e-Auctions are an e-sourcing concept, where a company or government agency issues a digital RFP for products or services. Companies that are interested in winning the contract bid against each other. It encourages healthy competition between suppliers and vendors and ensures that the goods and services are of high quality and at the current market price.
Online auction in procurement has many benefits for an organisation. Some are highlighted below:
Efficiency in the procurement process
The entire procurement process becomes smooth and quick. In the traditional procurement process, negotiations can take three-to-four weeks, if not longer. However, when a company opts for e-auction, the entire procurement process takes hardly a few hours to complete. Usually, the organisation can negotiate with several buyers simultaneously, allowing them to make a quick decision in a single working day.
Enhanced market efficiency
e-Auctions allow an organisation to include a larger pool of suppliers. It enables the company to invite large vendors to the bidding process, which is transparent. It eliminates geographical barriers and allows the company to find suppliers from across the world in their effort to get the best price.
When a company opts for e-auction, it reduces the purchasing price as the process puts pressure on the price, as the bidder knows that providing the best quality products or services for the lowest price will help it win the project. The auction is designed to procure products and services in volume, enabling the organisation to secure the best price to ensure cost saving.
e-Auctions also benefit suppliers, who can maximise their profitability, sell products and services fast and in bulk, and reduce their cost. These online auctions for procurement don’t just help the stakeholders as they also have a role to play in expanding the national economy.