In the business of procurement, you are already aware that either a government or a corporation will have to acquire the services or products of a smaller business entity. If you are one of the smaller business entities that are willing and able to participate in such venture, then you should also be familiar with reverse auction or reverse bidding. In reverse auction, like in any process involved in procurement, expect a great deal of competitiveness from all the other participating vendors. What more could possibly bring out the best from your business than a bit of obstacle in the rat race, right?
What Is It? How Is It Done?
In the area of reverse auction, government purchasing becomes a bit more interactive. In a normal, run-of-the-mill auction, the bidder who gives the highest price wins. But in reverse bidding, the bidder who gives the lowest bid wins. The bidders here are the vendor candidates in the government purchasing process. Here, the government will be posting a list of the products or services that they require. Then, as a small business entity interested in getting that procurement contract, you will have to give your quotes on the specific items or services required in the post. As a response to the posted quotes of all the participating vendors, the government agency will then choose the small business entity with the best quote given, depending on the company’s reputation, time of delivery, costs, and other factors that the agency deems relevant.
Implications
In every business venture, various groups that participate in this complex procurement web are greatly affected. Read on and find out:
Good for the businesses. Reverse bidding gives great opportunity for the participating companies in the auction to express what they got at a much lower price without compromising their overall quality. This is a very clear-cut method of seeing who among the participating vendors can REALLY deliver.
Encourages competition. A greater degree of competitiveness arises in the government purchasing process when you talk about reverse auction. A myriad of companies enter the bidding process while they still maintain the high quality of their product or service. If you want to participate in this activity, be aware of the great amount of stability that your business should possess to be able to compete with the other up and ready companies in your field. The high level competition makes all vendors be their best in every way, resulting to a much more improved product, whatever the cost.
Convenience. Through the ease of e-procurement, you could already enter a reverse auction online. You could conveniently choose the type of e-procurement that is most advantageous to your company and get on with the business at hand. Try your hand at e-procurement and see how it can benefit your business.
Who Is In the Reverse Auction Circle?
Because it is gaining popularity in the government purchasing world, companies like Toyota Motor Corporation, eBay Incorporated, GlaxoSmithKline PLC, and FMC Technologies Incorporated adhere to reverse auction or reverse bidding. Who knows? In time, maybe your company would be in line with these large corporations through reverse bidding.
So, are you ready to get your feet wet and know more about the ins and outs of reverse auctions? Tune in to more of our posts for more juicy essentials on the topic. You are also free to like us on Facebook or perhaps share your thoughts with us on Twitter – especially those about reverse auctions and other e-procurement info.
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