Realizing savings from online reverse auctions

M.L. Emiliani, D.J. Stec
2002 Supply chain management  
Discusses the savings that can result from online reverse auctions for the specific case of buyer-designed machined parts. Distinguishes between gross and net savings, and highlights factors that can reduce the magnitude of anticipated savings. Determines that the savings actually achieved are less than that reported by suppliers of online auction services for the type of buyer-designed production materials under consideration. Examines the root cause of why managers use online reverse auctions
more » ... ne reverse auctions to reduce the price of purchased goods and services. Concludes that the root cause of online reverse auctions is local optimization of the business system along functional, managerial, or financial dimensions, which in turn perpetuates chronic underutilization of valuable internal and external resources. Electronic access The research register for this journal is available at
doi:10.1108/13598540210414355 fatcat:dqwqw6ixirc43g5pzdceifcz2q