Search results

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.

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 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.

Presents the results of a survey conducted among aerospace part and sub‐assembly suppliers to quantitatively assess their reaction to online reverse auctions and its impact on their business policies and practices. Findings are compared to the qualitative benefits identified for suppliers by third party online reverse auction service providers. Determines that incumbent suppliers do not realize the benefits suggested 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. Concludes that both buyers and sellers participating in online reverse auctions will likely encounter unfavorable outcomes, thus questioning the effectiveness of this new purchasing tool as a means of reducing the unit price of buyer‐designed engineered components.

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.

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 improve the relief procurement process as one of the most important elements of humanitarian logistics. For doing so, a novel two-round decision model is developed to capture the dynamic nature of the relief procurement process by allowing demand updating. The model accounts for the supply priority of items at response phase as well.

A mixed procurement/supply policy is developed through a mathematical model, which includes spot market procurement and a novel procurement auction mechanism combining the concepts of multi-attribute and combinatorial reverse auctions. The model is of bi-objective mixed-integer non-linear programming type, which is solved through the weighted augmented e-constraint method. A case study is also provided to illustrate the applicability of the model.

This study demonstrates the ability of proposed approach to model post-disaster procurement which considers the dynamic environment of the relief logistics. The sensitivity analyses provide useful managerial insights for decision makers by studying the impacts of critical parameters on the solutions.

This paper proposes a novel reverse auction framework for relief procurement in the form of a multi-attribute combinatorial auction. Also, to deal with dynamic environment in the post-disaster procurement, a novel two-period programming model with demand updating is proposed. Finally, by considering the priority of relief items and model’s applicability in the setting of relief logistics, post-disaster horizon is divided into three periods and a mixed procurement strategy is developed to determine an appropriate supply policy for each period.

The purpose of the paper is to describe common decision‐making traps experienced by senior managers when considering the use of online reverse auctions as a means for sourcing goods and services and to reduce purchase prices.

The paper examines the information evaluated and decision‐making process used by senior managers in relation to common decision‐making traps.

Decision‐making traps are shown to lead to poor decisions related to the use of online reverse auctions.

Exceptions to observations and findings presented may exist. The paper provides a foundation for further investigation on how strategic sourcing processes are evaluated and selected by senior managers.

The paper is useful for managers as a guideline to evaluate sourcing options and avoid errors that can interrupt supply, reduce product or service quality, extend lead times, increase costs, or impair buyer‐seller relationships. It is helpful for academics to understand industrial decision‐making processes regarding the evaluation of sourcing options.

The paper explains decision‐making traps and provides the rationale for their existence in decisions to use online reverse auctions.

The rapid growth of online auctions underscores the need to analyze the mechanism of online auctions and to establish a theoretical research framework based on the business models adopted by successful organizations. While the theoretical and empirical research bases for traditional auctions are well established, current understanding of online auctions is still very limited. A broad conceptual model is developed that can form the basis for future research in online auctions. A review of prior research and use systems theory and empirical analysis is presented to identify the potential antecedents to online auction success. Then dimensions of the input, process, and output factors are discussed to develop the conceptual model. The conceptual model provides an impetus and direction for future research into online auctions, taking advantage of existing tradition but also forming the basis for the development and testing of research hypotheses that will expand the frontiers of knowledge in online auctions.