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The Ethics of eAuctions

by | October 6, 2015

eAuctions have become more commonplace within business over the last 15-20 years, though in some quarters there is still scepticism over their effectiveness and uncertainty in how to drive good, fair results.

Are people scared by how they are perceived by suppliers? Generally, individuals and organisations are happy to take on the competition. Many suppliers are established companies that have been around for many years.

It all comes down to how the auction is communicated and the fairness of the price. It is ethical as long as the appropriate time has been spent speaking with suppliers beforehand and adequate training has taken place.

The process needs to have been clearly communicated to ensure complete understanding of how it works and that the suppliers in the eAuction are comfortable with using the tool. The buyer needs to spend plenty of time preparing detailed specifications that provide clarity for the suppliers involved.

That way, suppliers can put their best foot forward during the auction and feel confident they are part of an ethical process.

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The online training and Q&A sessions can be completely anonymous, clearly articulating all the steps necessary to place a bid. Today’s software is pretty easy to use, so the training is brief and straightforward. However, this training shouldn’t replace direct contact by phone or face to face. A successful auction is not just about price, and relationship plays a significant role, especially to help any hold ups or issues in the process. The chances are that if one supplier is struggling with something, then others will be as well.

The more detail in the criteria the more ethical it is. Some electronic auctions are based just on price and others have a selection of different criteria to help the auction, such as quality, historic relationship or supplier experience. Buyers usually already know which supplier they want to use, but at the e-auction, they get a chance to look for alternative suppliers based on more defined outcomes. It is important that you are clear on your selection criteria and you build this into the weighting of the auction.

Finally you need to be prepared to commit to the winner of the auction and provide some feedback to people who weren’t successful. It’s important to make the whole process as transparent as possible. Ethically, eAuctions are a great way to negotiate, providing you follow these simple steps. The overall goal is to prepare suppliers to give the buyer their best price, have an overall positive experience, and be ready for future auctions.

So if you want to take advantage of the great benefits that eAuctions can bring, but want to do so with peace of mind, contact Xoomworks Procurement or find out more: