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Reverse Auction Essay

915 words - 4 pages

Morgan State University |
Factors Affecting Supplier Adoption of Governmental Reverse Auctions: An Exploratory Case Study
|
Submitted to : Dr. Abirami Radhakrishnan |

Shiva Neupane
11/10/2012
|

Factors Affecting Supplier Adoption of Governmental Reverse Auctions:
An Exploratory Case Study
In the context of procurement, a reverse auction is an on-line bidding process which allows vendors to bid as often as they wish during the auctioning period. Reverse auction is only a pricing tool during procurement to capture the best pricing available from the auction. Reverse auctions are secure, web-base auctions during which pre/post-qualified suppliers lower their prices real-time ...view middle of the document...

Why suppliers are not choosing governmental reverse auctions? This questions lead authors of this article to find out more information and to improve interaction and get favorable consideration with governmental reverse auction, some suggestions were presented base upon their findings.
1. Perceived Reverse Auction System
2. Perceived External Factors
3. Organizational Readiness Factors

1. Perceived Reverse Auction System:
Under this category three factors; compatibility, difficulty and perceived benefits are analyzed with relationship to willingness to adopt governmental auctions. Difficulty to use, highly arduous and time consuming are the main factor for firms to adopt government auction. Because of numerous websites of government reverse auction, information accessibility was challenging and time consuming for suppliers to submit a bid. Factors such as bid guide, download bid, vendor guide, procurement history, email notification and so on are compared for functional capabilities of governmental reverse auction websites and result were very random in terms of features. They lack each of these criteria heavily on the websites of all level; state, federal and local government showing poor level of compatibility. There were no perceived benefits for suppliers in choosing governmental reverse auction. Therefore, it was obvious for suppliers to be out of such reach.

2. Perceived External Factors:
Priced based competition intensity, customer power, and information intensity are three factors in comparing proposed relationship with willingness to adopt governmental reverse auction by suppliers. Price based competition in industry such as fashion, apparel, sportswears are highly competition intense and various suppliers are involved from different countries which creates a situation for suppliers to compete on the main factor such as cost irrelevantly because raw material cost, operating cost are drastically low in developing countries. Therefore, negative perceptions that reverse auctions are used as niggling purchasing tool designed to drive prices could discourage to adopt governmental reverse auction. High customer...

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