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The reverse electronic auction is a new competitive bidding procedure adopted by the recently enacted European Community (EC) directives on public procurement. It is submitted that the electronic reverse auction has the potential to reduce the tension between the European Commission and national policies of procurement, as it can decrease contracting costs, increase transparency and achieve better economic outcomes as a result of increased competition. This paper relies on auction theory in order to support such statements. A comparison between the traditional sealed-bid method and the reverse auction is further provided.

In the 1990s, reverse e‐auctions were designed to be a widely used procurement tool due to the dramatic cost reduction. However, the current usage is more limited than expected, because e‐auctions do not always produce the benefits expected and firms have great difficulty in deciding the right tool to use in the negotiation. The aim of this paper is to propose a methodology for a useful utilization of the reverse e‐auctions.

This paper suggests a method based on the quality function deployment (QFD) technique to help purchasing managers to choose how and when they should use e‐auctions to buy a new product or service.

The approach proposed is structured as a tree and developed in three steps: choice between traditional negotiation and e‐auction; choice between the different typologies of e‐auction (open, secret, and in sealed envelope); and, finally, choice of the specific characteristics of the e‐auction to guarantee an optimal negotiation outcome.

As completion and validation of the method proposed, two case studies are presented and discussed.

The value of the methodology is to propose a simple but systematic approach to use the reverse e‐auctions technique. The use of a QFD‐based approach represents the originality of the method.

In the late 1990’s, online B2B auctions were proliferating and were being adopted in a wide variety of circumstances. The reverse auction tool has evolved to take advantage of internet technology, and online auctions have been identified by many large organisations as a tool to achieve procurement savings. As companies adopt this technology, it is important for them to understand the implications of this type of procurement. This paper adopts a case study approach to identify the issues for both buyers and sellers using this type of B2B application. It describes the conduct of a reverse auction, from the preliminary steps all the way to the final awarding of the contract. The case study is viewed through the eyes of a supplier, undertaking a reverse auction for the first time. The main outcomes show that the auction vendor and buyer were major winners – with the supplier expending considerable time and effort to participate in the auction, only to realise that the auction places cost above all other factors in awarding the contract. The importance of cost over service delivery, customer support and buyer‐supplier relationship was the “bitter pill” the supplier had to swallow.

The purpose of this paper is to explore how a sourcing professional arrives at a decision to use an electronic reverse auction (eRA) to source a particular requirement by examining eRA appropriateness.

Past eRA research findings are synthesized into a summary table. From a comprehensive review of the literature, theories of technology adoption, social influence, referent‐dependence theory, and planned behaviour are discussed and synthesized into a model that explains the antecedents of eRA appropriateness. A case study methodology using structured interviews resulted in a refined model that sheds light on some of the controversial findings regarding electronic reverse auction appropriateness.

Expected savings, buyer confidence, and prior eRA sourcing satisfaction are identified as new constructs that help explain the decision to source via eRAs. Additionally, perceived eRA appropriateness is proposed as a new construct that mediates the influence of external, strategy factors on the decision to source via eRAs.

Recent literature suggests that the benefits of reverse auctions are overstated and reverse auctions constitute a fundamentally coercive use of buyer power. Reconciling the conflicting supplier perceptions of reverse auctions as use of coercive power with buyer perceptions of cost savings requires an explanation for the factors that lead to the decision to source via eRAs.

The modern competitive supply chain environment entices businesses to explore all avenues for cost savings. Explaining the drivers of reverse auction use illuminates the advantages and pitfalls of reverse auctions as a strategic sourcing venue.

From an extensive review of the eRA literature and eight case studies, the authors propose a model that integrates and extends previous eRA research. Key insights from the model are the mediating effect of perceived eRA appropriateness and the integration of individual level variables with the strategic decision to source via eRA. Additionally, a table is provided summarizing the findings from relevant eRA research that reveals key insights into the phenomenon.

The purpose of this paper is to quantitatively assess wood pallet suppliers' reaction to online reverse auctions and its impact on their business policies and practices.

Survey method was used to determine how pallet suppliers react to online reverse auctions.

Determines that pallet suppliers do not realize the benefits claimed by online reverse auction service providers. Identifies new sources of costs which accrue to buyers and are not accounted for in so‐called “total cost” request for quotes including: retaliatory pricing practices, less cooperative relationships, and sourcing work back to the original supplier. The qualitative benefits identified for suppliers by third‐party online reverse auction service providers are overstated or false.

The present work can be extended to other commodity categories to identify similarities and differences in how suppliers react to online reverse auctions, understand the domain of successful and unsuccessful application of the online reverse auction tool, and provide further insight into the evolution of buyer‐seller relationships, including embedded organizational routines such as power‐based bargaining.

Findings mirror the results found in a previous study that examined aerospace parts suppliers' reaction to online reverse auctions, and indicates that market makers have consistently overstated the benefits of online reverse auctions to both sellers and buyers, and the use of this tool will typically result in unfavorable outcomes for both buyers and sellers.

This paper will be of interest to buyers, sellers, and market makers, as it identifies important problems with online reverse auctions, and suggests questions that buyers should ask market makers to ensure better sourcing decisions.

The paper seeks to examine the presence of coercion in the common use of reverse auctions for industrial procurement and spend management activities, and to illustrate the many problems that arise when purchasing and supply management is viewed by powerful buying organizations as a simple dyadic relationship with sellers.

The paper takes the form of a literature review, and analysis of the meaning of coercion, and supplier survey data.

Reverse auctions, as commonly used, are shown to be fundamentally coercive, with coercion being essential for achieving the outcomes that buyers seek.

Survey responses and findings that can be drawn from them are limited due to the small sample size. Reflects the dyadic nature of buyers' corporate codes of conduct in relation to the day‐to‐day practice of purchasing and supply management.

The existence of coercion indicates that reverse auctions are inconsistent with corporate codes of ethics or codes of conduct with respect to supplier relationships (e.g. fairness, honesty, and integrity). Reverse auctions are also shown to be inconsistent with US federal procurement standards and the Institute of Supply Management's “Principles and standards of ethical supply management conduct”.

The paper brings to the forefront the existence of psychological and economic coercion in the common use of reverse auctions, and discusses how this creates difficult problems for both buyers and sellers. It also presents alternative strategies that managers in buying and selling organizations can use instead of reverse auctions.

Information and communications technology (ICT) has enabled the creation of tools to organize, transmit, store and act on information in digital form in new ways (Atkinson - McKay, 2007). Combined with the reforms of government and public administration in the spirit of New Public Management, many innovations are driven by ICT in the public sector. In this paper we focus on several ICT driven innovations from the perspective of e-procurement in the conditions in Slovakia. E-procurement carries out a number of stages of the procurement process, including search, sourcing, negotiation, ordering, receipt and post-purchase review. Thus it contributes to a more transparent and competitive environment in which government has to operate. We confront these theoretical presumptions in the analysis of selected cases of e-procurement use in Slovakia.

The purpose of this paper is to investigate e‐reverse auctions (eRA) implementation experiences across a diverse group of firms and sectors in the Indian context, to derive useful insights for theory and practice.

The paper takes the form of a qualitative multiple case study following direct observation of object reality. The data analysed include written documentation, archival records, physical artifacts and unstructured interviews with key eRA personnel.

eRA work best in a competitive, high capacity marketplace and are the dominant strategy when the focus is on low search cost per supplier, when the percent reduction over time in the price offered by the current supplier is low and when the product is standardized. The optimum number of bidders is five to ten. Most of the findings are in line with literature but some of them differ too. These will add to academic discourse.

The small sample size and case method approach limits the ability to generalize the findings. The firms were selected as a convenience sample and so may not be truly cross‐sectional. Only analytical generalisation is claimed rather than any statistical generalisation.

eRA improve effectiveness of the sourcing process and facilitate access to new suppliers. They also lead to standardization of sourcing procedures, reduced order cycle, reduced prices and generally higher service levels. This paper will help firms in India and other countries to develop policies, strategies and procedures while implementing eRA.

The paper is perhaps the first on eRA practices in India. The author describes the practices in detail and based on this develops a framework for eRA process and provides detailed and concise guidelines for managers.

Reverse e‐auctions are increasingly being used in business‐to‐business procurement and have been reported to yield significant price reductions for buyer firms. However, the adoption of online auction formats has raised many concerns among suppliers, often being criticized for damaging supplier‐buyer relationships and for being antithetical to what is currently regarded as good supply chain management. Against this background this paper aims to examine the reverse auction phenomenon in the UK packaging sector.

Data were collected from the direct experiences of one large food‐packaging supplier, using case studies of reverse e‐auctions, and from exploratory interviews with other suppliers in the sector.

While buyers are reaping significant short‐term price reductions, the benefits to suppliers are less obvious. In fact, little reference was detected to the often‐quoted reductions in overall transaction costs for either buyers or suppliers. However, most respondents were not able to specify their transaction costs and associated risks and did not appear to have adequate costing systems to enable such quantification.

Reports the concerns of suppliers, outlines how buyers could embed trust‐building mechanisms into the reverse e‐auction process and proposes a model for testing the findings in future research.

Expands on the existing experience of the impact of reverse e‐auctions on supply chain relationships despite the limited, albeit growing, body of empirical evidence of this.

The purpose of the paper is to explore the benefits of online reverse auctions for both buyers and suppliers in contrast to the negative implications for procurement process. This paper also aims to provide a framework for managers determining if participation in online reverse auctions is appropriate for their business.

Information was gathered from numerous sources including surveys from both buyers and suppliers in a multitude of industries in order to create a comprehensive analysis of benefits and shortcomings of online reverse auctions. Additional research could be pursued by conducting a detailed cost analysis of buyers who have adopted online reverse auctions. A thorough analysis of unit cost and total cost changes amongst various industries could provide benchmark data for companies contemplating entering the reverse auction arena.

The research analysis finds a strong temptation for buyers to participate in online reverse auctions: price reductions. However, buyers should approach online reverse auctions with caution as total cost savings can be misleading and participation may result in damaged relationships with suppliers. This can be seen in the results portrayed in the buyer and supplier industry survey which shows that buyers are more keen to participate in online reverse auctions in order to gain advantage of the lower prices and global potential of suppliers, whereas some buyers are keen on making a strong relationship with existing suppliers through direct contact.

Buyers' determination to use online reverse auctions relies on product specifications, supplier relationships, the current supply and demand environment, indirect costs, and several other factors which will vary for each product and for each buyer. Therefore, an all‐encompassing decision model cannot be presented to accommodate each scenario. However it can be seen that the industrial survey to the buyers and the suppliers has been an effective tool in bridging the gap between the decision model and the factors that vary between each buyer.

This paper provides managers a framework for determining if online reverse auctions are appropriate for their business. In practice, additional company specific information can be applied to the decision making model.

This paper includes a comprehensive decision framework specifically for buyers as well as an abbreviated decision model for suppliers.