Savings from Reverse Auctions

Aberdeen recently published (27 July 2007) a Sector Insight on the state of savings being generated across EMEA through the use of eSourcing technologies: EMEA: Advanced Sourcing Leads to Tangible Results.

This report quotes an average saving of 11.5% in North America vs 12.4% for EMEA. To me these figures look a bit on the low side, but hidden away on page 3 is an innocuous sentence that helps explain:

EMEA organizations are interested in e-sourcing event managed services (27%), supplier performance management programs (22%) and collaborative sourcing (21%); these technologies should further improve the realized cost savings.

In other words, the single greatest factor for increasing savings is to invest in event managed services. Obviously that comes at a price – so organisations need to weigh up the value of managed services against the costs – but it is gratifying to see Aberdeen recognising that not all electronic reverse auctions are created equal, and that managed services increase the benefits of electronic reverse auctions.

Small plug: Coincidentally, this report from Aberdeen is out in the same week as my new White Paper: “Does Procurement eAuction Design Matter?” which gives a number of examples for improving the results from eAuctions.

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