Q1
Beam and Segev (1997) defined an electronic auction as a special case of electronic negotiation and an electronic reverse auction (e-RA)-synonymously named online reverse auction - is a frequently used type of electronic auction in B2B commerce. Among different procurement methods an electronic reverse auction emerged in the mid 1990s started to play an important role. Initially it was adapted by automotive and aerospace procurement managers for commodity parts. Nowadays it is applied and extensively used by many companies both of public and private sectors, non-profit organizations. Annual spend sourced by e-RAs could be normally estimated at 10-15% for an average company and at half of annual spend for aggressive players. As Moorhouse noted (2008) analysts have noted that among Fortune 500 companies, almost all private sector firms of this size employ reverse auctioning today to some extent. Fast acceptance and growing popularity of eRAs is generally explained by Internet development and based on it software systems. Smart and Harrison (2003) pointed that the Internet, and new e-Procurement applications, allow companies to trade with an almost infinite number of suppliers online at very low cost. Sustainability of this technique is confirmed by many years of efficient implementation and economic value it adds. For buyers there were some valuable advantages of this method such as automating of many issues of sourcing process for incumbent suppliers, reducing costs by attracting contender vendors, shortening time spent on purchasing and making company’s needs more open on the market. This technique also increases transparency of the process providing equal participant’s treatment due to ‘compromising free’ approach and making s...
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...or alternative auction scenarios, have real possibility to establish bottom line price.
For a buyer it is significant to pre-calculate the switching costs in case incumbent supplier loses the auction.
Conclusion
Reverse auctions proved their efficiency during e-business boom have all the chances to again establish themselves as a very useful tool for achieving competitive advantage both for buyers and suppliers. In essence e-RA being a simple mechanism and saving millions of dollars is a real working tool to obtain financial and intangible benefits.
For one thing this technique allows new supplier to come to the market making the competition more transparent and exiting. For another it still requires adequate perception, discipline and contribution.
It seems that reverse auctions have all the opportunities to go further making the process easier, faster and cheaper.
This will help them to increase their negotiating power with suppliers while providing the company security in times of unplanned events such as poor quality. An increase negotiating power will give the company more options when selecting suppliers and the price at which they are willing to pay for these suppliers to manufacturer their product. Furthermore the will gain security because if there is an issue with one supplier who cannot produce the product or the quality of product they will have other suppliers to rely on. However, with having multiple suppliers the company should work on improving their quality test procedures that will be standard to all suppliers. In addition, it will help to detect sheer material before it is ready to be
Maintaining good quality helps the organization to avoid focus on rework and loss. Quality attracts customers and acts as detour to other suppliers. Most organizations fall for huge supplier list and spend their time in negotiating for costs over quality. It is a good practice to maintain minimum of approved most trusted suppliers than to promote huge suppliers list.
Hampton D K, Peter R &, Walker H T D, 1996, Relationship-Based Procurement strategies for The 21st Century, Vis, Canberra.
iii. Bargaining Power of Buyers The bargaining power of buyers is high due to the low switching costs and the availability of substitute products. iv. Threat of Substitutes
· There is the possibility of the supplier integrating forwards in order to obtain higher prices and margins. This threat is especially high when
The new supplier will have different rules which can in turn risk the operations of which will result in a delay of
For firms who are purchasing semi finished goods from outside supplier will make a contract for a long period and due to repeated relationship the fir...
E-marketing is a fast growing and rapid platform for any form of business. EBay has been highly successful over recent years and this is a perfect example of an online business. The internal and external environments are constantly changing and in order to keep up with these changes, businesses and organisations must make relevant changes, and generate new strategies to keep up with contemporary developments in e-marketing and to also maintain their position in their market in comparison to their competitors.
eBay needs to transfer its competitive advantage in the online auction industry into the area of
Since mid-90, technology changed procedures for evaluating supplier’s relationships. Before technology, Suppliers relationships used to be an isolated activity disconnected from others companies’ activities highly influenced by conflict of interest. But when technology started to provide accurate data, companies begin the focus on inventory management activities increasing the importance of procurements departments’ evaluation as a way to reduce supply chain cost. With data, procurement can evaluate suppliers and their benefits for the company. In today business environment, the company dilemma is evaluating if the supply chain should be vertical, full outsourced of mix, considering industry maturity impact and price competition (Chopra & Meindl, 2007; Slack & Lewis, 2011).
The other side of the matter is excessive adherence to preferred suppliers neglecting the advantages competitive pricing. Competitive pricing could pave the way for reducing the price of the end product. This is what the evaluation of the T5 agreement now suggests.
Purchasing process is the process of buying the right material, at the right quantity, at the right moment, at the right price and from the right supplier ( Heinritz et al, 1986). It can also be defined as the way an organisation behaves towards it suppliers, as suppliers are the pillar of strength for all organisations at large. According to We...
Markets have four different structures which need different "attitudes" from the suppliers in order to enter, compete and effectively gain share in the market. When competing, one can be in a perfect competition, in a monopolistic competition an oligopoly or a monopoly [1]. Each of these structures ensures different situations in regards to competition from a perfect competition where firms compete all being equal in terms of threats and opportunities, in terms of the homogeneity of the products sold, ensuring that every competitor has the same chance to get a share of the market, to the other end of the scale where we have monopolies whereby one company alone dominates the whole market not allowing any other company to enter the market selling the product (or service) at its price.
Turban, E., Lee, J. K., King, D., Liang, T. P., & Turban, D. (2009). Electronic commerce 2010. Prentice Hall Press, p. 90, retrieved from, http://dl.acm.org/citation.cfm?id=1816466
According to the author, e-business is conducting business on the internet by not only buying and selling goods, but also servicing clients and collaborating with business partners by using all the human technologies.