Auctions in LICIFY

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3 April, 2018
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25 June, 2018

Auctions in LICIFY

What is a reverse auction?

The reverse auction is a new and innovative abbreviated trading model carried out on the web, in which buyers publish their needs for the purchase of materials and contracting services, and interested suppliers publish their prices by sending bids or offers to the low during a certain period of time, allowing to achieve more effective, efficient and traceable negotiations in a shorter time.

Reverse auctioning is a strategy used by many administrative purchasing and supply management companies as part of strategic sourcing and global supply management activities. This type of auction becomes more popular as e-commerce becomes stronger and more popular.

Operation of a reverse auction

In a reverse auction the buyer presents the item he needs with details and specifications, the suppliers offer their products and prices. In this type of auction the provider that offers the lowest price wins the auction.

In a reverse auction the buyer hires a market maker to help make the necessary preparations to carry out the reverse auction. This includes: the search for new suppliers, the training of new suppliers and owners, the organization of the auction, managing the auction event, and providing auction data to buyers in order to facilitate decision making.

The market maker, on behalf of the buyer, issues a quote request to buy a particular item or group of items. On the indicated day and time, several suppliers, usually 5-20, log on to the auction site and input prices to several in a period of 30-90 minutes. These quotes reflect the prices they are asking to supply the requested good or service.

History of a reverse auction

Estos tipos de subastas ganaron popularidad en la década de 1990 como consecuencia de la aparición de herramientas basadas en Internet. Pionero de subastas en línea, FreeMarkets fue fundada en 1995 por ex-consultor de McKinsey y ex-ejecutivo de General Electric Glen Meakem después de que él no pudo encontrar apoyo interno a la idea de una división de subasta en GE. Meakem contrató a su colega en McKinsey Sam Kinney, quien desarrolló gran parte de la propiedad intelectual de FreeMarkets. Con sede en Pittsburgh, PA, FreeMarkets construyó equipos de creadores de mercado y gestores de productos básicos para gestionar el proceso de ejecución del proceso de licitación en línea y configurar operaciones de mercado para administrar subastas sobre una base global.

These types of auctions gained popularity in the 1990s as a result of the emergence of Internet-based tools. Pioneer of online auctions, FreeMarkets was founded in 1995 by former McKinsey consultant and former General Electric executive Glen Meakem after he could not find internal support for the idea of ​​an auction division in GE. Meakem hired his McKinsey colleague Sam Kinney, who developed much of the intellectual property of FreeMarkets. Based in Pittsburgh, PA, FreeMarkets built teams of market makers and commodity managers to manage the process of running the online bidding process and set up market operations to manage auctions on a global basis.

Aided by the deployment of dot-com, FreeMarkets has quickly seduced famous clients such as BP, United Technologies, Heinz, Phelps Dodge, Exxon Mobil or Royal Dutch Shell, among others. Many competitors appeared immediately, such as General Motors, which was one of the first FreeMarkets customers, or the giant SAP, to join the reverse auction market.

What are the reverse auctions for?

The reverse auction serves to expedite the contracting of the State, reducing costs and obtaining the best market prices. Unlike the classical procedure, it evaluates the quality (through the technical file), has defined deadlines and presence of the referential value.

Why make reverse auctions with LICIFY?

En Licify estamos lanzando una nueva herramienta diseñada con el fin de brindar negociaciones finales más competitivas para que así los negocios entre compradores y proveedores optimizando los negocios con los beneficios que tenemos en Licify:

At LICIFY we are launching a new tool designed to provide more competitive final negotiations so that business between buyers and suppliers optimizing business with the benefits we have in LICIFY:

  • Restrict direct purchases and open contracts.
  • Bet on the cheapest option while maintaining quality.
  • Greater transparency in purchases.

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