Abstract
E-reverse auction is an online, real-time dynamic auction between a buyer organization and a group of pre-qualified suppliers. There occurs a competitive environment, which can lead to great price reductions for the items auctioned. In addition, cycle-time savings for buyers and suppliers, growing markets, accessing to a larger pool of suppliers can be the other advantages. Using e-reverse auction also includes risks such as damaging supplier relationships and increasing the total cost of procurement. This leads to a resistance from internal users and suppliers in the use of e-reverse auction. In the chapter, a research model including risks and benefits of using e-reverse auction is proposed in order to understand the important factors in the decision to use e-reverse auction.
TopBackground
The empirical research on e-reverse auction reveals that the main reason to use e-reverse auction is to maximize the savings in the procurement of products or services. One of the popular service provider, Ariba StartSourcing indicates that they are delivering “value for organizations for all sizes and industries by- sourcing $340 billion spend in annual across 500 categories, saving $30 billion annually and cutting process and cycle times by 50-70 percent” (Ariba StartSourcing Solution, 2015).
Key Terms in this Chapter
Negotiation: It is a discussion about an issue to reach a consensus between the parties.
Acceptance: A decision to use a particular IT/IS system.
Bidding: It is an offer of a supplier during e-reverse auction that the supplier is willing to sell.
Reserve Prices: It is the starting price of an e-reverse auction determined by a buyer with the examination of historical prices of a product/service.
Request for Quotation: Includes the specifications and some critical contract terms like payment terms etc. of a product or a service to be auctioned, and is prepared by the buyer in order to make an invitation to the suppliers.
E-Reverse Auction: It is a type of e-auction, conducted in real time over internet between buyer and suppliers in order to determine the supplier and the price of a product/service.
E-procurement: Purchase of a product or a service over internet.