A reverse auction is a competitive sourcing event in which qualified suppliers lower or improve their bids to win a buyer's business. It is best suited to clearly specified requirements with sufficient supplier competition and should not replace evaluation of quality, capacity, risk, and total cost.
How does Reverse auction work in practice?
The buyer defines the requirement, participation rules and bidding schedule, then qualified suppliers submit progressively improved offers during the event. The platform ranks bids according to the configured basis. A reverse auction works only when specifications and non-price requirements are already comparable; the lowest bid should not override quality, capacity or contractual criteria that were not evaluated.
Quick reference for Reverse auction
| Check | What it means for the transaction |
|---|---|
| Category | Procurement and sourcing |
| Record to keep | Keep the requirement, requester, supplier response, evaluator and approval together when they apply. |
| Do not infer | Do not treat a sourcing record as a purchase order, invoice or proof of delivery unless that later document has actually been issued. |
