By Kiera Outlaw, ProcurementIQ Staff Writer
Ever wish you could simulate a competitive environment where suppliers battle it out between each other and you end up with a cost savings, on average, between 10-20%? You most certainly can, and it’s called a reverse auction.
In contrast to a traditional auction, a reverse auction requires a supplier to place bids for the amount they’re willing to sell at for your specified good or service. At the end of the auction, the supplier with the lowest bid typically wins the business.
Buyers often conduct reverse auctions via software or an online platform, invite at least two suppliers, set the timer and watch the price tumble. I know what you’re thinking…what’s the catch? And rightfully so, there are a few things to consider before you conduct a reverse auction.