• E-auctions the future but not as we know them

Opinion

Electronic auctions are the first step towards making procurement efficiencies but it is the next wave of technology that promises real moves towards a purchasing panacea, according to Peter Robbins.

E-auctions the future but not as we know them

In 2000, businesses began the transition from paper to web in a bid to transform their purchasing with an automated process. E-auction sites popped onto our radar and they were deemed the next big thing. Put simply, on-line hosted auctions enabled suppliers to 'pitch' against each other to drive down prices (and margins for the buyer) to win contracts.

This simple process became hyped beyond belief until the scepticism of the later year web downturn tempered the world's enthusiasm. However, as the internet has stabilised, so the public and private sectors have increasingly returned to sourcing goods and services through the e-auction principle.

Of course, this move is driven by similar but different factors in the private and public sectors; reducing overheads to add value to the bottom line; the Office of the Deputy Prime Minister (ODPM) demanding savings of £21.1BN on the back of the Gershon report, the £1.1BN saving potential found by the National e-Procurement Project and the latest e-gov efficiency targets.

As a result of the various pressures held within either environment, the traditional e-auction is undoubtedly a first rung on the ladder towards automating processes to help buyers make cost reductions. However, yesterday's model of the 'one-hit-wonder' e-auction is not the most efficient, particularly when focussing on commodity items, and does not capitalise on advanced technology available.

Electronic auctions take considerable preparation, educating suppliers on the process, undertaking levels of pre-auction negotiation, implementing a dry run to unearth technical or training issues and setting extraneous parameters before you even invite suppliers to the table in the first place.

The question has to be asked, is the current model delivering a truly efficient process? Are we missing out on a trick and simply becoming excitable about an old model that offers a way out for those looking to start making cost savings at the expense of time, a strategic move that is recognised and visible within the current corporate climate?

Perhaps, but whilst technology has been developing to hone the one-off e-auction process of yesterday it is clear that the e-auction of today could be a very different beast indeed.

What if we could discover a process that conducts daily e-auctions automatically overnight, every night, allowing users to access multi-faceted product lists by best price and availability within a transparent and secure environment from anywhere in the world?

Not only that, let's go blue skies for a minute, what if we could find technology that requires no supplier or buyer training and actually manages multiple supplier relationships automatically, empowering us all to purchase products at the touch of a button?

This type of powerful aggregation technology would genuinely take us to a new level of efficiency and eliminate the timely need to pick up the phone and negotiate or manage suppliers at all - such a solution simply manages suppliers in a structured manner, inviting them to stay competitive on a daily basis to keep enjoying your business.

Such an advanced process would also spread the risk associated with contracting to any one supplier or group of suppliers and let's face it, no one supplier can provide the best priced product ever day of the week on every product it stocks. Ultimately, innovative technology would ensure users receive the opportunity to buy nothing but the best priced product (whatever the supplier) every working day delivered within the shortest possible time.

Without all the entrapments of managing suppliers, manually comparing prices and conducting vast swathes of admin and training, the new generation could actually free up operational time and add value to a users role. This would mean users could actually enhance their role to focus on more strategic tasks, in turn buoying job satisfaction.

The point is, this next generation technology is no hypothesis, it is here and now.

Yes, simple online auctions can provide huge cost savings, and yes, organisations cannot afford to miss out, but new technology is alive and kicking. Now is the time to build on existing processes and become as enthusiastic as the analysts about the new technologies that are beginning to shape the future of the efficiency revolution.

Peter Robbins, Probrand Ltd