“Auctions are not only about driving the price down. They are about having a fair, transparent, and extremely efficient process. And if you do that, in the long run, you will get the true market price.”
If you are relatively new to the field of procurement, there is a good chance you’ve never experienced an auction first-hand. With all of procurement’s focus on moving towards value and away from cost-only decision making, that’s understandable. Unfortunately, however, auctions are a valid tool in procurement’s vast toolbox, and in many cases we may be dismissing them – and their potential in a negotiation – without sufficient evaluation of the opportunity.
Jacob Gorm Larsen is the Head of Digital Procurement for Maersk and the author of the newly published book, “A Practical Guide to E-Auctions for Procurement: How to Maximize Impact with e-Sourcing and e-Negotiation.” From his perspective, an auction is simply “an online, market-driven negotiation, based on total value and with commitment.” That’s certainly not something procurement should take off the table when the conditions are right.
In this conversation, Jacob and Host Philip Ideson discuss:
- The history of auctions as part of the longer timeline of procurement technology development
- How and when to use auctions to create maximum value for the business
- How to improve communications with suppliers so that both parties achieve their goals and to promote the creation of a lasting relationship
- The ways procurement organizations can structure themselves to ensure they get maximum ROI from their investments in technology