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eAuctions – The Pros, the Cons and Excel

Nick Drewe

Content about Digital Transformation has never been a hotter topic. At the time of writing there are: ‘485,000,000 results in 0.47 seconds’ on Google. To put that into context, Brexit triggered ‘360,000,000 results in 0.53 seconds’. (I was hoping that would work, but that has even taken me by surprise!)

However, even with all this content at our disposal, why is it that when it comes to Procurement, so many are still questioning moving their tender process ‘fully online’? When we say ‘fully’ online, we are referring to eSourcing software and eAuctions rather than email and spreadsheets.

Is it due to a lack of knowledge of eAuctions? The Costs? Time restraints?

As the co-founder of Market Dojo, an eSourcing software as a solution (SaaS) product, I will endeavour to address the many myths of eAuctions and highlight why there is a lot less to be concerned about than you imagined.

So what are the most common objections we hear to do with eAuctions? And how do we address them?

The main objection that would apply to any department in any industry, when looking for any new product, is, of course, the initial cost and ROI.

But when solutions, such as Market Dojo, are available for as little as £500 per month, with the ability to run your first eAuction from day one, users are more than capable of seeing an ROI by the close of play that day. Market Dojo also offers the ability to pay per auction for users only looking to run a single event, so if it is a quick saving you’re looking to make, that can be done.

This leads us on to our next point, another concern we hear is that Procurement professionals simply don’t have time to set up and learn how to use the software. Again without delving too far into Market Dojo and turning this into a sales pitch, the setup time is minimal, highlighted by the point above regarding running your first auction the same day.

As long as you have the suppliers ready and they are willing to partake, all that needs to be done is your RFQ or RFP, which you can also do through the tool. Don’t forget, it is in the best interest of the Solution provider for you to run successful auctions, and so there are dedicated Customer Support and Success functions to ensure your event runs smoothly.

“I don’t think eAuctions are right for my category.”

If this sounds familiar, then you’ll be glad to hear that although eAuctions might not be suitable for absolutely everything, if you can tender and negotiate it in a traditional sense, then there’s a good chance of eAuctioning it too.

Over the years, we have seen hundreds of things run through our Market Dojo tool. From common tenders on items such as Office Supplies and Raw Materials to the bizarre like pig launchers and nappies!

So whether you’re running a tender for Lifeguards in the UAE or £120 million of meat in a single auction, somebody has already tried, tested and succeeded using eAuctions.

If you’re starting out, the Category Hub on our website is a great first port of call. The Hub breaks down eSourcing statistics and insights on an industry by industry basis and the following article on Spend Matters is a great indication of just how diverse eAuctions can be.

“What about my supplier relationship? Won’t that be affected?”

There are numerous studies that show the eAuction process is, in fact, a way of strengthening supplier relations due to the levels of transparency and efficiency. Running an eSourcing event gives you the opportunity to be in constant communication with your suppliers when it matters most, rather than going back and forth over the weeks, in emails.

Alternative methods of Sourcing such as emails and spreadsheets do not allow for total transparency, whereas running an eAuction allows all suppliers to feel as though they are being treated fairly and the same.

By cutting down the time required to run a tender, you are also strengthening the relationship this way too. Suppliers are able to set aside time to partake in a live auction rather than having to be in and out of emails and spreadsheets, over a longer period of time.

eAuctions can be a way of not just uncovering the savings you could be making, but the cost of your current relationship. If you were able to cut costs by 16% would this be worth the current relationship? In some instances this might not be the case, however, it is always worth considering that a better deal could be out there.

If you are going to go with a new supplier, it’s important to define in the tender documents how the relationship and service levels should be maintained, so that new suppliers can equally offer that expected level.

Some other points where eAuctions can in fact strengthen supplier relationships are:

  • Developing a repeatable process,
  • Reducing the cycle time of the sourcing process,
  • Improving supplier knowledge of eAuction process

Finally, if it’s not broke why fix it? Many Procurement teams are happy with their current processes and don’t feel the need to move to an online solution.

The approach that we take towards this, is that often these teams aren’t aware of the savings that they could be making if they were to utilise eAuctions. Many companies work with longstanding suppliers who might not be offering the best price available. eAuctions can bring new suppliers into the mix and the competitive nature of the auction process can lead to amazing savings that you weren’t aware of.

We have incorporated a few of the perks above, however here is a quick breakdown of why eAuctions work so well, and why they should be considered by those not currently utilising them.

Savings in money and time

As we touched on above, the savings in time and money that eAuctions can offer, are without a doubt the biggest selling point as it were. Users of Market Dojo save an average of 16% across a multitude of industries and if you’re wondering whether eAuctions will work for your product or service,  the attached blog highlights exactly why they will.

Everything centralised

The great thing about running your RFX, tenders and events in one place is that you don’t have to worry about flicking between your Excel sheets, emails or anything else. Everything is together in one place and you can quickly access documents while watching your event unfold.

Easy to use

eAuctions really couldn’t be simpler to use, and ease of use is exactly what has inspired all our products at Market Dojo to date. Below is a diagram depicting the eSourcing process broken down into three simple steps: Questionnaire, RFQ and Auction.

Can incorporate other methods such as Excel

eAuctions aren’t always a replacement for Excel, rather they can be used in unison to compliment one another. You can still upload your excel docs into the eSourcing software and likewise, you can export date back into Excel.

Live: Everyone is together bidding

Finally the auction buzz. The eAuction process is really exciting and seeing bids come through life is a real buzz. If you run ranked auctions suppliers are able to see where they are being ranked and what the lowest bids are at the time, this can be a great way to increase the competitive bids and hence increase savings!

Market Dojo

ABOUT THE Guest Author:

Nick Drewe

Nick Drewe

Nick is a Director and Co-Founder of Market Dojo, providing innovative eSourcing and supply chain solutions for procurement professionals.

Nick spent the first 5 years of his career delivering managed reverse auctions, it was at this point, in 2010, he co-founded Market Dojo.

Market Dojo offers a vast array of capabilities that help procurement professionals get the most out of their sourcing activities with easy to use and intuitive solutions immediately. Designed by procurement specialists, their solutions aim to help you centralise your information and negotiate the best value for your goods and services.