Daily essentials like electricity has also shown sharp increase in countries where a great amount of electricity are generated from diesel. Transportation costs has also risen and is causing a huge stress on businesses and the consumers at large.
At the same time, consumers are witholding spending as an immediate reaction to rising cost. This causes companies to experience decline in sale and yet an increase in production costs.
Studies have shown that it is much easier to cut cost by 1% then to increase sales by 10% and yet obtaining the same bottom line.
It would be a natural flow for business owners or procurement managers to ask "how can I stay competitive" or "how can I cost down at a time when cost are rising?".
E-bidding
E bidding or E reverse auction as some calls it is one of the strategic tools in procurement best practices. If I could summarize it in one sentence I would call it "an effective tool for price negotiation."
Many large organisations have used it typically in the U.S. and also Europe. It is relatively new in Asia and its receptiveness is still much at an infancy stage.
Bid comes in many forms and each has its own strength. Like in an auction we have the English auction, the Dutch auction and many versions more, bidding is very much in the same fashion. the more common ones are the time limit and the rounds.
In the time limit, the bid will run for a specified time frame and the bid is dynamic where as in he rounds, the bidders will log in one price in each round and the the will go for a specified number of rounds. However, which ever method is used, the end results is the same and that is the lowest priced bidder wins.
Benefits
It simplifies your negotiation.
Effectively cost down tool.
It also improve transparency and fair play in the procurement system.
Improves the chance of new market for suppliers.
Implementation
It is often wise to have a independant consultant to help companies who wish to deploy E bidding tools lay out the process.
While it's benefit is compelling for companies to use E bid, there are couple of activities that is required and important in order to have a process that has strong integrity and professionally executed. This will ensure a fair and transparent process to ensure the integrity of the exercise so that vendors will always be satisfied and without doubts. Then this exercise is only being felt as satisfactory.
There are a good numbers of professional service available in the market and careful selection of the right party to conduct the E bidding is vital for the success of the bidding event. Some typical areas to look at is the level of security in the server and software features. Apart for this is the number of successful E bid conducted by the consultant should also be considered. Most importantly is still the level of service that the consulting company may provide you along the way and the processes used to achieve this end.
In short, E bidding is a process and one of the tools in successful Supply Chain or Procurement function. The question is always its role in the overall strategy of the company and not to be treated merely as the end point to a cost down exercise.
Happy Bidding!
