2-28.2 Determine Software Platform/Service Provider

The second step in the reverse auction process is to determine the software platform or reverse auction service provider to run the auction. As mentioned earlier in Section 2-15, Consider Auctions, the three levels of auction technology available are:

• Full-Service — a full-service provider hosts the auction process from start to finish.
• Hosted — the technology is hosted by a third party, but the auctions are organized and run by the buying organization.
• Self-Service — buying organization oversees all aspects of the auction, including implementing the auction technology internally.

Many companies specialize in reverse auctions. It is critical to choose a Reverse Auction Service Provider with a good reputation and experience in the business. Item managers should examine each firm’s functionality by mandating demonstrations of past auctions run for other companies over a wide range of goods and services.

Once selected, the Reverse Auction Service Provider should also aid the client and purchase/SCM team in the establishment of auction parameters. For example, the item manager decides the duration of the auction, the level of visibility given to suppliers, and establishes bid increments. Reverse Auction Service Providers can support the item manager in these decisions, even if the purchase is only for reverse auction software.