Thursday, 30 November 2017

Three Compelling Reasons to use a Japanese Auction by Peter Schmidt

Peter Schmidt offered to write a guest blog for Market Dojo on his past experience with eAuctions. Peter has a long track record in, sales, consultancy and procurement. He specialises in Telecoms, Managed Services and Public Cloud.


In procurement, eAuctions can be regarded as a fair way to buy goods or services as all the suppliers have an equal opportunity of being awarded the business.

The model that is commonly used is the reverse auction that gives suppliers during the auction information on their position relative to their contenders. This practice creates a competitive element among the bidders allowing them to establish the market price for the buyer.

At the end of this reverse auction, the contenders ranked two and three may have a fairly good idea of the established market price. This will indicate to them to improve their performance for similar categories organized by the buyer. Despite the fact that the above sounds great and the results are rewarding, there are situations that would call for the Japanese auction.

The Japanese auction
The mechanism of the Japanese eAuction is straightforward. All the participating suppliers start at a predefined price level that is decreased by a fixed percentage during the auction. The final contender who declines the offer wins the auction.




The contenders are unaware of who is bidding and what the others are doing during the auction. In general, the best price that arises from a Japanese auction is less favourable than when a reverse eAuction is conducted. There are situations, however, that could benefit from the Japanese auction model.

Lack of pricing elasticity

The suppliers have submitted their offers at different price levels, where there is a reason to believe that the dynamics of reverse auctions are likely to fail because of a lack of price elasticity between the highest and lowest bidder. The Japanese auction will ensure then, that at all times a better price is established, as the lowest bidder is unaware of the others and is encouraged to give a better price. 

Limited amount of contenders

If for whatever reason suppliers are not eager to bid and the number of contenders is reduced to two, you may consider a Japanese auction to eliminate the risk that one of the bidders declines to participate at the last moment, which leaves the buyer with only one supplier. The Japanese auction allows the buyer to continue with the auction and establish a better price. 

Regulated environment

In a highly regulated market segment where suppliers do not want to know from each other the kind of pricing levels that they can offer. Also here the Japanese auction can be the right fit, as the suppliers are not able to assess the behaviour of their contenders.

Other methods that are beyond the scope of this blog that can be conducive in yielding better results from an eAuction is the introduction of extra variables that relate to the market conditions and/or the supply chain. 

It is paramount that whatever way you chose, suppliers must be well informed about the rules of engagement as the buyer’s success depends on their commitment. 

For more details on the various types of auctions, please download the Infographic from Market Dojo. 


Alternatively, if you’re interested in find out more about the services that Peter Schmidt provides, click here

Peter Schmidt, Independent Consultant for P.Schmidt Consultancy Services B.V.

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Thursday, 23 November 2017

Learning Excel through Football

Market Dojo have put together a learning spreadsheet to help procurement professionals gain a better understanding of excel. This spreadsheet uses premier league, international and club football data to provide engaging educational statistics.


Included in the spreadsheet is:
  • Basic Excel Formulas - SUM, Average, Min/Max, Count etc
  • Intermediate Excel Formulas - IF & IF(AND)
  • Text Excel Formulas - TRIM, Concatenate etc
  • Excel Lookups - Standard Lookups & VLookups
  • Conditional Formatting Rules
  • Pivot Tables - Layouts, filters etc
  • Graphs - Editing graphs, Trendlines, Combo Graphs etc
  • Macros - Turning on macros and creating macros

You can download the spreadsheet here on our resources page under miscellaneous.

In the modern age of data, being able to decipher large amounts of data can be invaluable in both saving you time and analysing data in new ways. Whether you trying to formulate data into an importable file or simply improve your employability.

We believe that having a good understanding of Excel is essential for the modern day procurement professional. Without being able to use Vlookups or create conditional formatting rules you would struggle to organise and interpret large volumes of data that is crucial in modern roles.


This spreadsheet isn't meant to be a thorough understanding of all the different aspects of Excel. However, if you have anything else that you believe should be included just get in contact and we will do our best to include in an amended version.
For more information on tools that can help procurement professionals get the most out of their activities go to www.marketdojo.com

Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Thursday, 9 November 2017

5 Top Tips to no longer fear Reverse Auctions

This article is to help you overcome what seems to be a very scary concept to organisations - the reverse auction. Too many procurement people, or perhaps your stakeholders, the mere mention of the word ‘reverse auction’ can install huge pangs of anxiety, or even terror. There is a misconceived notion that reverse auctions are complex beasts, that only the most experienced, battle-hardened procurement professional is capable of running.

There is a common saying that “People fear what they don’t understand” so we’re here to help you and your stakeholders overcome your fear of reverse auctions. These 5 top tips are designed to tackle any feelings of fear you have towards reverse auctions, and hopefully, teach you that they are something to embrace.

Top tip 1 - Pick your initial categories strategically and prove the value

Our study into reverse auctions showed that 90% of respondents thought stakeholder buy-in was the major barrier to running reverse auctions, (Read our barriers to reverse auctions blog here). If possible, try and choose some non-sensitive categories to run reverse auctions on, to begin with. Office Supplies is a great choice for this (apologies to those of you who are very precious over the type of pen you have). Invite stakeholders to view the auction, showcase the value you can offer and hopefully it will be a springboard for success to attack some other categories.


When it comes to choosing which category to run a reverse auction on, look for those which are easy to define, has savings potential, and high liquidity (high number of capable and interested suppliers).

Top tip 2 - Sell the benefits to all parties

This tip applies to both your stakeholders and suppliers. For suppliers, in what other scenario do they have an opportunity to receive some live feedback on their competition and where they sit in the market. Typically, the only feedback suppliers will receive is what the procurement lead offers them, and this can be hard to come by.

For stakeholders, the obvious benefits to reverse auctions would be price, but there are much more. It can offer insights into bench marking as well as true Market Price. We’ve seen some reverse auctions where 5 suppliers have been within £100 of each other for a £million contract - that is true market compression. It is also a much more efficient negotiation method where you can involve multiple participants over short timescales, and with no geographical constraints.

Top tip 3 - Seek guidance from your solutions provider

Your solutions provider should have seen a wealth of eAuctions completed across their client base, across a huge selection of categories too, and are in an ideal position to help you with construction and strategy for your eAuction. Don’t be afraid to pick their brains, they’ve probably seen your category put through a reverse auction, or something very similar. At Market Dojo, we’ve seen over 10,000 eAuctions across more than 150 categories run through our tool. We want to see our clients succeed, so we offer lite strategic advice included within our licence cost, to maximise the likelihood of success.


Top tip 4 - Communication is key - get your suppliers bought into the process
I cannot reiterate the importance of communication throughout the reverse auction process.  Communication needs to be clear and consistent from start to finish and will help with any objections you have from suppliers. Explain to your suppliers why you’re looking to do a reverse auction, hold a session with all the suppliers to give them the opportunity to raise any concerns they have and take the time to give them feedback to alleviate those concerns. Inform them about the award criteria you’re going to use (see Tip 5), and ensure that your award method is consistent.

Some suppliers will have a negative perception of reverse auctions, but the way that you communicate will go along way to changing their opinion. Please do not change the award criteria at the last minute, as it will completely undermine the entire process.

Top tip 5 - You are not obligated to go with the lowest price

“We’re not an organisation which buys purely on the lowest price”  - Good because you don’t have to! There is absolutely no obligation to go with the cheapest quote within the auction. More often than not, reverse auctions are run under what’s called a ‘buyer's choice’ meaning you have free reign to award the business to whatever supplier you see fit.

Furthermore, you can actually run weighted reverse auctions, therefore combining the quality aspect to your tender with pricing in the reverse auction. This works in exactly the same way as if you were to run a weighted RFQ, but with live rankings based on a combination of price and quality scores. There is no reason to not run a reverse auction based on the objection of a price.

Don’t forget the importance of communication to your suppliers - make sure you follow through on your actions.




For more information on barriers to reverse auctions click here.


Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!

Monday, 6 November 2017

Misconception of Categories


There's often a misconception within procurement and eAuctioning that success with using eSourcing solutions relies heavily on the type of categories. Typically, categories such as stationery and IT equipment are thought to be more suitable for eAuctions than other complex categories. However, the auctions ran through our tool suggest differently. 

Here I have listed just a few categories which have been run through our software recently.

  • Honey and jam   
  • Condiments


  • Food can often be thought of as complex category as the specifications and health and safety regulations require careful onboarding and strict requirements from suppliers. However as shown, cupboard essentials can be run through eAuctions! So don’t rule them off too quickly, they could reap you some huge savings depending on your specification.


  • Packaging materials
  • LED lighting
  • Bar code Scanners


  • This is an easier category that is often ran through the tool. Specifications are relatively easily defined, depending on how you limit the specification. E.g. size and shape are much easier to modify, with the ability for suppliers to make this a highly competitive lot, ensuring you get the market price.

  • Fire extinguisher
  • Meat
  • Fertilisers


  • Items in this category surprisingly have been successfully sourced through eAuctions. However, tight specifications and strict onboarding protocols are essential to make this a success.

  • Gas
  • Oil


  • An especially easy category to define with a highly competitive market. However, your requirements need to be relatively sizeable to attract participants and gain substantial savings. Numerous Market Dojo clients run these categories frequently through our tool.

  • Cars
  • Boilers


  • A highly competitive market depending on specification. Potential to generate high savings if suppliers have been correctly onboarded and potentially allow suppliers to offer next best alternative. However, a company may want to stick with a particular brand, limiting your negotiation opportunities.

  • Bed mattresses
  • Garden Tools


  • These types of categories have successfully been run through the Market Dojo tool, producing high savings for many Market Dojo customers. The potential for a loose specification gives it the ability to source from numerous suppliers for increased competition and additional savings.

    The benefit of allowing users to customise their requests through questionnaires allows just about anything to be auctioned through our software. As you can see from the list, there is a variety of categories sourced through our tool. Even for more tricky categories, we offer a service to govern the onboarding processes called SIM Dojo to ensure that proper practice is met. So don't be put off running complex categories through an eAuction tool!

    If you are interested in any of the services that we provide such as Market Dojo and SIM Dojo mentioned to help run your eAuctions and govern supplier onbaording click here for more information.




    Wednesday, 1 November 2017

    New Release - November 2017

    Our regular system improvements have taken place again, and this month we have looked at Document Sharing.


    Ability to attach documents only for a specific supplier
    Documents are a really important way for our customers to share information, whether these are terms of business, product specifications or customer references, they often form a critical part of the tender. Until recently, document security meant that a Host could only share documents with Participants based on their status. All participants would see some documents, with others restricted to just the Participants who the Host had given access to the whole event. Sharing in this way, is easy and simple, however sometimes you may want to share a document with only some suppliers. Examples include co-signed NDAs, Award Letters and Signed Contracts. Previously, the only option was to do this outside Market Dojo, which meant some parts of the audit trail were not available. Sharing Now, we have changed this, so that documents can be shared with certain suppliers, or just with the other Hosts managing the event. This is an extra option when creating or editing documents:

    Sharing.gif
    Documents have a new ‘Share with’ option, where you can control who can see the document.

    Viewing
    The experience of viewing a document remains the same for Participants (either they can see a document, or they cannot). For Hosts, there is now an extra information badge, which shows who has access to this document.
    viewing.gif


    When the host views a document, they can easily see who it is shared with.

    Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!