Increasing your Choices
During a traditional quotation or sealed bid process some suppliers come in so far off the mark that they exclude themselves from further consideration. The following bid chart for epidural packs highlights the opportunity for suppliers to put themselves in a better position through the identification of true market price as they hunt for the lead.
The opening bids are the result of a traditional quotation process. As can be seen, the ultimate result of this auction made only a very minor price improvement when compared with yellow's pre-auction offer. However, whereas prior to the auction yellow was the only game in town, by the end of the 30 minute exercise there were 3 suppliers within a very tight range. This common effect of clustering around true market price gives the buying organisation greater flexibility and more choice with less need to compromise on the qualitative aspects of the contract
Next section: Probity, transparency and fairness characteristics of reverse auctions
