Buyer Analytics

A couple of weeks ago I wrote a post about an article titled Reverse Auctions Not a Cure. The article was written by Leigh Kost who is studying for an MBA at Arizona State University. This was an interesting article and was well researched.

Alan Buxton, who is Product Director at Trading Partners also read this article. Before ruling out e-auctions, Alan believes that buyers should consider multi-attribute auction.

A multi-attribute auction takes account of the fact that a supplier's bid for a contract is made up of several attributes, of which price is not the only one. Other attributes might include service levels, lead times, environmental considerations, payment terms, or anything else that is of significance to the contract award decision.

Taking all these attributes into account allows suppliers to be more imaginative with their bids and deliver greater value while retaining margin. For example, a supplier might find himself competing by extending a warranty period rather than lowering price.

One of my favorite antidotes is the engineer who runs to purchasing with a large bid wavier. "We need to buy from manufacture "X" because there is not time to bid". An alternative to meet the engineer's objective is to conduct a multi-attribute auction. Procurement makes it known to suppliers that lead-time will be the determining factor in the bid award.

Here is the link:

http://www.manufacturing.net/ind/index.asp?layout=webOnlineSpecialZine&articleid=CA6358515