|
|
Having a clear purchase specification is critical, and should be evident in all sourcing decisions. The better the purchasing description (e.g., consisting of clear specifications for products or SOW for services), the better the sourcing results. A well-planned buy will always provide better sourcing results.
Generally, in a reverse auction, the buying organization should set a dollar amount higher than the desired final cost for the initial bid. A high dollar amount usually leads to a more favorable outcome for the buying organization in a reverse auction because suppliers bid against each other and drive the price of the product or service down. If the item manager(s) decide to source enough of the organization’s requirements to attract suppliers, the requirements must be robust enough so that the volume can be managed and leveraged by the supply base to drive savings and efficiencies. However, the dollar amount should not be so high as to create potential risks for the organization. The key deciding principle for the appropriate level of a starting bid is the ROI, and it is easier to gain a larger ROI on a larger purchase. In some cases, the suppliers may provide something innovative; therefore, they may have some input into setting the preliminary price.
|
|
