|
|
COTS auction software packages are readily available for purchase. There are three levels of auction technology available, and the level of investment is up to the Postal Service:
- 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 auction is organized and run internally by the user.
- Self-Service — the user oversees all aspects of the auction, including implementing the auction technology internally.
Figure 2.8
Auction Technology
As Figure 2.8 illustrates, the level of investment and value obtained from an auction solution is generally related to the amount of purchasing forecast through the reverse auction process over time. The following analogies illustrate the differences between the three models:
- Full-Service model — when a person needs to drive infrequently or is unsure of how to get to a certain location, he or she can hire a taxicab. The customer needs to know only the origin and destination. The taxi company provides the driver, the car, and even the directions on how to get from the origin to the destination. The customer needs only to make the initial phone call. This works well for infrequent purchases, or while a person is learning his or her way around town.
- Hosted model — although less costly early on, the more the customer relies on the taxi, the more that the customer realizes that he or she knows his or her way around town and that it is cost-prohibitive to continue traveling by taxi. The person realizes that he or she can drive himself or herself to work, the grocery store, etc. However, the person is not prepared to purchase a car, because the total cost includes having to pay full insurance premiums, car payments, maintenance, and generally ensuring that the car is in working order. Because the person really needs the car only on weekends, it makes better sense to rent the car; now the person is paying only to use the service and can drive the car where and when he or she wants.
- Self-Service model — once the person realizes that he or she is driving the car every day and that it is becoming expensive to consistently rent a car to drive around town (yet less expensive and with more control than using a taxicab service), the person decides to purchase the car. This involves a larger initial outlay of cash to pay for the car and its maintenance, but because the person now owns the car, he or she has the ability to drive it when and where he or she wants and no longer has to pay for added services and overhead for others to take care of the car for him or her. Because the person is using the car frequently and driving many miles, over the long term, the costs of ownership are much lower than the alternatives.
|
|
