Reverse Auction

Morgan State University |

Factors Affecting Supplier Adoption of Governmental Reverse Auctions: An Exploratory Case Study

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Submitted to : Dr. Abirami Radhakrishnan |

Shiva Neupane

11/10/2012

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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 for products and services that are asked for. Reverse auctions are relatively new to the Federal and State Governments which account less than a percent of total procurement amount. This procurement tool appears to be best suited to buying a large volume of simple, well-defined, or standardized commodities. However, reverse auctions are consistent and compatible in saving lots of money over that of traditional pricing methods. Willingness to adopt governmental reverse auction are affected by factors such as: (1Perceived reverse auction system factor, (2) perceived external factors and (3) organizational readiness factors.

In private sector, there are two main factor which affect suppliers to adopt reverse auction system. Suppliers perceive online reverse auction as a divisive tool used by corporate buyers to lower down price and these trends tip the balance of power towards corporate buyer. These are private industry implications; however, governmental reverse auctions are not subject to same kind of aggressive competition as private industry, they check and create laborious procedure to insure fair procurement process and avoid fraudulent practices, ignore incentive to lower cost.

Why suppliers are not choosing governmental reverse auctions? This questions lead authors of...