How much steam is there left in reverse auctions?

Two contrasting views:

  1. Been there, done that. The vast majority of companies have now done aucions and taken all the margin out. The age of the reverse auction as a revolutionary procurement tool is over. Time now for buyers to focus on other things raher than continuing to beat suppliers on price.
  2. My god, we’ve barely scratched the surface. The vast majority of companies have either done no auctions, or just one auction and really haven’t exploited the benefits of auctions to lower price and increase quality.

As you might think, my views tend towards the latter 🙂 

Aberdeen reckons the average auction saving is around the 12% mark. TradingPartners’ average auction savings are nearer the 20% mark. I’m not sure how meaningful one rolled-up average number is, but suffice to say that this number covers categories that have been auctioned twice, three times or more as well as rising markets, falling markets etc. Reasons as to why this should be the case are for another blog but, even taking Aberdeen’s number there is clearly still some margin left in 2007 for buyers to take out.

Admittedly if I didn’t believe this then I would not be working for an auction provider – so feel free to provide me some evidence to the contrary if you think I’m wrong.

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