As Buyer, the best way to obtain the lowest prices on a deal is, without doubt, making compete the suppliers for the deal on a bid. This is the core purpose of reverse auctions .. getting savings for you. Reverse auctions are perfect for the acquisition of specific goods or services purchased during a period of time (blanked orders for goods and services). The main motivation on reverse auctions is the attainment of savings, since characteristics of items/services are well defined and the quality should be controlled by buyer during the agreed supply period. Register and participate as buyer. Important: Opening auctions require credit (Tokens).
Buyers define by means of a specific reference (Part Number / produtc Ref) or with help of a detailed description, what they intend to purchase, placing this information on a simple form, including purchase conditions like: Delivery place, delivery time, payment conditions, packaging, general terms and conditions, etc... and then,.. buyers invite suppliers to a reverse auction, where they underbid trying to get the deal.
Terms and Conditions of every auction are always determined by the buyer in the opening form or with an additional document accesible for all suppliers invited to the auction. They could be as simple as: "Payment terms 30 days net invoicing" or much more complex for big deals including Credit conditions, insurance bonds, warranty terms, quality standards, technician certifications, etc...
Buyers also are responsible for giving enough instruction to suppliers invited to the auctions, assuring that their offers will be in accordance to the terms and conditions requested.
Sellers or Suppliers have to be prepared to bid against other potential suppliers, reviewing in advance and thoroughly all specs and conditions of the bid, in addition to the required cost calculation, and assuring all the time, that the bidding process maintains the requested margin of the company they are representing.
Successful suppliers of reverse auctions are good prepared, with bullet proof and dynamic calculation spreadsheets capable to produce ONE (1) single value to be used in the auction with each offer made, and know precisely the lowest bid they can do (the economical lowest offer), without sacrificing required quality or margin.
Specific items with large volume sales (supplies / consumables), or long contract periods (services) with low margins, are the cases where suppliers need to be very precise on calculations, reviewing the whole supply chain.
Key elements to be reviewed by suppliers on a reverse auction:
Any person registered can open a reverse auction to buy specific goods or services.
However auctions at Reverplace are not Public. Therefore, in order to participate in a reverse auction as a seller, it is required for this seller to be invited first by auction owner (the buyer). Buyers on the other side, need to have credit (Tokens) to be able to open an auction, and after opening it then invite sellers to participate. Tokens can be purchased via PayPal or credit card on a secure connection, requiring the majority of auctions between one or two Tokens to be opened. One Token investment value = USD 10
The first step is to get registered in Reverplace. Reverplace just request the necessary data to differentiate one user from other and in this way have a clear identification for buyers and sellers. Buyers could eventually act in the name of companies, but it will be Sellers job to check the existence of the liaison Buyer (Owner of auction) with Representing Company at the moment they receive the invitation for the auction. Buyer is also clear about who will be invited, and which company the seller represents.
Buyers will issue for every auction Terms and Conditions (T&Cs) that sellers / suppliers will read and accept before entering the auction.
Auctions can finish with a buyer/Company purchase commitment (decision auctions), if T&Cs indicate this automatic decision; or they can be used as tool to obtain the lowest quote of a good or service (RFQ auctions), which could be transformed later in a purchase order (PO) or a contract.
Companies of important size require to do RFQ-auctions first in order to obtain the best price, and then buyers proceed to issue the corresponding purchase order in their ERP system for its approval. Awarded seller / supplier will get the PO once approved.