Combinative reverse auctions are very interesting when it comes to get proposals from suppliers of different sizes.
A company is about to buy 3 000 desktop computers. The same configuration is expected for all computers and the level of quality is the same too.
Instead of offering the whole market of 3 000 PC, the company will create three lots of 1 000 PC. The goal in doing so is to keep small suppliers able to submit offers that may be competitive on smaller lots against bigger companies. But big suppliers will be able to submit offers by bundling lots and show their ability to submit offers using their return on scale on larger quantities. The lot bundling capability is possible thanks to the combinative aspect of our reverse auctions. The goal in using such auctions is to make sure that the returns on scale of big suppliers can really be competitive against the lower management costs of small companies.
Suppliers will have the opportunity to submit offers for one lot, two lots or three lots. Combinative reverse auctions can detect which configuration of proposals is the best for the buyer.
Here is how such an auction is done:
The most relevant combination for the buyer is to sign a contract with the same supplier for all lots. |
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It is also possible to use combinative reverse auctions to handle slightly different purchasing situations, especially the ones concerning RFPs for several sites.
A company is about to select one or several PC suppliers for three of its sites. These sites are far from each others.
Combinative reverse auctions allow suppliers to submit offers either for each lot or for a bundle of lots. In this case, large suppliers can submit proposals for all sites whereas small and local suppliers will focus on the lots corresponding to the sites they are close to. The buyer will then be able to compare: - Prices proposed by large suppliers who can offer better prices on large quantities thanks to their returns on scale.
- Prices offered by small and local suppliers on each lot. Small suppliers can offer competitive prices since they have low management costs.
The most interesting choice is identified by the reverse auction tool. The buyer knows quickly which suppliers to select. Suppliers of different sizes are given a chance to work with the company and the buyer can compare their proposals without spending too many resources and too much time.
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