There are number of surveys carried out by auction experts consistently reporting two key challenges in the introduction of online Auctions, their own procurement team and suppliers.
The introduction of e-auctions in the company surprisingly encounters resistance from their own procurement team. They are worried by automated pricing that their “core competence” supplier negotiation is no longer needed and at the same time their freedom of choice in supplier choice is limited. In addition, many procurement team members have a hard time with online auctions where all necessary specifications of the procurement object must be clearly defined in advance. In classic supplier negotiations, such specifications are often only made during the actual negotiations. Such a procedure is no longer possible with e-auctions. The companies that use online auctions have therefore developed a whole package of measures, to ensure the use of e-auctions by the procurement team. The most important of these are:
- Comprehensive technical and content training for procurement team
- Creating best practice examples through e-auctions in areas where auctions are considered unsuitable
- Clear communication that the use of online auctions and the efficiency gains will not lead to downsizing
- Use of so-called change agents who, as experienced employees, introduce their colleagues to the use of e-auctions and serve as contact persons for queries
- Commitment of the online auction usage in the target agreements of the individual employees and demand of the e-auction use by the management
Regardless of the procurement team, many suppliers have strong reservations about participating in online auctions. This is understandable, since the auctions weaken their bargaining position and strengthen the buyer. In addition, there are always reports that companies use auctions only for price bench-marking and then perform the actual award independently of the auction. In addition, many suppliers obviously fear that buyers will not allow qualified bidders to bid or even make false bids to artificially increase price pressure. As a result of these concerns, it is necessary for companies to use the online auctions to impose binding auction rules on themselves as well and to strictly enforce compliance with these rules.