proverbial honey bee returning to a hive, each individual serves as their
own filtering, gathering and sharing facilitator which inevitably determines the viral
potential of a particular message.

In short, instead of engaging or writing to the unknown masses, social media and social
networks actually enable you to connect and ultimately build a rapport with the
individual directly. It is then the individual who spreads (re pollinates) the message to
others within his or her network of contacts. As a means of creating a point of common
reference, think of it as a referral system on steroids.

For vendors who are now entering the realms of social media through the launch of a
blog, the old adage that people buy from whom “they know, like, and trust” is one that
they would be wise to remember in the context of building that level of personal rapport.
Or, as my good friend the Marketing Doctor Dr. John Tantillo so adeptly phrases it in the
title of his new book, vendors would be well-advised to recognize and respond to the
reality that “People Buy Brands Not Companies.” (NOTE: In the case of purchasing and
supply chain solution vendors, you can substitute “Technologies” in place of
Companies.)

Therefore, and looking beyond the realms of technical interconnect-ability, your brand is
like your signature or fingerprint. It is personal and it is unique. It is also at this level
that you distinguish yourself in a highly competitive world.

In terms of a Vendor’s Blog, the audience is interested in your brand, which is also your
unique and distinguishable personality. It is this very “Personality,” according to Future
Buzz’s Adam Singer, that is woefully lacking from the traditional mainstream’s highly
polished and professional looking blogs.

In short, if I had myopically focused on driving traffic to the lone PI Window on

Business Blog so that people could read about my company, and the services I offer or
the products I sell there is no way, regardless of how professional or polished it is in
appearance, that the blog would have experienced the same growth in readership
activity. This is the essential starting point.

However, and this is another key point to remember, you need to offer useful information
in the form of “branded insight.” It is this branded insight, which is centered on
experience and expertise about a subject for which one has a great deal of passion versus
a company name, logo or product offering, that builds the pre-requisite “know, like and
trust” relationship.

The real question that a remains is simply this . . . what brand is a particular Vendor
looking to build through their new blog?