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E auctions grow in China
September 25, 2007

Recent seminars in China have shown a marked increase in the use of eAuctions as a method of getting better pricing. A few worldwide corporations have brought the practice to Asia after perfecting at the originating location. Auctions can provide a significant cost advantage, hopefully without sacrificing some Supplier Relationships structure. Suppliers are catching on to auctions though, for instance from a recent article on Auctions for Supplier from INC magazine:

A brief review, and some reminds me of my days on EBAY

1. Bid rock bottom first to scare off the other bidders.
2. Hold off until the very end to see where it goes,
3. As the current supplier, you don’t have to be the lowest, but a few % points higher will still give you the order because the buyer figures in the ‘Switching costs”

There were a few others but now that Auctions are more common place…. the suppliers are catching on real quick as to how to play the game.

Auctions do force us to clean up specs to assure equal bidding and provide for a direct view for the results. If suppliers bid below some costs or no profit to get the business, they may be less cooperative in the future for reschedules, samples, return, and other service we build into our SRM needs.

Another trend is the new efforts to reduce indirect spend costs here in Asia. Direct costs have in many cases been shaved down, but now there are significant efforts to do the same for the indirect spend throughout the region. Travel is especially a large target, especially for trips to Asia from the EU or Americas.

Posted by Walter E. Buczynski, CPSM (Certified Professional in Supply Management) on September 25, 2007 | Comments (1)