Effective Spend Management Through Electronic Reverse Auction Configurations

Abstract

The purpose of the paper is to analyz wide range of possible auction strategies and configurations of eRA, with respect to the ever changing market conditions. Electronic reverse auction (eRA) represents an electronic sourcing method of competitive bidding among a number of qualified suppliers. Theory assumes that eRA represents pure market environment with information perfectly distributed between both buyers and suppliers. Although initial eRA cost savings in B2B could be as high as 40%, without deeper knowledge of different auctions strategies and configurations, additional cost reductions are not possible. To identify crucial determinant, the statistical (correlation) analysis on the data set of more than 18.000 auction items with different configuration parameters was conducted. Findings suggest that the more bidders are invited to the eRA, the better results could be expected. Additionally, the complexity of the eRA parameterization does not seem to influent the success of the eRA. These results can influence usage and SW development of eRA application in real environment. This research extends already realized studies in the field of electronic auctions for the B2B processes