15 December 2005 | Anusha Bradley
Buyers must consider e-auctions from a supplier's viewpoint to encourage more bidders, prevent collusion and maximise savings.
That was the conclusion of a study by Oxford University PhD student Max Tse on behalf of sourcing firm TradingPartners.
He said buyers should make auctions more attractive because the more bidders, the greater the chance to make savings.
"The purchaser should think about the incentives and disincentives bidders may face to enter the e-auction," he said.
He suggested TradingPartners made its bid specifications more generic to include more suppliers.
Tse also said an "aggressive entry price method" - where the purchaser sets a starting bid
figure - should be avoided because it puts off some suppliers.
John Hatton, corporate development director of TradingPartners, said although rare and hard to prove, collusion between suppliers sometimes occurs.
Tse said tendering fewer,
higher value contracts makes it more difficult for suppliers to try to share out work.
He also said buyers should state if they face a cost as a result of switching suppliers to reduce the existing supplier's advantage.
Hatton said Tse's research paper had forced the firm to "think again" on how to get the best results.