On Reverse Auctions: Part Ii - Implementation Issues Associated with Putting Competitive Bidding to Work

This article serves as the second part in a two-part series that provides an overview of the reverse auction concept, building on the best research in the field of supply chain management. In this instalment, we look at the concerns involved in making reverse auctions work in practice – the implementation issues. Frist, we look at when reverse auctions should – and should not – be utilized by a buying organization. We then examine the decision rules that should be used in determining which of the competing suppliers wins the reverse auction. Next, we look at the best research available as to how the use of reverse auctions impacts the buyer-seller relationship. Finally, we examine what is in essence a “make or buy” decision in regards to whether the purchasing organization should run an auction in-house or make use of the services of a third-party “market maker.