What is a procurement e-auction

An auction is a public or private sale process in which goods, services, or assets are offered to bidders, who compete against each other to buy the item at the highest possible price. Auctions have been used for centuries as a method of price discovery and allocation of resources. Here are the basics of an auction:

Item for sale: The item being auctioned can be a tangible good (like a piece of art or real estate), an intangible asset (such as a patent or trademark), or a service (like a contract for construction work). The value of the item may be known or uncertain, depending on the nature of the asset and the market conditions.

Auctioneer: The auctioneer is the individual or organization responsible for conducting the auction. They present the item for sale, provide information about the item's features and conditions, manage the bidding process, and ultimately close the auction by declaring the winning bidder.

Bidders: Bidders are individuals or entities interested in purchasing the item being auctioned. They participate in the auction by submitting bids, which represent the price they are willing to pay for the item. Bidders may be present at the auction location, participate online or via phone, or submit proxy bids through an agent.

Bidding process: The bidding process typically starts with the auctioneer announcing an opening bid, which is either a pre-determined amount or based on the perceived value of the item. Bidders then submit higher bids in increments set by the auctioneer until no one is willing to bid higher. The bidding may be open, where bidders openly call out their bids, or sealed, where bidders submit their bids in a confidential manner.

Types of auctions: There are various types of auctions, including:
a. English auction: Also known as an open ascending price auction, this is the most common type of auction. In an English auction, the auctioneer starts at a low price, and bidders raise their bids until no one is willing to bid higher. The highest bidder wins the item.
b. Dutch auction: In a Dutch auction, the auctioneer starts with a high price and gradually lowers it. The first bidder to accept the current price wins the item.
c. Sealed-bid auction: In a sealed-bid auction, bidders submit their bids confidentially, and the auctioneer selects the winner based on the highest bid received.
d. Vickrey auction: This is a variation of a sealed-bid auction, where the highest bidder wins the item but pays the second-highest bid price.

Winning bidder and payment: Once the bidding process is over, the auctioneer declares the highest bidder as the winner. The winning bidder is then required to pay the winning bid amount and may also be responsible for additional fees, such as taxes, shipping, or auction house commissions.

In conclusion, an auction is a competitive process where bidders vie to purchase an item by offering progressively higher bids. The auction format encourages price discovery and allows sellers to obtain the highest possible price for their goods, services, or assets. A procurement e-auction is reversed, meaning the Auctioneer want to purchase Item under the commercial conditions he/she define and the Bidders are supplier ready to sell Item under these conditions.

Course presentation

Course Level: 

Advanced level course.  Approx: 15 + 15 minutes.


Course Description:

In step 3 of LHTS (Learn How To Source) standard sourcing process the sourcing tactic of the event is decided. The characteristics of the supplier market and the product/service about to be sourced are defined and thereby also the negotiation method (and how to approach the market). But when should e-auction be chosen as a the preferred negotiation method...? 


Learning Objectives:

  • In this course the student will learn the most common standard methods and how/when e-auction should be applied.

  • This course is designed to empower students with the skills to effectively decide when e-auctions are the optimal negotiation method, enhancing their capabilities in tactical procurement roles.


Who Should Enroll:

  • Understanding the concept of a procurement e-auction, as one of the negotiation methods that can be applied, is a key skill for the tactical buyer role.


Why This Course:

The course comprehensively covers the various standard methods in procurement and provides in-depth guidance on when and how e-auctions should be strategically utilized. This program is designed to empower students with the skills to effectively decide when e-auctions are the optimal negotiation method, enhancing their capabilities in tactical procurement roles.

Listen to other learners

5 star rating

Great introduction to E-Auction

Sebastian Nilsson

Good start to get the ground knowlegde of e-auction.

Good start to get the ground knowlegde of e-auction.

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4 star rating

Intressant kurs

Rasmus Halldin

Bra och tydlig introduktion till e-auktion.

Bra och tydlig introduktion till e-auktion.

Read Less
5 star rating

Very good and it's easy to understand

Mikael Gergin

5 star rating

Awesome

Moses Sammy Ponda

Its a well explained course

Its a well explained course

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4 star rating

Återkoppling!

Pierre Brönner

Jag är en person som lär mig bäst via att prova eller lyssna in det jag ska lära mig mer än att läsa. Jag tror också att det kan bli än mer intressant på det...

Read More

Jag är en person som lär mig bäst via att prova eller lyssna in det jag ska lära mig mer än att läsa. Jag tror också att det kan bli än mer intressant på det sättet oavsett hur du som person tar till dig kunskap. Jag tycker att det finns några delar i den text som presentarades som även kan presenteras i själva genomgången av kursen som exempelvis de olika typer av produkter man en e.auktion kan byggas på samt resultat av e-auktioner.

Read Less
5 star rating

Very good and it's easy to understand

Mikael Gergin

Curriculum

(15 min video and 15 min reading)

    1. LHTS standard sourcing process

    1. Download slides and reading

    2. Defining Auction

    3. Purpose

    4. Participants

    5. Direction of bidding

    6. Format

    7. Transparency

    8. Explaining Procurement e-Auction.

    9. Benefits to collect from having Procurement e-auction capability

    10. Recommendations related to a sourcing event which include negotiation via Procurement e-auction.

    11. Example how an e-Auction can create value for all parties.

    12. What do a negotiation expert say about e-Auctions?

    1. From English reserved to Japanese

    2. Explaining the e-auction types

    1. Pre-conditions needed to succeed.

    2. Revolution Through E-Auction: A Tale of Procurement Innovation

    3. Injecting Empathy in the e-Auction process

    4. Blogpost to read

    5. Case Study: Navigating the Pre-Qualification Phase

    1. Questions to help you verify that you meet the Learning Objectives.

About this course

  • €40,00
  • 26 lessons
  • Tactical buyer role
  • Basic level course

Instructor

Senior instructor. Fredrik Axelsson

Meet Fredrik, a seasoned procurement professional from Gothenburg, Sweden, with a Master's in Economics from Gothenburg University and an Executive MBA from Stockholm Business School. With roles at LM Ericsson, Solectron Sweden AB, Axelson Purchasing Resources AB, Saab AB, and Alstom/GE, Fredrik has amassed expertise in sourcing and procurement. In 2017, he launched Sourcing Partner, a procurement consultancy firm how also own and manage Learn How to Source. Fredrik's diverse experience spans from Operative Buyer to Sourcing Director and roles like Commodity Manager and Business Development, in line organizations and projects, including industries like banking and manufacturing. Fredrik's story is one of continuous growth, learning, and adaptation, making him a well-rounded professional with a wealth of knowledge to offer.

Next Step: Setting Up a Procurement E-Auction

Next recommended step (Course 2 of 4 )

Preparing for a procurement e-auction by determining the scope, inviting suppliers to bid and setting up the procurement e-auction platform.

Course included in following bundles

  • €160,00

    Procurement e-Auction

    The bundle of 4 courses on procurement e-Auctions is designed to provide professionals like you, who are responsible for purchasing goods and services, with a deep understanding the confection between category strategies an online procurement auction as negotiation method, best practices, and considerations when setting up an e-Auction. Through a combination of theoretical concepts, practical case studies, and blog posts, this course will empower you to navigate the intricacies of conducting successful e-auctions and bring value to your organization.
    Buy Now
  • €2.100,00

    Tactical Buyer role - Advanced level Certificate

    Are you looking to elevate your skills in procurement and sourcing? Our Tactical Buyer Training Bundle is an online course series crafted to meet the unique demands of procurement professionals, particularly those in a tactical buyer role.
    Buy Now

My first encounter with Procurement e-Auction

Blogpost by Per-Erik Karlsson

As a procurement manager who has worked in the industry for over 20 years, I vividly remember my first encounter with e-auctions. It was in the early 2000s, and I worked for a large manufacturing company that wanted to purchase a significant amount of raw materials for our production line.

Traditionally, this process involved a lot of manual work, including identifying potential suppliers, sending out requests for quotes, and manually comparing bids. It was a time-consuming and often frustrating process, and there was always a risk that we might not get the best deal.

However, my team and I decided to explore the use of e-sourcing as a way to streamline the process and increase transparency. We collaborated with a system provider and set up our first event.

I remember feeling a mix of excitement and nervousness when the e-auction started. We had several suppliers bidding in real-time, and the platform automatically tracked and analyzed the bids. It was a completely new way of doing business, and it felt like we were at the forefront of a major technological change.

At the end Buyer running a procurement e-auctionBuyer running an auctionof the auction, we were able to secure a deal that was significantly better than what we could have achieved through traditional methods. It was a game-changer for our procurement process, and we continued to use e-auctions for a range of categories, including raw materials, services, and categories all the way to office supplies.


Some key lessons I want to convey:

  • Embrace innovation: By exploring new technologies like e-auctions, procurement departments can streamline processes, increase efficiency, and save money.
  • Be open to change: The introduction of e-auctions represented a major change in how procurement was conducted. By being open to this change, the company could take advantage of this new technology.
  • Don't be afraid to take risks: Implementing new technology always involves some risk. However, by carefully planning and executing the e-auction process, the procurement team could minimize the risks and achieve a successful outcome.
  • Focus on transparency: E-auctions provide a high degree of transparency that traditional procurement methods often lack. By using this technology, the company could increase transparency and reduce the risk of unethical practices.
  • Continuously improve: E-auction technology has continued to evolve over the years and has become more sophisticated and powerful. Procurement departments should continuously evaluate and improve their processes to take advantage of these advances and stay at the forefront.

Looking back, that first encounter with e-auctions was a turning point for me as a procurement manager. It opened my eyes to the power of technology and the potential for innovation in procurement. Since then, I have been a strong advocate for e-sourcing in general and specifically e-auctions and have continued to explore new ways to use technology to improve procurement processes and create value for my organizations.

/// Per-Erik Karlsson, retired procurement manager.

About Learn How to Source

Learn How to Source is an online platform based in Sweden, offering a range of procurement courses accessible globally. It serves as a community where procurement experts share their knowledge through online courses, designed for various experience levels from introductory to expert. Courses are concise, about 30 minutes each, and cover different aspects of procurement, tailored for different buyer roles. The courses focus on practical knowledge, presented by seasoned professionals, and include quizzes and certificates. They can be accessed from any device, emphasizing microlearning for flexibility and efficiency.