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The purpose of this paper is to present an analysis of the impact of e-auctions (reverse auctions) in today’s supply chain management methodology with a focus on the current limitations and the future potential of the sourcing mechanism.Design/ Methodology/ Approach: Through the use of an extensive literature review, this paper will explore the current knowledge on e-auctions, the present trends around its integration within operations and the future expectations for this sourcing method. Particular interest will be given to the roll of e-auctions, their benefits, and the limitations within supply chain management.Findings: This paper highlights major benefits and limitations of e-auction from buyers and supplier viewpoints. Moreover, it succinctly describes the challenges and issues within e-auction framework and showcases where the e-auctions are heading in the future.Research limitations/ implications: Even though there is sufficient literature available on this topic, several supply chain researchers have expressed conflicting opinions on e-auctions in terms of cost, quality and buyer-supplier relationships.
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E-Auctions – A Major Trend in Supply Chain (Literature Review)
Mikael ThakurKyle Seidler Jun Bi Anshul GoswamiMohan Mogulla
SCHULICH SCHOOL OF BUSINESS -YORK UNIVERSITY4700 Keele Street, Toronto, Ontario, M3J 1P3Masters of Business Administration (MBA) Program
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E-Auctions – A Major Trend in Supply Chain
Table of Contents
ABSTRACT....................................................................................................................................................................2
1.0 INTRODUCTION...................................................................................................................................................3
2.0 METHODOLOGY & SOURCES.........................................................................................................................4
3.0 LITERATURE REVIEW......................................................................................................................................5
4.0 TRADITIONAL PROCUREMENT METHODS................................................................................................6
5.0 IMPACT OF E-BUSINESS ON SUPPLY CHAIN.............................................................................................7
6.0 ROLE OF E-AUCTION IN SUPPLY CHAIN....................................................................................................9
6.1 E-COMMERCE........................................................................................................................................................96.2 E-PROCUREMENT.................................................................................................................................................106.3 E-COLLABORATION.............................................................................................................................................10
7.0 E-AUCTION DEFINED.......................................................................................................................................11
7.1 MAJOR TYPES OF E-AUCTION.............................................................................................................................11
8.0 HOW E-AUCTIONS WORK..............................................................................................................................12
8.1APPPLICATION OF E-AUCTION.............................................................................................................................148.2 E-AUCTION TECHNOLOGY..................................................................................................................................14
9.0 BENEFITS AND LIMITATIONS OF E-AUCTIONS......................................................................................14
9.1 BENEFITS OF E-AUCTIONS...................................................................................................................................149.2 LIMITATIONS OF E-AUCTIONS.............................................................................................................................16
10.0 CHALLENGES AND ISSUES WITH E-AUCTION......................................................................................18
10.1 CONFLICTING OPINIONS – BUYER/ SUPPLIER RELATIONSHIPS.........................................................................1810.2 SUSTAINABILITY – BUYERS PERSPECTIVE........................................................................................................1910.3 SUSTAINABILITY – SUPPLIERS PERSPECTIVE....................................................................................................20
11.0 TRENDS AND FUTURE OF E-AUCTIONS..................................................................................................20
12.0 CONCLUSION...................................................................................................................................................23
APPENDIX 1 – E-AUCTION PROCESS................................................................................................................25
APPENDIX 2 - TYPES OF E-AUCTIONS..............................................................................................................28
APPENDIX 3 –E-AUCTION EXAMPLE (SUN MICROSYSTEMS)..................................................................32
REFERENCES............................................................................................................................................................35
End Notes.....................................................................................................................................................................38
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E-Auctions – A Major Trend in Supply Chain
ABSTRACT
Purpose: The purpose of this paper is to present an analysis of the impact of e-auctions (reverse
auctions) in today’s supply chain management methodology with a focus on the current
limitations and the future potential of the sourcing mechanism.
Design/ Methodology/ Approach: Through the use of an extensive literature review, this paper
will explore the current knowledge on e-auctions, the present trends around its integration within
operations and the future expectations for this sourcing method. Particular interest will be given
to the roll of e-auctions, their benefits, and the limitations within supply chain management.
Findings: This paper highlights major benefits and limitations of e-auction from buyers and
supplier viewpoints. Moreover, it succinctly describes the challenges and issues within e-auction
framework and showcases where the e-auctions are heading in the future.
Research limitations/ implications: Even though there is sufficient literature available on this
topic, several supply chain researchers have expressed conflicting opinions on e-auctions in
terms of cost, quality and buyer-supplier relationships.
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E-Auctions – A Major Trend in Supply Chain
1.0 INTRODUCTIONAs the growth of internet based commerce accelerated during the 1990’s operation managers
increasingly looked for new and novel ways to strategically capitalize the electronic networks via
improved supply chain methodologies. One of the newest mechanisms to gain popularity in the
latter part of the decade was e-auctions (also known as online reverse auctions). Carter et al.
(2004) defined an e-auction as a real-time auction between a buyer (including an organization)
and multiple invited suppliers, where suppliers can submit several bids during the specified time
period of the auction. This concept was introduced to improve the efficiency of distributing
requests for proposals to larger markets while easing the bid evaluation and selection process.
For more than a decade, e-auctions have brought significant advantages in terms of
quantitative and qualitative supply chain factors, thereby signifying its growing importance
within the supply chain framework. Theoretically, the buyers should realise savings by reaching
a larger volume of qualified suppliers which will result in reduced purchase prices. At the same
time, suppliers should benefit due to the means of reaching a larger customer market and
increasing sales volume. For both parties, lower transaction costs are the driving benefit.1
However, unqualified bidders, like brokers, who are incapable of supplying the product have
been found participating in the auctions.2 Furthermore, while early data suggests that the
variance in purchase price per unit provides positive results, the total operation costs are often
higher once the costs of implementing the auction are included. To add to the confusion, the cost
information provided by the auction administrators is often skewed to show only end of auction
values.3
Beyond the desired cost savings, e-auctions provide potential strategic opportunities for
buyers and suppliers alike. Most significantly, e-auctions provide an efficient means for
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obtaining market information about world-class suppliers, buyers and competitors. The
increased information flow combined with the reduced time requirement for transaction
processing allows for reduced forecasting horizons and additional effort to be placed on strategic
sourcing.4 The unfortunate negatives surrounding the mechanism include an increased focus on
cost over quality, service and relationships. In addition, mistrust between buyers and sellers
have grown due to opportunistic objectives being assumed.5
In spite of the negative cogitations surrounding e-auctions, many Fortune 2000 organizations
continue to pursue the activity with the expectation of reduced purchase prices.6 The greatest
potential for the sourcing strategy is expected within bulk, commoditised and easily specified
goods with low switching costs. Specialty items with custom modifications or non-standard
sized order may complicate the logistics of information flow in the electronic system. That being
said, senior management often still support the activity due to early reports of success and a
failure to utilize total cost metrics.7
2.0 METHODOLOGY & SOURCESThe research conducted has relied upon a rigorous literature review of peer reviewed and
academic articles combined with support from additional information gathered via online trade
journals. The focus of the investigation has been towards the effects of e-auctions upon the
supply chain management framework. Our intention is to determine the composition of this
sourcing mechanism, its trends and the future potential in sourcing management. Initially we
focussed upon the traditional procurement methods, then emphasized upon the impact of e-
4 Hartley J. et al (May 2004), An Exploration of the Adoption of E-Auctions in Supply Management, Eee Transactions on Engineering Management, Vol. 51, No. 2, Page 1535 Emiliani, M. L. and Stec, D. J. (2005). “Wood Pallet Suppliers’ reaction to online reverse auctions”6 Emiliani, M.L. (2006), “Executive Decision Making Traps and B2B online reverse auctions”, Supply Chain Management.7 Ibid.
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commerce on the supply chain management. Next, specific attention has been placed upon the
various roles in which e-auctions are utilized within supply chain management. Thereafter, we
focused upon the e-auctions’ working mechanism and their benefits and limitations in industry
today. Finally, the research has been expanded to determine the current trends, challenges and
the future opportunities facing the mechanism.
The primary sources for our research come from public online journals, ‘ABI/Inform’,
‘ProQuest’ and the Schulich School of Business Library.
3.0 LITERATURE REVIEWIn the supply chain management literature, high attention has been focused on electronic
medium and its potential benefit to an organization's supply chain capabilities (Sehwail and
Ingalls 2003).
Since the emergence of e-auctions in the mid 1990’s as a cost savings mechanism within
procurement methodologies (Kumar and Chang, 2007), it has gained significant press throughout
supply chain management literature (Sehwail, 2006) in regards to its potential benefits and
limitations. Within the first ten years of its usage, from 1995 until 2004, e-auctions were
involved in transactions totalling over $70 billion worth of goods and services. (Zaccone, 2004)
Within this context, one major supply chain trend is the use of e-auctions to obtain efficiency
within supply chain framework (Supply Chain Digest 2007). Virtually every major industry has
begun to use and adopt e-auctions on a regular basis (Smith 2002). The phenomenon of e-
auctions in supply chain has been receiving increasing attention among researchers from
purchasing and supply management (Jap 2002; Smeltzer and Carr 2002; Sehwail and Ingalls
2004). E-auctions have been depicted as a procurement tool capable of benefiting both suppliers
and buyers. (Supplier Selection & Management Report, 2003)
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There are many contradictory opinions on the value of e-auctions in the marketplace and
whom, if anyone, benefit most. (Zaccone, 2004) The mechanism promotes cost savings (Kumar
and Chang, 2007) while increasing access to potential suppliers and enhancing buyer supplier
relationships. (Losch and Lambert, 2007) Opponents to the system suggest the costs savings
are smaller than most expect or often nonexistent when the total procurement costs are
considered (Emiliani, 2006). Furthermore, using e-auctions, product quality can be negatively
affected and buyer-supplier relationships are damaged or destroyed. (Nair, 2005) Suppliers view
buyers as being opportunistic by placing unrealistic demand upon the agreement. (Tonbridge,
2003; Nair 2005) In addition, buyers are seen as making decisions based primarily on price,
disregarding the value of quality (Emiliani and Stec, 2005) and established relationships.(Chain
Store Age, 2003) Several academic journals highlighted the negative effect on the buyer-
supplier relationship as the biggest concern related to using e-auctions (Jap 2000; Sehwail and
Ingalls 2003; Smeltzer and Carr 2003). Executives are suspected of encouraging the usage of e-
auctions due to misrepresentation of costs/benefits process by the marketmakers (Emiliani,
2006). The most noted message for e-auction is that while it has its place within procurement,
individuals and organizations alike must be cautious while determining if e-auctions is an
appropriate mechanism for their required activity. (Crane, 2008)
4.0 TRADITIONAL PROCUREMENT METHODSProcurement is the process of establishing agreements for buyers to acquire good or services
from available suppliers. In general, this process includes, amongst other things, establishing a
price, delivery, timing, and conditions upon which, the item is to be transferred. There are many
steps that may be included within the process from initial specifications to negotiations and order
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fulfillment. One of the main challenges with establishing a procurement contract is managing
the information flow among all the stakeholders.
One traditional method of handling this is the bidding or tendering process. With this method
a buyer will issue a written Request for Proposal (RFP) detailing the specifications for the
acquisition to potential suppliers and sealed tenders are invited over a specified period. The
suppliers will then return official bids detailing the offering. After the tender submission period,
the tenders are opened and examined for another period, usually for approximately 4 weeks, and
then awarded to a supplier based upon pre-decided evaluation criteria.
On commodity items, the deciding factor may be limited to price and/or timing of the
delivery. More complex purchases may require a series of negotiations to ensure quality,
reliability and trust between the parties involved.
5.0 IMPACT OF e-BUSINESS ON SUPPLY CHAIN
For the last few decades, all businesses across the industry have been influenced by the e-
business technologies. Since that time, we have witnessed how information technology has
revolutionized supply chain management. In 2003, researchers estimated the online business-to-
business (B2B) is around 78% of the overall e-business market, which signifies the importance
of usage of internet technologies within businesses.8
Researchers have focused on the significant effects of the e-business and Internet revolution
on supply chain management practices and concluded that the Internet will enable organizations
to achieve high cost efficiencies and allow organizations to react quickly to major market
changes9. The use of Information Technology is critical in supply chains because it enables
dynamic reconfiguration of organizational structures and adds flexibility to supply chain
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processes10. Supply chain management has been literally reinvented by the new networked
technologies and the business processes and practices that these technologies facilitate, such as e-
procurement, e-marketplaces, e-logistics, collaborative commerce, e-auction, just-in-time (JIT)
production, customer interface, and web-based package tracking11.
By taking their supply chains online, organizations realized significant savings across the
supply chain, thus they are quite supportive of the evolution of the e-business12. Online
marketplaces help buyers reduce their unconventional spending (including their expensive
emergency buying), since every item is pre-negotiated and catalogued13. In addition, these
benefits also include reducing bullwhip effect by better information management through
accessing more suppliers, exchanging information real-time with a single point of access to
ensure consistent workflow, decreasing processing errors, and reducing information technology
complexity by reducing the electronic connections established with suppliers14.
Nowadays, several manufacturers are doing business with vendors they never knew existed a
decade ago simply because they were located in a different part of the world. By allowing
businesses to expand their horizons, ecommerce has given them the tools to truly find the best
and most affordable suppliers. While before, the buyer had to create a complex RFP, distribute it
to potential vendors, wait for their responses, then sift through each of their proposals
individually in order to make a decision, nowadays, enabled by the internet, the entire process
can be completed in 3-7 days instead of weeks or months.
Following table highlights the comparison of Traditional model vis-à-vis eBusiness model
Traditional Procurement Model eBusiness ModelBased on personal contacts Highly dependent on electronically based
communication and relationshipsHigh investment in assets Lower investment in assetsStandardized products in large volumes Made to order based on customer demandHigh transaction costs Low transaction costs
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High inventories Rapid Information flows replace inventoryRestricted flow of information Free flow of inter-organizational informationFocus on profits Focus on supply chain efficiency, growth and
profits
(Source: Antonnette, G., Giunipero, L.C., Sawchuk, C. (2002), E-Purchasing Plus: Transforming Supply Management through Technology, JGC Enterprises)
6.0 ROLE OF E-AUCTION IN SUPPLY CHAIN
Following the e-Business framework designed by Lee and Whang (2002c), we will explore
the role of e-auctions in Supply Chain Management. This framework assigns all e-Business
applications into three main categories, namely e-Commerce, e-Procurement, and e-
Collaboration.
6.1 E-commerce
E-Commerce assists a network of supply chain partners to identify and respond quickly to
changing customer demands captured over the Internet.15 Within e-Commerce segment, e-
auctions has brought huge efficiency for organizations in supply chain areas such as order
fulfillment process, cost structure, profit contributions, logistical requirements, service quality,
degree of market segmentation, access to demand/supply information and return policies. E-
auctions have also led to the effective formation and utilization of e-fulfillment in e-Tailer
businesses through its ability to customize the diverse requirements across industries, buying
situations, and types of products.
(Source: Johnson M. et al (2002), E-business and supply chain management: An overview and framework, Production and Operations Management Journal)
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6.2 E-procurementE-Procurement allows organizations to leverage the Internet for procuring direct or indirect
materials, as well as handling value-added services such as transportation, warehousing, customs
clearing, payment, quality validation, and documentation.16 The key aspect of e-procurement is
to include the end-user (requester) in the procurement process via an electronic multi-vendor
catalog and to close the process gaps (e.g. re-entry of data) in the supply chain for indirect goods
(Neef, 2001). E-auctions offers a common platform to facilitate efficient procurement as
numerous buyers and sellers find each other and transact according to some pre-specified
protocols, governed by the marketplace or traders’ internal rules. Modern manufacturing
requires flexibility in order to cope with strong competition, fast changing customer preferences,
shortening product life cycle and product variety proliferation. An efficient material procurement
via e-auctions is needed to support flexible manufacturing.
16 Ibid.1 Teich, J., Wallenius, H., Wallenius, J. and Koppius, O. (2004). “Emerging multiple issue e-auctions”. European journal of Operational Research. Vol 159. Iss. 1. Page 1. 2 Emiliani, M. L. and Stec, D. J. (2005). “Wood Pallet Suppliers’ reaction to online reverse auctions”3 Emiliani, M.L. (2006), “Executive Decision Making Traps and B2B online reverse auctions”, Supply Chain Management.8 Lancioni et al, Information systems development within supply chain management, International Journal of Information Management, October 2004, Pages 375-3859 Ibid.10 Chandrashekar A. et al, The Virtual Supply Chain, Managing virtual web organizations in the 21st century: issues and challenges, 2002, Pages 90 - 10611 Lancioni et al, Information systems development within supply chain management, International Journal of Information Management, October 2004, Pages 375-38512 Murtaza M. et al (2004), "E-marketplaces and the future of supply chain management: opportunities and challenges", Business Process Management Journal, Vol.10, No. 313 Barratt, M. et al (2002). “Exploring business-to-business marketsites”, European Journal of Purchasing & Supply Management, 8(2), 111-122.14 Sehwail, L. et. al, 2005. “Critical Success Factors for E-procurement Online Marketplace”, International Journal of Operations and Service Management, Vol. 1, No. 4, pp. 344-35715 Johnson M. et al (2002), E-business and supply chain management: An overview and framework, Production and Operations Management Journal
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6.3 E-collaborationE-Collaboration facilitates online coordination of various decisions and activities beyond
transactions among the supply chain partners17. These activities include information sharing and
integration, decision sharing, process sharing, and resource sharing. Procurement through
collaborations deals with the strategy development, supplier selection, negotiation, supplier
evaluation, and supplier development. Several researchers indicated that similar to e-
collaboration, e-auctions is concerned with continuous supplier management in terms of supplier
evaluation and development to improve the overall cost performance of the supply chain.
Moreover, e-auctions empowered by the information flow of e-collaboration will help greatly to
reduce the impact of bullwhip effect and can be utilized in developing a commodity sourcing
strategy. Furthermore, e-auctions can greatly improve purchasing process through automating
requisitions and purchase orders for goods and services, decentralizing buying, connecting to
suppliers directly and improving employee compliance with preferred supplier policies.
7.0 E-AUCTION DEFINED
CAPS Research (2003) defined an e-auction as an online, real-time dynamic auction between
a buyer (including an organization) and a group of pre-qualified suppliers who compete against
each other so as to win the business of supplying products or services that have pre-defined
specifications for design, quality, quantity, delivery, and related terms and conditions. Within
this e-auction, these suppliers compete against each other by bidding online using specialized
software by submitting successively lower-priced bids during a scheduled time period.
Additionally, Sehwail and Ingalls (2004) defined e-auction as the real-time electronic bidding
event, which a company uses to outsource products/ services with reducing bid prices, and
bidders would be allowed to enter bids once or continuously as per the auction format.
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Interestingly, in this e-auction, there exists some degree of visibility among suppliers regarding
the actions of their competitors towards getting the contract for supplying products and services
to the buyer.18 Furthermore, e-auction design is not one-size-fits-all as its design is based upon
the several aspects present in the marketplace such as technology, business processes, preference
of different players, power disparity between buyers and suppliers etc. Thus, based on these
aspects, we will view how buyers apply different types of e-auctions to distinctive categories
within the supply chain.
7.1 Major Types of e-auction
Following are the five different types of e-auctions19:
1. Reverse English2. Reverse Japanese3. Reverse Dutch4. Weighted/ Multi-Attribute5. Sealed Bids
The first three auction types: ‘English’, ‘Dutch’ and ‘Japanese’ are typically used in a price-
only environment. However, ‘Weighted/ Multi-Attribute’ auctions put emphasis on non-price
attributes, and can deliver effective results in the appropriate categories20. ‘Sealed Bids’ are most
useful where the bidders could not compete effectively because source of products/ services
cannot be specified clearly21. (For details on each auction, see Appendix 2)
8.0 HOW E-AUCTIONS WORKAn e-auction allows suppliers to use internet-based software to bid against each other online
and in real time against a published specification from a single buyer. Within this auction,
suppliers can bid for the posted contract at the buyers’ internal marketplace or at one hosted on a
neutral site, such as eBreviate.com or FreeMarkets.com. The buyer will post the RFP with
20 Ibid.21 Ibid.
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specific requirements and a starting value and suppliers will bid against it until the auction
closes. The lowest price is not always the criteria to win a successful bid, but one who offers
value and speed of delivery along with quality and reliability. After bidding has ended, parties
will contact each other and arrange payment and delivery terms as well. Several organizations
have utilized e-auctions successfully. An example of e-auctions has been described in
Appendix 3.
Researchers presented four general guidelines for successful implementation of an e-auction
event: the buyer must clearly state the commodity specifications, the purchase lots must be large
enough to encourage suppliers to bid, the appropriate supply market conditions must exist, and
the correct organizational infrastructure must exist for the buying organization.22
Following flowchart describes the step-by-step procedure of e-auctions:
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(For details on e-auction process, see Appendix 1)
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8.1Appplication of E-AuctionE-auctions are relevant to the products or services of considerable market competition, a
minimum of four suppliers is considered as a healthy level23. Moreover, the contract offer should
also be large enough to attract the suppliers i.e. the predictive savings must exceed the cost of e-
auctions. On the other hand, there are following areas, where e-auctions is not relevant and not
advisable. First, if the suppliers have demonstrated the sign of not being able to cut the prices
further than e-auction is not a correct option. Second, if most of the suppliers do not have
internet availability to participate in the process. Third, if the buyer has to initiate the process
only for short period and is not looking to initiate a strategic partnership with supplier(s)
Undoubtedly, e-auction, which has the immense capability in terms of its usage, is an
emerging supply chain trend and was considered to be top 10 trends in 2007.24
8.2 E-Auction TechnologyThe e-auction does not require any specialized computer equipment nor do they need any
extra software to be downloaded onto their computer hardware. The only basic requirement is a
reliable Internet connection with a recent Microsoft’s Internet Explorer Version.
9.0 BENEFITS AND LIMITATIONS OF E-AUCTIONSE-auction delivers innumerable benefits to both buyers and suppliers across the supply chain
in terms of overall costs, strategic sourcing, supply chain efficiency and compatibility with other
quality practices such as JIT and others.
23 How to be successful in e-auctions, Procurement Program, http://www.lcpe.gov.uk/Library/pdf/How%20to%20e%20auctions%20web%20version.pdf, Accessed on April 8, 200824 Gilmore D., The Top 10 Supply Chain Technologies and Strategies for 2007, First Thoughts – Supply Chain Digest, Jan 2007
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9.1 Benefits of E-auctions
In this section, we will analyze the e-auctions’ benefits from buyer and supplier viewpoint.
From a buyer’s perspective the advantages of e-auction depend on the buying situation, the
strategic importance of the product, and the existence of international standards for the product25.
Yet the researchers, due to increased competition, have generalized these benefits for buyers in
terms of lower transaction costs, shorter order cycle-times, and competitive purchase prices26.
Additionally, e-auction attracts buyers with the appeal of low prices, a broader supplier base, and
highly efficient procurement process27. Several large companies reported decreases in purchase
prices by 10 % or more of those prices by using e-auctions28. Organizations, such as ‘Quaker
Oats’ and ‘Smith Kline Beecham’, reported millions of dollars in cost savings with e-auctions
compared to traditional purchasing methods29. However, strategic advantages of e-auctions are
more significant than mere cost savings across the supply chain. Using e-auctions, supply
analysts can identify several world-class suppliers, gather and analyze market data, and focus on
strategic sourcing rather than on processing transactions only. Interestingly, the classic
economic order quantity (EOQ) model suggests that as ordering costs are reduced, it becomes
economical to order in smaller quantities, resulting in lowering total inventory holding costs30.
Thus, with the use of e-auctions resulting in lowering ordering costs, organizations should have
lower inventory costs31. It is known that Just-in-time (JIT) purchasing and having small
quantities of materials delivered frequently can lower the buyer’s inventory costs and purchase
prices32. Researchers suggest that e-auctions are compatible with a just-in-time strategy because
sourcing can be done quickly33. The Gartner report (2001) stated that the buyer’s ability to
identify new suppliers quickly through electronic medium is quite useful, especially in a
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fragmented industry. As per IDC study (2001), additional benefits for buyers might include
process cost reduction and accelerated product development.
On the other hand, suppliers can benefit by obtaining market information about buyers and
other competitors, having an outlet to better manage excess capacity, and competing for business
from new customers34. E-auctions provide an opportunity for suppliers to gain a better
understanding of the buyer’s financial goals by viewing buyer’s opening price ceiling for the
specified product/ service. Suppliers also gain valuable information about their competitors’ cost
structures that can help them to become more effective, thereby providing value to the buyers in
the long run35. Several researchers emphasized upon the key benefits of e-auctions and listed
four key reasons, as perceived by buyers, for suppliers to use e-auctions: new business, market
penetration, inventory management and cycle time reduction36.
Following table shows the benefits to the buyers and suppliers within the supply chain.
Benefits For Clients Benefits for Suppliers
1. Reduces the cost of products/ services2. Reduces negotiation process time3. Is an easy process to repeat with other
products4. Encourages development of closer
supplier relationships. (Alternate opinions will be discussed in the report)
5. Availability of quality market information.
6. Wider pool of sellers to choose from.7. Improved inventory management.8. Short and improved purchase orders.9. Strategically fits with JIT
management.
1. Improves discipline in the tendering process
2. Encourages transparency of pricing and ability to react to competitors' prices
3. Reduces negotiation process time, thereby promoting convenience
4. Short and improved bids due to elimination of travel, paperwork etc.
5. Allows suppliers to track their status relative to competitors.
6. Access to new geographic markets.7. Strategically fits with JIT
management.
34 Hartley J. et al (May 2004), An Exploration of the Adoption of E-Auctions in Supply Management, EEE Transactions on Engineering Management, Vol. 51, No. 2, Page 15335 Jap, S. (2000), "Going, going, gone!", Harvard Business Review, Vol. November/December pp.30.36 Smeltzer, L., Carr, A. (2003), "Electronic reverse auctions: promises, risks, and conditions for success", Industrial Marketing Management, Vol. 32 No.6, pp.481-8.
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9.2 Limitations of E-auctionsRegardless of the aforesaid benefits within the supply chain framework, e-auctions still fall
short in few areas. Most academic journals and business press articles agree that the negative
effect on the buyer-supplier relationship is the biggest concern related to using e-auctions37 38 39 40
41. As e-auctions by nature are the buyer driven tools, which explains that the transparency and
power are not balanced in the buyer and supplier relationship42. A buyer need not be as
committed or invest as much as in the traditional formats. Such an unbalanced business
environment can lead to reduction in trust, commitment, expected continuity, satisfaction and
investment into the relationship43. Many buyers are anxious that using e-auctions might destroy
their relationships with the suppliers. This fear is especially pronounced when the buyer and the
supplier have had a long working history and they have spent decades building strategic alliance
partnerships based on trust and loyalty. With the announcement that an e-auction would be used,
the buyer was possibly indicating that the supplier was no longer meeting the expectations of the
buying organization44.
On few occasions, researchers noticed that the cutthroat price war between the bidders leads
to compromise on quality issues. Because e-auctions seem to emphasize cost over other
qualifications, many buyers may choose the lowest bid only to find out that it includes shoddy
workmanship, low quality products, and slow delivery times, which in turn cost them more in the
37 Ibid.38 Sehwail, L. et. al, 2005. “Critical Success Factors for E-procurement Online Marketplace”, International Journal of Operations and Service Management, Vol. 1, No. 4, pp. 344-35739 Jap, S. (2000), "Going, going, gone!", Harvard Business Review, Vol. November/December pp.30.40 Emiliani, M., Stec, D. (2001), "Online reverse auction purchasing contracts", Supply Chain Management: An International Journal, Vol. 6 No.3, pp.101-5.41 Altman, B. (2003), "Reverse auctions destroy relationships", Manufacturing Engineering, Vol. 130 No.642 Teich J. et al (1999), Multiple-issue auction and market algorithms for the world wide web, Decision Support System, Vol 26 Issue 1, July 1999, Pages 49-6643 Ibid.44 Smeltzer, L., Carr, A. (2003), "Electronic reverse auctions: promises, risks, and conditions for success", Industrial Marketing Management, Vol. 32 No.6, pp.481-8.
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long run. Judgmental errors may occur in the process of quoting the bid lower than that appear
on the screen. Furthermore, there is scope for the introduction of ‘Ghost bidders’ by
unscrupulous buyers so as to increase the bidding price among the genuine suppliers.
Other limitations include suppliers’ not participating in the auction. In theory, only two
competitor firms are required for an auction. But economic game theory indicates that when only
two competitors exist, they are not inclined to participate in either a ‘reverse’ or ‘forward’
auction. Even though only two parties may well be involved in the final stages of bidding, at
least four or five viable, competitive bidders are generally required to begin an auction45. Another
risk is that the sellers may get caught up in what may be termed “the race.” Bidders may get so
caught up in the emotion of the race or competition that they offer unreasonably low prices46. On
the other hand, buyers are also facing the risks of e-auctions. With the aforesaid benefits of e-
auctions, buyers, on few occasions, could not anticipate the hidden costs such as costs associated
with changing and approving suppliers, monitoring new suppliers, using additional manpower to
move products from one supplier to the other, employing technical assistance, and the services of
the market maker.
In summary, the practical, legal and ethical limitations on part of e-auctions can be
highlighted as follows:
1. Possibility of fraud and anonymity2. Limited participation3. Reoccurring order fulfillment costs4. Possibility of harming strategic relationship with supplier5. Low cost vs. best value issues6. Risk of plotting ‘Ghost bidder’7. Lack of negotiable terms and conditions8. Hidden costs associated with the process
45 Cassady, R. (1967), Auctions and Auctioneering, University of California Press, Berkeley, CA.46 Smeltzer, L., Carr, A. (2003), "Electronic reverse auctions: promises, risks, and conditions for success", Industrial Marketing Management, Vol. 32 No.6, pp.481-8.
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10.0 CHALLENGES AND ISSUES WITH E-AUCTION
10.1 Conflicting opinions – Buyer/ Supplier RelationshipsIn recent studies (Carbone 2003), some researchers have identified apparent negative effects
of e-auctions on buyer-supplier relationships. In addition, many authors have assumed that e-
auctions are detrimental to effective construction and management of buyer-supplier
relationships (Craig R. Carter, and Lutz Kaufmann 2007). On the other hand, some researchers
have also argued that both market efficiency as well as long term relationship can be
dramatically improved if e-auctions are used properly (Adam J. Fein, 2002). Therefore, finding
out the answers for the questions of how and when E-auctions have seemingly different effects
on buyer supplier relationship become very important.
Significantly, some researchers have found out that there are general negative effects of e-
auctions on the collaboration between buyers and suppliers in the short term relationship (Craig
R. Carter, and Lutz Kaufmann 2006). More specifically, research has shown that suppliers who
participate in a e-auction feel exploited by the process and lose trust in the buyer (Adam J. Fein,
2002). This is especially when e-auctions are used to support short-term relationships. Suppliers
feel a great deal of competitive pressure due to a larger pool of participants, resulting in a forced
offer with a lower price to the buyers. Although the market efficiency was increased, the buyer
supplier relationship was decreased dramatically in this case.
On the other hand, it was shown that when e-auctions are used to support long-term
relationships, both market efficiency and long-term relationships are improved drastically. This
is primarily due to the fact that both price factors as well as non priced factors such as product
quality, delivery time, and service level, have to be taken into consideration when making
repeated souring decisions47. However, if the needs of buyers can only be fulfilled by a small
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number of suppliers, then e-auctions should not be applied here. Essentially, the transaction price
will not be reduced enough to generate significant savings for the buyer if only limited
competition exists48.
10.2 Sustainability – Buyers PerspectiveSome research has appeared to confirm that buyers may be shifting away from a total cost
approach toward a price-only-based approach thus not adequately considering non priced factors
in their selection decision (Carbone 2003). Significantly, buyers in e-auctions need to think
beyond simply the quoted price in order to make their strategic souring decisions more
effectively. Price may be an important factor in the decision, but other elements, such as added
services, must also be taken into consideration when making souring decisions.
Accordingly, a buyer’s utility is determined by both price and supplier quality49. Ignoring
these non priced factors in e-auctions will eventually lead to higher overall costs to buyers. For
instance, some suppliers who win the e-auction will cut out normal services, use less quality
materials, or extend deadline just to make it possible for them to place a more competitive initial
bid even though the final bill may end up being much higher50.
In addition, Carbone (2003) stated that the success of an E-auction primarily depends on
whether it is conducted under the right conditions. More specifically, goods and services that can
only be provided by a limited number of suppliers will not be effective with e-auctions since the
suppliers, not the buyers, will have all of the power in the situation and can actually drive the
price up instead of down51. Buyers need to be aware of this and also need to realize that treating
suppliers with respect now can secure them a trustworthy supplier in the future52.
49 Carter, C.R. (2000), "Ethical issues in international buyer-supplier relationships: a dyadic examination", Journal of Operations Management, Vol. 18 No.2, pp.191-208.50 Fein, Adam J. (2008), Online Auctions Are Here to Stay, Modern Distribution Management. Retrieved on April 3, 2008 from: http://www.mdm.com/stories/fein3401.html
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10.3 Sustainability – Suppliers PerspectiveBesides being very competitive in auction price, suppliers in e-auctions will also have to be
very proactive in offering value added services to buyers in order to sustain their future
businesses. Accordingly, Carter believes that "E-auctions are widely perceived ... as a divertive
purchasing tool designed principally to drive down supply prices without adequate consideration
given to other important measures ...." Typically, on time delivery, extra warranty, better quality
of product, and flexibility could all be part of these important measures.
11.0 TRENDS AND FUTURE OF E-AUCTIONSIn spite of its limitations and challenges as a sourcing tool, e-auctions have not only been
utilized for the past decade, it has also shown significant growth in its market penetration.
According to market research, by 2003, 42% of large buyers and 14% of small buyers were
already utilizing e-auctions.53 As shown in the figure below, this penetration has been achieved
through consistent growth since 2000. At the same time, only 5%, on average, of buyers total
spending was through the use of this mechanism.54 By 2004 over $70 billion worth of goods and
services have been involved in e-auction transactions.55 The momentum of this sourcing totals
growth in market utilization has continued over the following years.
53 Ibid.54 Ibid.55 Zaccone, Suzanne (2004), The Tin and Tang of Reverse Auctions and Trust, Converting Magazine, Vol. 22, Iss. 5, Page 34.
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Sources: Fein A., Online Auctions are here to stay, Modern Distribution Management, http://www.mdm.com/stories/fein3401.html
With the growing application of e-auctions across various industries, there has become
increasing scrutiny concerning its various limitations and effects upon the procurement process.
The key issues that are being addressed today, and must continue to be improved upon in the
future, are: (1) buyer-supplier relationships, (2) e-auctions dominant focus upon lowest price and
(3) business sustainability. How these issues are addressed will determine the ultimate market
utilization level of the tool and its ability to handle specialty and customized items in additional
to the more common usage on commodity items.
Since e-auction is merely a tool for the procurement process, the drawbacks in the
methodology are being quickly compensated for, through rapid advancements in the technology
supporting the application. The advent of increased access to and capacity of broadband internet
services are extending the reach and speed of the e-auction services while providing greater
capacity for data transfers. As a result, software applications are becoming more sophisticated
by allowing buyers and suppliers to apply additional detail to the bidding process. Affectively,
participants will be able to optimize the process by implementing scenarios to tailor bids towards
a variety of market conditions.56 Ultimately the future enhancements to tool will enable
increased negotiation capabilities within e-auctions and move the process beyond price focus and
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towards quality, relationships, and other value added features. As product margins continue to
shrink due to cost based competition, the e-auction improvements in future will allow suppliers
to leverage their existing relationships and core competencies in order to differentiate their offer
in the auction.
Furthermore, increasing scrutiny is also being placed upon participants within the e-auction
process to ensure the qualification of bidders and the ethical behavior of the buyer.57 The
intention is to improve the reliability and reputation of the process in the future. For example,
some large organizations have taken to rating suppliers based upon past performance and utilize
the ratings to determine which suppliers to invite to particular auctions.58 Additionally,
traditional e-auctions have been based off of the ‘English reverse auction’. Current trends
suggest that other auction forms will gain popularity in the future as a means to differentiate the
procurement process while also creating more affective means for sourcing the required
combination of product specifications and price.59 (For details on different types of e-auction, see
Appendix 2)
By continuously developing the methodology in the future, participants will be able to
successfully counter the impact the limitations of e-auctions by developing the processes to
operate beyond them. However, if developments towards enhancing relationships and ethical
behavior fail, the e-auctions’ growth appears to be limited to undifferentiated suppliers with bulk
commoditized items and ever tightening profit margins.60
60 Fein, Adam J. (2008), Online Auctions Are Here to Stay, Modern Distribution Management. Retrieved on April 3, 2008 from: http://www.mdm.com/stories/fein3401.html
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12.0 CONCLUSIONThrough an extensive literature review, an in-depth analysis has highlighted the potential
impact of e-auctions upon supply chain systems and its limitations, trends and future
expectations have been presented.
Enabled by advancements in internet technology and the influence of e-business on the
supply chain, e-auctions have formulated a significant role within e-commerce, e-procurement
and e-collaboration. Reduced costs, negotiation processing time and an enlarge pool of potential
suppliers are just some of the benefits being realized by buyers utilizing this methodology. On
the other hand, suppliers gain from access to new markets, competitor pricing transparency and
improved discipline in the tendering process. Unfortunately there are significant limitations still
plaguing the sourcing tool, most significantly the potential for fraudulent behavior, reduction in
product quality, failure to properly meet the product specifications and the dematerializing of
buyer/ supplier relationships. Additionally, many academic and peer reviewed sources disagree
on the true impact upon the buyer/supplier relationships and the sustainability of the mechanism.
Since its inception in supply chain management over a decade ago, e-auctions have been
showing continuous and significant growth in utilization. While Reverse English auctions are
still the norm, other forms of auctions are providing and are expected to continue to provide
significant growth for the methodology. In additional, e-auctions are evolving through
considerable development in the technology and its ability to formulate and value relationships.
Furthermore, e-auctions are moving away from the purchasing decisions being based purely on
cost based factors. Participants are being enabled with the option of customizing bids for
specific market conditions and place value on more qualitative factors like reputation. Overall,
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e-auction has proven itself to be a dynamic procurement tool with a valid role and future within
specific parts of supply chain management.
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APPENDIX 1 – E-AUCTION PROCESS
The preparations for an e-auction are quite similar to traditional way of awarding agreements.
The organization examines the marketplace and, if required, a Request for Information (RFI) is
sent to selected suppliers. After the e-auctions are examined, a final specification for tender
process is created. Traditionally, Requests for Tenders (RFT’s) are sent to potential suppliers
and sealed tenders are invited over a specified period. After the tender submission period, the
tenders are opened and examined for another period, usually for approximately 4 weeks, and
then awarded. The e-auction process differs from the traditional process, where instead of calling
for tenders, suppliers are invited to the e-auction event in an online sphere. Prior to the e-auction
event, bidders are pre-qualified not only in their capacity to supply but, if applicable, their ability
to conform to the company’s operations and controls management systems. With the current
CSR corporate agenda, suppliers are also chosen based on how socially responsible their
organizations are within the green supply chain management framework. For e-auctions, the
company operates within strict operations and management systems because suppliers of
operations and sensitive goods and services are audited prior to and during any agreement
period. Bidders in the current e-auctions have been pre-existing suppliers that were already pre-
qualified. To prepare bidders for the e-auction, the company sends an instruction document on
how to use the e-auction application and details of the specific auction to the bidder. A dummy
auction is held if required, with the company staff member hosting the event walking the bidder
through the process. The bidders are given a user ID if not already a registered user and a
password to log-in to the auction web site. In cases where the specifications are complex, the
company may conduct a hybrid process where an RFP takes place and followed up by the e-
auction. This enables the organization to check that the bidders are fully aware of the
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specifications of the agreement that is up for bidding. In these cases, the bidders are told of the
process to take place from the outset. The basic rules of the auction have been the same for all
the auctions held so far: bids are accepted through the online event only (not via phone, fax etc)
and bids are final and cannot be withdrawn. The auctions have been for entire lot of goods, not
goods broken down into parts/components. The feedback to the bidder works on a ranking
system where the bids are shown only where they are in relation to other bids and what their own
bids have been. The bids are only accepted if they fall with a range as determined in the rules of
the auction - the range is set to specific percent or dollar values as part of the configuration of the
e-auction prior to the event. Also in the configuration of the e-auction are the vendor penalty
factors. These are adjustments to the bid price to give an actual price to the company and allow
for such things as exchange rate, switching costs and transportation costs. These penalty factors
are disclosed to the bidders prior to the event and affect the bid ranking position. Also the lowest
bid is not always awarded with the agreement. One of the terms of the e-auction is that the
company reserves the right not to award to the lowest bidder. If the winning bid is invalid, the
company will re-hold the e-auction.
Following figure gives you the overview of pre-auction, auction and post auction phases
of e-auction from buyers’ perspective.
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(Source: Kumar S. et. al, "Reverse Auctions: How much total supply chain cost savings are there? - A conceptual overview", Journal of Revenue and Pricing Management, May 2007)
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APPENDIX 2 - TYPES OF E-AUCTIONS 61
(Source: Alanbuxton, Does Procurement eAuction Design Matter? (part 1), http://alanbuxton.wordpress.com/2008/03/26/does-procurement-eauction-design-matter-part-1/, Accessed on April 5, 2008)
Reverse English: A reverse English auction is the most common type of procurement auction.
In this type of auction the suppliers all open the bidding at a particular price and bid against each
other to drive the price down.
English auctions are most effective when:
1. They include several suppliers who share a similar cost base.
2. The suppliers are competing to win.
Many researchers stated that an English auction should contain at least four suppliers and those
suppliers should share a similar cost base because to win a reverse English auction, a bidder does
not need to place his best possible bid. It is sufficient to marginally beat the second best bid.
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Japanese e-Auctions: In a reverse Japanese auction, the buyer states a price and bidders have to
accept that price level or withdraw from the auction. Acceptance indicates that the bidder is
prepared to supply at the stated price. When one bidder accepts a certain price level, the buyer
lowers the price level by a defined amount and again asks bidders to accept or withdraw at that
level. This kind of auction continues until there are no more bids placed. Japanese auctions work
well in the following environments:
1. When there are significant differences in cost base among bidders.
2. When the contract is of different value to the different bidders.
Japanese auctions also have advantages for suppliers because:
1. Incumbent suppliers cannot shadow the leading bid because they need to accept each
price level as it is offered.
2. Bidders do not have to reveal their market prices to competitors.
Japanese auctions have the following disadvantages:
1. As this format is relatively new so bidders may be uncomfortable with the process.
2. They do not give suppliers any useful competitor information, therefore an over-
confident supplier may choose to hold back during the auction and miss out on being
awarded the contract.
Japanese auctions are recommended where there are large differences in cost base among
suppliers, or where there are three or fewer suppliers.
Dutch e-Auctions: In a reverse Dutch auction, the buyer offers a very low price, lower than
suppliers would accept. The price gradually increases until a supplier chooses to supply at that
price. The buyer has to award the contract to the lowest priced supplier because this is the only
price revealed during the auction process. Therefore Dutch auctions are limited to those
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categories where price is genuinely the only differentiating factor among bidders. The key to
success in a Dutch auction is a lightning fast connection speed so that the clock can tick
relatively quickly and the bidder can stop the clock at exactly the right moment. Even with the
increasing speed of internet connections worldwide, the internet is still far too slow to be able to
run a true Dutch auction. Therefore most implementations of online reverse Dutch auctions allow
suppliers to submit their best price before the event starts. The clock then ticks up and places a
“bid” on behalf of the lowest priced supplier.
Weighted/ Multi-Attribute eAuctions: Within this auction, non-price factors are rolled up into
a merit score (represented relative value) that is then subtracted from the supplier’s price bid to
arrive at a comparator score. This comparator score represents the relative value of each
supplier’s bid, taking into account price and non-price attributes. Thereafter, suppliers are ranked
based on their comparator score.
These kinds of auctions can have the following benefits:
1. Post-auction decision making is made simpler, because the differences in non-price
elements of the different suppliers have already been factored in.
2. Potential to allow higher-quality and higher-price suppliers to compete on a level playing
field against competitors in the auction.
Sealed Bids (or Vickery - second price sealed)62: A sealed-bid auction allows bidders to submit
written bids without knowing the bid of the other people in the auction. The highest bidder wins,
but the price paid is the second-highest bid. The auction was created by William Vickrey. This
type of auction is strategically similar to an English auction, and gives bidders an incentive to bid
their true value.
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(Source: Alanbuxton, Does Procurement eAuction Design Matter? (part 1), http://alanbuxton.wordpress.com/2008/03/26/does-procurement-eauction-design-matter-part-1/, Accessed on April 5, 2008)
The aforesaid process chart depicts under what circumstances which type of e-auctions would be highly beneficial to an organization.
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APPENDIX 3 –E-AUCTION EXAMPLE (Sun Microsystems)Sun Microsystems uses e-auction as part of its value added procurement strategy to source for
low-end memory circuits and low-capacity disk drives to high-end chips, power supplies and
virtually every capacity disk drive the company buys. Nowadays, it is also using e-auctions with
its electronics manufacturing services (EMS) providers. The company not only awards printed
circuit board assemblies, but also entire systems, including servers and mass storage units, to
contract manufacturers through reverse auctions.
The company invites past business suppliers to participate in the e-auction as they have
already been score-carded (i.e. pre-screened), and their performance
in the past is part of the Procuri (e-auction software) auction tool
that Sun uses. In 2007, the amount of business Sun Microsystems
awarded through e-auction is approximately $2.7 billion. Moreover,
Sun Microsystems' total annual spend with suppliers is around $4
billion.
By using e-auctions as a way to source for components, Sun Microsystems harnesses several
benefits. First, the major benefit is to reduce cost of materials by creating a competitive
environment. When the company initially began to use the e-auction procurement method they
immediately realized a 30% reduction in the components’ price. Then, over time, the cost
reductions become incremental. The savings represented a huge competitive advantage for Sun
Microsystems because it, while spending $4 billion a year, is competing with some companies
who spend upwards in the range of $40 billion.
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Sun Microsystems also participates in a ‘high integrity’ auction, which implies that Sun
Microsystems do not put anyone in an e-auction that it will not award business to. Most of Sun
Microsystems's e-auctions are not winner take all. It is essentially auctioning off pieces of the
component pie and not the entire pie.
Typically, Sun Microsystems asks three suppliers to bid for its requirements. This process
allows healthy competitive environment because each supplier knows that it will get a portion of
Sun Microsystems’ business. A supplier can increase or lose share of business with Sun
Microsystems through e-auctions. A supplier may have 50% share of business for a certain
commodity. If they do well, then they can bring it up to 55% to 60%. If they aren't aggressive
then their share may fall to 40% in a quarter. The other suppliers may get a 35% share and the
third a 25% share. It is about receiving a portion of the overall pie almost all the time.
E-auctions have resulted in Sun Microsystems getting similar prices to what larger OEMs
(Original Equipment Manufacturers) receive. Large OEMs traditionally had gotten better prices
than Sun Microsystems because their volumes were much larger, but as soon as Sun
Microsystems began with e-auctions, the gap shrunk to almost zero.
The key highlights of Sun Microsystems’ e-auction:
E-auctions need to have integrity. In other words, do not include suppliers that have no
chance of getting business.
E-auctions should not be winner take all. It should be a varying portion of overall pie
should be awarded to all suppliers through e-auctions.
Only suppliers, who have been previously qualified, and are currently doing business
with a company, should be included in e-auctions.
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How Sun classifies its e-auction spend
Sun Microsystems classifies its production materials into different levels and uses e-auctions for
the following products.
Level Commodity
1 Mechanical assemblies (plastic molding, metals works)
2 Electro-mechanical (fans, cables)
3 Electronic enclosures, PCBA backplanes, power supplies
4 Systems integration (active boards, software)
5 Full system manufacturing/design
Source: Sun Microsystems
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End Notes
17 Ibid.18 Ibid.19 Buxton A., Does Procurement eAuction Design Matter?, Trading Partners, http://www.tradingpartners.com/usa/download.php?Id=85&Field=File&Force=Y&Stream=N , Accessed on April 4, 200822 Ibid.25 Branko S. et al (Jun 2004), Advances in e-procurement: A focus on the product/buying situation, Management Services Journal26 Hartley J. et al (May 2004), An Exploration of the Adoption of E-Auctions in Supply Management, Eee Transactions on Engineering Management, Vol. 51, No. 2, Page 15327 Moser, E. (2002), "E-procurement – reverse auctions and the supplier's perspective", Pharmaceutical Technology, Vol. 26 No.5, pp.82-5. 28 Hannon, D. (2004), "Online buying gathers steam one buyer at a time", Purchasing, Accessed on April 4, 200829 Brunelli, 2000. "Online auctions save millions for Quaker Oats and SmithKline Beecham." Purchasing, vol. 128, no. 4, p. S22, 2000.30 Prof. Lakats L., Economic Order Quantity, Supply Chain Management and E-Commerce Lecture, Winter 200831 Hartley J. et al (May 2004), An Exploration of the Adoption of E-Auctions in Supply Management, Eee Transactions on Engineering Management, Vol. 51, No. 2, Page 15332 Dong, Yan, Carter, Craig, and Dresner, Martin, “JIT Purchasing and Performance: An Exploratory Analysis of Buyer and Supplier Perspectives”, Journal of Operations Management, Vol. 19, 2001, pp. 471-483.33 Sashi, C.N., O'Leary, B. (2002), "The role of internet auctions in the expansion of B2B markets", Industrial Marketing Management, Vol. 31 No.2, pp.103-10.47 Gattiker et al., 2005, Why do sellers dislike Internet reverse auctions?: some experimental results, Proceedings of 16th Annual North American research/Teaching Symposium on Purchasing and Supply Chain Management (CAPS/ISM) March 17–19, 2005, Tempe, AR (2005).48
Procurement Trends, http://www.epiqtech.com/e-procurement-Trends.htm, EPIQ, Accessed on April 8, 200851 Day, George S.; Fein, Adam J.; Ruppersberger, Gregg (2003): Shakeouts in Digital Markets: Lessons from B2B Exchanges, in: California Management Review, 45(2), 2003, pp: 131-150.52 Hong, Y., Hartley, J.L. (2001), "An exploration of online reverse auctions as a procurement tool", Proceedings of The 12th Annual North American Research Symposium on Purchasing and Supply Management, pp.79-90.56 Shah, Chiraq (2005), What’s the future of e-auctions?, European Leaders Network. Retrieved on April 3, 2008 from: http://www.europeanleaders.net/magazines/european-leaders-elp02/articles/11707/57 Dunn, Lauren, Does Congress Need to Regulate Online Auctions? Retrieved April 6, 2008 from: http://pcworld.about.com/news/Jun282001id53983.htm58 Moozakis, Chuck (2001), Tools Give Managers Purchasing Power – Web Procurement Software Helps Companies Cut Costs, Rate Vendors And Manage Inventories Better, InternetWeek.59 Shah, Chiraq (2005), What’s the future of e-auctions?, European Leaders Network. Retrieved on April 3, 2008 from: http://www.europeanleaders.net/magazines/european-leaders-elp02/articles/11707/
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61 Buxton A., Does Procurement eAuction Design Matter?, Trading Partners, http://www.tradingpartners.com/usa/download.php?Id=85&Field=File&Force=Y&Stream=N , Accessed on April 4, 200862 Vickery Auction, http://en.wikipedia.org/wiki/Vickrey_auction, Wikipedia Website, Accessed on April 6, 2008
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