Reverse Auctions in a downturn (1)

Procurement Leaders opened its latest issue with the words “Good news, we’re in recession”. I’ve long agreed with this view, as you know, so it’s good to hear the likes of Jason Smith, Principal Advisor of KPMG’s procurement advisory service, reported in Procurement Leaders on the subject:

“Increasingly people are looking to procurement to deliver results,” says KPMG’s Smith. “They can’t actually increase the top line so it’s ‘how can we save money from within the business?'”

Smith points to e-sourcing, strategic sourcing and outsourcing as basic tools to help cut costs. KPMG estimates there is a typical saving of between 5% and 35% using e-auctions and 10% via strategic sourcing. But he believes there’s much more mileage in these techniques.

“The leaders are starting to adopt these tools but they’re not taking them beyond pilot categories such as office supplies. But how can they use those tools on the more strategic indirect purchases? There’s still a long way for even the leaders to go,” he says.

A good question to ask. From my (probably biased) perspective I would imagine a big part of the reason for failing to take these initiatives beyond the pilot stage is largely down to a lack of resource and focus within the buying organisation. Any other views?

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One thought on “Reverse Auctions in a downturn (1)

  1. Its been claimed that reverse auction procurement would save 5% to 35% of the total spend. then why procurement manager restric themselves within the pilot categories?

    How do you strategies the marketing services. would you go for reverse auction? what kind of strategy would you adopt? i feel marketing services are more senstive compared spefic commodities/products.

    your thoughts on e-auction staretgies for marketing services?

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