Posted on February 24, 2014 by Jon Hansen on Procurement Insights
Editor’s Note: When Kelly Barner and Alun Rafique submitted this post on the variables in the adoption of auctions, they hit close to home in terms of an area of procurement about which I have a great deal of experience and expertise.
For several years my research into the utilization of advanced algorithms within the framework of an agent-based model was funded by the government’s Scientific Research and Experimental Development program.
From the early development phase through to the eventual introduction of a production system in the Department of National Defence, the model progressively demonstrated tangible savings while maintaining a high degree of supplier participation. The key to success was not only in the flexible bid parameters that leveraged complex algorithms to assign the weighted values that resulted in the optimum supplier being picked 98 percent of the time, but was also achieved through an understanding of the market. More specifically, the identification of commodity characteristics about which you can read in my May 2007 (reposted 2011) article Dangerous Supply Chain Myths Revisited (Part 7): Enabling Technology – The Emergence of the Metaprise.