The “Killer” E-Business Application: Strategic Procurement Through Electronic Reverse Auctions

Rod Braithwaite, Information Systems Consultant

Andrew Stein[HREF1], Lecturer, Information Systems, Victoria University Andrew.stein@vu.edu.au

Paul Hawking[HREF2], Senior Lecturer, Information Systems, Victoria University paul.hawking@vu.edu.au

David Wyld[HREF3], Associate Professor of Management, Southeastern Louisiana University, USA dwyld@selu.edu

Keywords

B2B e-commerce, e-Procurement, Online Auctions, Case Study

Abstract

In the late 1990’s, online Business-to-Business (B2B) reverse auctions (E-RA’s) proliferated and were adopted in a wide variety of circumstances. The reverse auction format evolved to take advantage of Internet technology and reverse auctions have been identified by many large organisations as a tool to achieve substantial procurement savings. As companies adopt this technology it is important for them to understand the implications of this type of procurement. This paper adopts a case study approach to identify the issues for both buyers and sellers using this type of B2B application. It describes the conduct of multiple reverse auctions in a large Australian global company viewed through the eyes of the buyer undertaking a reverse auction. The main finding of the paper is the keen acceptance of the E-RA model and its ability to drive down costs across the procurement process.