One of the crucial elements of any Reverse eAuction platform is its usability for suppliers. Often overlooked in favour of hosts (typically the paying client for eSourcing solutions), the ease-of-use of a reverse auction platform has a direct correlation to the level of competition.
We got in touch with a freight supplier who had been using Market Dojo as a participant for his perspective on our software. Joel Ziemek from Direct Connect Transport has been using Market Dojo for the last six months and participating in numerous reverse eAuctions held by Aggreko plc.
Here’s what Joel had to say:
Tell me about yourself?
I am an account manager for Direct Connect Transport, we specialise in freight haulage across North America.
How did it start?
We were eager to work with one of Market Dojo’s clients; Aggreko plc. After getting in touch with Aggreko and completing their vetting process they initially invited us to participate in a single reverse auction. The eAuction was for their long-distance road freight needs across Minnesota hosted by Market Dojo software. Since taking part in the initial eAuction, we have been actively participating and tendering bids for over 20 reverse auctions a month. Having the ability to participate in these auctions has made a real impact on our business.
Have you ever participated in a Reverse Auction before?
To be honest with you, I had never heard of a reverse auction before Aggreko invited us to participate. Obviously, without knowing what I was getting myself into, I did some research prior to participating in my first auction. However, the majority of what I have learned has come from using the system and taking part in auctions.
What do you like about Market Dojo?
Well for one it is really easy and simple to use. The layout is very straightforward and as a freight supplier, I can see the full event details on the overview screen. Typically they include the origin, destination, cargo etc. We find this particularly useful because it comprises of all the details that we need to participate in an auction or quote for a specific job.
One of my favourite aspects as a freight supplier is that I get instant feedback when participating in an eAuction. It saves me a lot of time and hassle in comparison with chasing a quote. But with the ranked auctions events that are set up by Aggreko. We know at the auction close where we placed and whether we were successful in the event.
What have you found really surprising about Market Dojo and eAuctions?
How fun it is! I love my job and I find quoting on jobs really rewarding, but directly competing with other businesses adds another level of enjoyment and excitement. It’s a great feeling in winning an auction and being ranked 1st knowing that you have won the business.
What do you think that Market Dojo can do to improve?
I really like the system, but the layout of the event pages could be improved. Just so that I can better navigate between multiple live events.
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!Responsive Design for Market Dojo
Market Dojo has now rolled out the responsive design for our flagship product, Market Dojo. This is designed to be optimised visually across all computer, smartphone and small tablet devices to maximise the user experience and interface.
Screenshot of the new responsive design for a multi-lined RFQ
You can now use the responsive design for Market Dojo through our platform by logging in at https://secure.marketdojo.com.
Alternatively, you can revert to the old design by going tohttps://previous.marketdojo.com. Any events created or actions made within the tool on either the responsive design or the old design will be consistent within the platforms.
Screenshot of the existing design for a multi-lined auction
In a short time, the site hosting the existing design will be removed andwww.marketdojo.com will only run through the fully implemented responsive design. The responsive design has been built and designed in-house to ensure the consistency of the platform but with a refreshed visual design.
Key features of the Responsive Design
If you wish to continue to use our existing design, just login athttps://previous.marketdojo.com and the data will be consistent with that of the tool in the responsive design platform. This functionality will only be available for a limited period of time and if you wish for more information contact us at firstname.lastname@example.org.
A key focus of the responsive design is giving users a better experience of the tool, offering users the ability to take onboard more information than ever before.
Nicholas Martin, Chief Technology Officer & Co-founder of Market Dojo said:
“As the use of mobile devices and tablets continue to grow rapidly, so does the range of devices and screen sizes on which people are using our tools. Our new responsive design allows users to reach critical content faster with a refreshed design that adapts to their device.
“It is only thanks to our fantastically dedicated team and incredible clients that we have been able to do this. We will be eternally grateful for all of those who have given us their continual support and look very much forward to rolling this out to become the live platform.”
For more information, contact us at email@example.com
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself![Case Study] Aggreko create ‘Freight eMarketplace’ using the Market Dojo tool
Chad Thibodeaux is the Central Logistics Manager for Aggreko North America-Americas. His duties involve the strategic sourcing for Aggreko’s transportation needs
When did you first consider using Market Dojo?
At Aggreko, we are the leading global provider of modular, mobile power, cooling, heating and air solutions. We supply to over 100 countries including to a number of major events such as the PGA tour and Formula 1 Race Days. This is in addition to our regular deliveries of rental solutions and power solutions to refineries, power plants and major construction sites.
We use multiple modes of transportation services to get our equipment moved throughout North America, but for the sake of this conversation, I will divide it into two major categories: local & long haul deliveries. The field service centres that are in close proximity to the delivery location are categorised as ‘local deliveries’. For the majority of these deliveries, we use regional service providers to deliver the equipment. For all of our long-haul deliveries which are further away from our service centres, we use approved service providers that can cover a much larger territory.
Initially, we recognised an opportunity change the way in which we procured our long-haul freight needs. For a number of years, it had been the responsibility of the local service centre teams for the arranging of vehicles and suppliers to long-haul destinations.
However, we felt that if we centralised our long-haul needs into a single central procurement team we might be able to generate high levels of savings and gain greater visibility on our spend. It was at this point that we considered using a tool that included an eAuction solution as it would give us the greatest potential for savings. We were recommended Market Dojo by a partner and have since been implementing it globally.
How have you been using Market Dojo?
Specifically, we’ve been using Market Dojo to create a ‘freight eMarketplace’, centralising all of our long-haul freight needs in North America and reducing costs through Reverse Auctions with suppliers. We have used our list of existing suppliers in addition to specifically chosen new suppliers to generate increased competition for each of the lots. Part of my role as the Central Logistics Manager is to liaise and manage suppliers and to oversee the outsourcing long-haul freight project.
What is your overall aim of using Market Dojo?
Our overall target is to capture and relay the data on a large scale, using those teachings to create further savings and thus getting better value for money, without compromising either the service from our supplier or the quality of service that we provide to our customers.
From the success that we have already had, it’s obvious that we will always be using an eAuction tool. Simply, the success has far exceeded any of the negatives and hopefully, we can continue to streamline and adopt the process on a greater scale.
What challenges did you face with the Freight eMarketplace?
Initially, we struggled with centralising all of the long-haul needs in North America to the new central team. Previously each of the field teams had organised with suppliers for deliveries in their local areas. However, we quickly found that in the past both our local teams and the suppliers had been using a different process to organise deliveries. Consequently, it took time for all of the suppliers to adapt to the new system.
Another issue was the resources needed to manage suppliers. Previously the workload had been spread across numerous teams in the continent. However, we found that with the workload we had to create an internal place within the central team to manage those vendors.
What didn’t you consider until you started the eMarketplace?
One aspect that we didn’t realise was the importance of sending a clear and consistent message to the freight suppliers regarding the eAuctions. In the freight transportation industry, eAuctions are not the norm. Therefore we had to educate many of our suppliers as to the process. At the start, we found a few issues with suppliers such as aggressively bidding but being unable to meet their obligations.
What have you heard back from suppliers?
To be honest, we have heard mixed feedback from suppliers. Some suppliers are unhappy with the process, mostly because those suppliers had previously been awarded a larger amount of business and only had to compete with a small number of other suppliers. Whereas we have heard very positive feedback from other suppliers regarding the process such as the immediate awarding of lots on completion of the eAuction and the increased level of competition, allowing for a greater number of suppliers to be considered.
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!Spend Matters – The A-Z of Reverse Auctions
The article highlights our A-Z complication of categories that have been eAuctioned through our Market Dojo platform, including the average savings of the reverse auctions, in hope that it might provide encouragement to others!
Here is a snippet of what you can expect within the article:
Automotive parts have seen an average saving of 32.5% across items like bus batteries, bulbs, doors, mirrors and windscreens.
Bedding has been auctioned on our platform 7 times, with an average saving of 33%.
Construction works is by far the most popular category in the ‘C’s with over 500 auctions run through our tool, with great success too – average savings are 16%.
Digital Media brings us into the contentious area of Marketing. However, with an average saving of 26%, it has salvaged many a departmental budget crisis.
Energy is a very popular category with a 7% average saving and one we see great opportunity for an “eMarketplace”, equipped with standardised templates and pre-approved vendors to make this auction category accessible to all.
To read the full article, visit the Spend Matters website here.
Today we are pleased to welcome a guest post from Terri Hudson. Terri is the Managing Director of Baker Wanless. They are a UK based procurement consultancy who have been shortlisted for the ‘Best Business for Customer Service’ at the prestigious Croydon Business Excellence awards.
Baker Wanless provides a wide range of Flexible Sourcing Solutions to their clients from different sectors that are looking to review, monitor and reduce costs around the globe.
Many large businesses use consultancies like ours to provide additional or specific resources to identify opportunities to reduce costs, find alternative suppliers to their incumbents or simply to accelerate the speed of their procurement projects.
In the last 3 years, we have helped our clients to buy the ‘same for less’ by addressing £384.7m of spend across goods and service contracts, identifying savings of £47.5m (12.35%) on spend. This is the power of eAuctions.
Our average return on investment ratio is 30:1 meaning on average for every £1 spent with us, we find £30 to give you back in savings. We also guarantee to save you money or you don’t pay us.
Why is it important to consider new suppliers?
“The wider you cast the net, the greater value that can be gained…”
New suppliers can provide a vital role in challenging the incumbent supplier. Often in our experience, clients will wish to remain with their current incumbent supplier. This is typically due to the evolved relationship between the companies and the potential cost of changing suppliers. However, by considering new suppliers and using a format such as a Ranked Reverse eAuction, you drive competition for the tender in a fair and transparent manner.
An eAuction also provides the ability to deliver price compression. Creating an environment in which all suppliers are inclined to offer their best value, this might be of particular importance if a single supplier is unable to facilitate the long-term demand.
One key feature that we encourage is ethical bidding, ensuring that suppliers offer values that are sustainable in the long term for their business. The importance of this can be highlighted in cases where thorough research hasn’t been done by the supplier prior to negotiations.
Stay tuned for parts 2 and 3 where we discuss cost avoidance and diminishing returns.
Katherine Clark is a Procurement Officer at Kent County Council. Her duties involve the strategic sourcing for the information technology needs of one of the largest county councils in the UK.
Tell me about yourself?
I’ve been working in the procurement team for Kent Council for the last few months, my role revolves around the IT needs for the council.
How do you use Market Dojo?
We use Market Dojo in our procurement departments for eAuctions and questionnaires to weight auctions. Typically we use it on tenders greater than £50,000 however we have auctioned for values of only a few thousand pounds.
What is your most notable success using Market Dojo?
My first eAuction involved comparing suppliers for an identification tracker system. Kent county council had been using an incumbent supplier for a number of years on the same contract terms but we wanted to discover the current market value and whether we could produce savings as a result.
We choose to conduct a Weighted Ranked eAuction, with 70% based on value and 30% based on the quality. The result was a huge success with our incumbent and preferred supplier offering a value that was 40% less than the previous price we had been paying.
We also received very positive feedback from the suppliers that took part in the eAuction, some of the suppliers mentioned that they found the system easy to use and were happy to have taken part and been considered in the eAuction.
How will Kent County Council continue to use Market Dojo?
Here at Kent County Council, we are always looking at ways we can use Market Dojo. The success we have had has changed the mentality of our procurement teams into a focus on generating greater savings turning us into a team that thinks “why should we not use Market Dojo, rather than why we should”.
Lastly, what is your favourite thing about Market Dojo?
We love just how easy it is to use. When I was first tasked with creating an eAuction I was quite daunted with having had no prior experience of conducting an auction or using an eSourcing software before. But after creating a few demo events using their Sandpit tool and the support from Market Dojo, I felt confident in my ability to use the software and produce great results.
You can read more about our work with
Kent County Council here.
A Japanese Reverse Auction is an auction type that requires all suppliers to bid at a continuously decreasing price (the value of which is set by the buyer/host). The bidders may choose to either bid at the current value or drop out of the auction. Rather than most reverse auction types which finish in principle when the second-to-last bidder drops out of the auction, a Japanese auction ends when the single supplier left has offered their lowest value they wish to bid or their time limit has elapsed during that individual price level.
The fundamental aspect to a Japanese Reverse Auction is limiting the information available to the suppliers. For example when using Market Dojo software if a bidder drops out of a Japanese Reverse Auction, the only information available to that bidder is; the values that they have bidded on, the value at which they refused (and therefore dropped out of the auction) as well as the time that elapsed while they participated in the auction. Unlike typical auctions types in which they may have visibility to see the winning value of the auction or at the very least their rank.
Another important difference to typical auction types, is that with a Japanese Reverse Auction the bidders aren’t directly competing against each other’s bids. For example in a Ranked Auction, bidder 1 would bid against the value of bidder 2. Whereas in a Japanese Reverse Auction, bidder 1 and 2 would both have the option to bid for value X without the knowledge of each other’s bid. Thereby stopping a bidder from directly bidding to oppose the value of another bidder.
What’s so special about a Japanese Reverse Auction then?
But what’s the benefit to me?
By limiting the level of information to the suppliers, it encourages suppliers to offer at an affordable price they can supply for. Rather than just offering a value that is better than their competitor. It also stops suppliers from bid shadowing (offering a value within a small margin of the lead bidder potentially still including them in consideration after the end of the event even if they didn’t win).
Japanese Auctions are particularly effective in a situation where there might be price fixing between suppliers, especially in a market with a limited number of suppliers. For example if 1 or 2 companies hold a monopoly on your market, a Japanese Auction would encourage them to offer their best value rather than just to offer a value that beats that of their competitor.
Do you have any examples?
Homeserve recently saved £1.4 million through Japanese eAuctions, while shortening their negotiations process from weeks to hours. In this case the eAuctions were for various subcontractor services across the UK and had over 140 suppliers participating.
For more information on how Homeserve used Japanese eAuctions
Has it been labelled as a ‘lazy mans tool’?
In the past Japanese Reverse Auctions has been seen as a ‘lazy mans tool’. This could be due to Japanese Auctions being able to function with a very limited number of participants.
However Japanese Reverse Auctions require the hosts to set a number of different conditions for the auction. Such as the predetermined price decreases, the time limit of each predetermined price decrease and setting the range for the qualification bid. And as with other eAuctions you need to correctly create the specification of the item/service and SLA’s. Not to mention getting the suppliers engaged. Meaning that although it might be a simple way to generate competitive bids from both the incumbent supplier and new suppliers, it requires some effort on the part of the host to create the right environment to get the most competitive result from a Japanese Reverse Auction.
Additional information on Japanese Auctions is available on our website
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!
Mid-week saw us release a couple more enhancements to the software, as well as many more general improvements to meet our growing customer demand. However two main highlights stood out that we would like to share with you in this blog…
We’ve seen increasing demand from Latin America and other Spanish-speaking regions across the globe and so we’re really excited to add Spanish to complement our numerous other language options.
As one of the most widely spoken languages in the world, it really does increase our potential user base and across several continents to boot. Give it a try today and let us know what you think!
PS: a huge thank you to our wonderful partner in Latin America, Bruno Alvarez, for all the time spent on helping us perfect this release.
Another exciting release driven by a customer request is the ability to save existing questionnaires as a template to re-use in future.
A superhost can keep tabs on which templates are created to ensure the library remains organised. There’s also the scope in the future for the Market Dojo team to pre-load our customers’ libraries with some useful templates to help them get started. This particularly applies to the SIM Dojo tool where we can provide some best-practice on-boarding questionnaires.
We hope you enjoy these new features, brought to you free of charge and immediately available to all. Keep the ideas coming as we really do listen!
The technical team have been extremely busy of late, upgrading and maintaining our 4 distinct products covering category planning, innovation, eSourcing and supplier information management.
This week was the turn of our flagship eSourcing tool, Market Dojo, to receive a new feature: multi-currency.
By this, we don’t mean simply the ability for clients to run their sourcing events in a currency of their choice – we’ve had that since the beginning. This actually refers to enabling participants to select their own preferred currency from a pre-defined list. Hosts can pick which are available to participants and what the corresponding exchange rate is to convert back to the Host’s own currency for bid comparison purposes.
The exchange rates are established per sourcing event, so you don’t need to fear an accidental change in the future that would distort your past results. You can even change the exchange rates during your sourcing event, up until participants submit their bids.
The multi-currency feature is only available as part of our Advanced Lots setup, given the few extra steps that are required. However this also means that you can combine Lots, or even Line Items, of different currencies, which is very neat.
For example your Lot may consist of a UK tariff, an EU tariff and a US tariff. You can stipulate that each element has it’s own currency that you want to see the bid in. No problem!
Should you then have an event total that needs to sum up the various elements, all in their own respective currencies, again no problem. You can even decide what currency you wish the total to appear in.
The same applies to the participants as well, even during the course of a live eAuction where all this maths is running behind the scenes to present everyone with the latest converted results.
So the next time you run a sourcing event using spreadsheets to convert bids into a single currency, know now that there’s a better way to do it by using Market Dojo.
Market Dojo helps procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!
Reverse auctions are a bit like Marmite, some people love them, boasting the success they’ve seen to friends and colleagues, utilising them when and where they can. Some people however, such as Phil Ideson, are more sceptical. For Phil, this was due to personal bad experiences with the process. For others, it may be similar or it could be as little as a lack of understanding giving this means of negotiation such a bad reputation.
We wanted to set Phil straight and demystify the reverse auction for him, leaving a more positive image of how you can really use reverse auctions as a buying tool to leverage great savings and success in your procurement negotiations.
Did we manage to turn Phil around? Find out in the podcast in the link
Market Dojo help procurement professionals negotiate better with our on-demand eSourcing tools. If you’d like to find out more, get in touch or register for free and play around with our software for yourself!
A long time ago, in a galaxy far, far away…
Star Wars was born.
And with the exciting news that Star Wars Episode 9 will feature the use unseen footage of the late,
So what CAN Star Wars teach us…
1. Star Wars taught us that when negotiating, it is important to have something of value to barter with. Anakin Skywalker went to extreme lengths, building a ‘podracer’ to secure his freedom from slavery and secure essential parts to Queen Amidala’s ship.
2. Star Wars taught us that ‘turning to the dark side of the force’ is not an effective way to achieve savings…
3. Star Wars taught us that it is important to have a really good understanding of complex categories. How else can you build a Death Star!
When conducting a reverse auction, the lotting structure needs to be able to account for this…
4. Star Wars taught us that keeping your stakeholders aligned throughout the process and clearly defining the specification of a tender are all crucial to ensure that your military does not end up dressed in ridiculous red ‘armour’ with zero protective properties (as stated by We Are The Mighty in their article here.)
5. Star Wars taught us the importance of Procurement within any organisation, regardless of culture. See this quote from the Star Wars Wikia page:
“Procurement and Supply was a branch of the Rebel Alliance that worked to free material from Imperial-occupied worlds. Individuals working for Procurement and Supply included SpecForces technicians (from the 7th Regiment) known as “Procurement Specialists” or “Scroungers.” Winter served as a Procurement Specialist on Averam and other worlds under the alias “Targeter.” Procurement specialists who specialized in acquiring ordnance were known as “Ordnance Procurers.”
6. Finally, Star Wars taught us that if you look like Princess Leia, you get whatever it is that you want in life.
Has Star Wars taught you anything else about procurement? Let us know!
Or get in touch to hear about how you can save money without “Turning to the Dark Side”!
If you’re new to eSourcing and unsure of where to start with creating an event, this article from Tony Verheggen should help clear things up. As the Sourcing Process Owner at Air Products for 10+ years, Tony is a true expert in his field having run many auctions. He kindly went through the process of creating an event on our eSourcing platform and knocked up this article to give you an understanding of how simple eSourcing can be.
Step 1 – Creating the Questionnaire
To create a questionnaire you will need to check the following checkbox:
Questionnaires can be used to to gather information throughout the Supplier Engagement Process. Surveys, RFI’s, Assessments are all types of questionnaires. In the early stages Questionnaires can be used to assess one or more suppliers capabilities, be that manufacturing or services. They can be used to understand the offerings in the marketplace, by providing a mechanism for suppliers to present the full breadth of what they do, because they can upload brochures as attachments in answering questions. They can be used to narrow in on the right specification that fits your specific need. Technical details and ideas can be exchanged through questionnaires. Terms and conditions can be finalized and agreed to before an auction actually takes place, so the only thing left to settle is pricing, and this is preferred. Even after contracts have been signed and the supplier begins performing under the contract, questionnaires can be used to monitor performance periodically.
Questionnaires constructed properly can save you time and money by getting the answers you need. Here are a few examples of why one may use a questionnaire for a particular type of tender, with some example case studies of where these have been used within Market Dojo.
|Tender Type||Reason for Questionnaire||Case Study|
|Pharmaceutical||To ask your supplier about which regulatory good manufacturing practices they are following, so you understand their compliance to those regulations.||Regina Maria|
|Metal Parts||You might need to ask about compliance to US conflict minerals regulations, where you would survey your entire manufacturing base about the origin of their materials.||Jenatec|
|Software||You might ask questions about the capabilities of the software to see if it does exactly what you expect.||n/a|
|Construction||Use a survey to verify how tight the labor market is at the moment.||ABM|
Doing the questionnaire before the RFQ or Auction is preferred because getting the answers later after the pricing is settled can lead to re-opening pricing discussions. This destabilizes pricing, because now potentially you are asking the supplier for something different or additional, changing the scope or specification. Change may be unavoidable, but much of it is preventable. Settle all questions first before pricing.
A questionnaire can limit which suppliers participate in further events. There is a checkbox that allows you to change the questionnaire into a pre qualification survey. A pre qualification survey is one that acts as a gateway to all suppliers responding to the questionnaire, before it allows them into the full questionnaire. They must give the correct response or they are denied access. An example might be; suppose you wanted to make sure you kept the information in the questionnaire confidential, you could ask them if they intended to maintain its confidentiality, (yes/no). A no answer would deny them access to the rest of the information and questions.
Additionally, there is a checkbox each for scoring and weights.
In early questionnaires you create, it is best to leave these unchecked, until you are thoroughly familiar with how they work, and have practiced in the sandpit. This is a more advanced functionality, that helps resolve subjective differences in questions as well as internal team imbalances and avoid disagreements. For example, a technical team member may weight the technical questions more than the commercial questions while a commercial team member might do the reverse. As the Purchasing Leader, your role is to make sure the team works together and achieves an objective result they can live with. Scores and weights help do this. But in most cases where these are not concerns, it is best to begin creating questionnaires without scores and weights to simply gain maximum information from your suppliers. Use scores and weights to settle disagreements objectively.
Once you have received answers back from the Questionnaire to help you thoroughly define the specification or scope of work, now you are ready for the next stage.
Step 2 – Request for Quotation (RFQ)
The RFQ is used to define pricing in various stages of the process. You can do an RFQ to define budgetary estimates so you can plan ahead. Also, you can obtain early estimates of pricing to establish where the market price is. Or you can use the RFQ to obtain confirmation of the final pricing, in which case if no auction is done, it would be the final stage. It depends on what your strategy is and often what kind of time pressure you are under. The RFQ can also be used to define where the auction prices will start from. Usually you want to know the range of prices among suppliers before you go to auction, Then the auction will use this information to set the initial pricing. This information is essential in choosing the right kind of auction.
Typically an RFQ also includes questions that were not on the questionnaire. These might ask suppliers for clarification of answers provided in the questionnaire, or obtain agreement to final terms with their final bid. If you are in a hurry, or what you are buying is well defined, sometimes a quick RFQ can include simply an attachment with the specifications, and a terms sheet and a single item requesting pricing. Turnaround times for these kinds of RFQs can be very rapid.
If you progress from a RFQ, straight to an Open or Ranked Auction, then their bids will not be pulled through. This is because during an eRFQ process, if there is no mention of an eAuction it would be unfair to assume those bids will be become the suppliers starting bids.
However, if you have an eAuction without an eRFQ process, then you will have a qualification bid process. This is exactly the same as a RFQ process but the bids will be pulled through as the initial bids in a open or ranked eAuction. The benefit of these initial bids is that it lets you understand if the suppliers can log on, bid in the system, find mistakes in the specification, understand initial savings and let you know if your strategy is correct.
The final stage is an auction. There are several types of auctions available through Market Dojo which you may select from. We’ll cover each type of auction separately. They are: Ranked, Open and Japanese auctions. Let’s cover them one at a time and take care to examine the differences so you know which to use and when to use it.
Direction of price in a reverse auction driven by competition.
These type of auctions receive multiple bids from suppliers and then as the bids come in, suppliers are ranked from lowest bid to highest bid. The only information revealed to all suppliers is his/her rank in the bidding. The key then for the supplier is to bid lower and lower to improve his rank until he is in first place. If the supplier remains in 1st place at the end of the auction, then he is considered the winner of the auction.
The advantage of this kind of auction is that revealing rank creates a very dynamic and highly competitive atmosphere where suppliers must bid aggressively to discover and win the lead. If many suppliers are bidding, it can lead to true market price discovery. The other advantage is that it communicates to suppliers that there are many qualified suppliers who want this business. Sometimes this message is critical to convincing suppliers, particularly the incumbent supplier that this material or service is a commodity, not a specialty and hence deserves commodity pricing not premium pricing. Often times the incumbent will be in denial about the possibility that he will lose the business to others, even if the buyer tells him this is so. But seeing is believing, and when the incumbent sees he is in 9th place, it goes a long way toward changing denial into a willingness to negotiate and reduce his price. Sometimes it even takes more than one auction loss or loss of the business before the incumbent changes his view of pricing.
One of the disadvantages of this type of auction is that you need to have 3 or more suppliers. If you have fewer, it leads to less vigorous bidding action. Since the price is hidden, another disadvantage is that it takes somewhat longer for the bidders to find and reach the lead. They may be cautious and try and creep up on the lead with many small bids, rather than jumping to the lead with one large bid, because they don’t want to overshoot the lead by a large margin. They may also decide that second place is good enough, hoping that the lead bidder is later disqualified in some way, leaving them to pick up the business.
In these types of auctions the suppliers see the lowest bid alongside their own bid. This allows them to see and take the lead by bidding lower immediately. They know exactly what they need to do to take the lead. This speeds up the pace of the auction as long as the suppliers feel they can meet or beat this price. However as suppliers drop out, the competition may slow.
One of the advantages this auction type offers is that suppliers don’t know if they are bidding against one supplier or many other suppliers. You can run this style of auction with only 2 suppliers. If your incumbent supplier already has a very low price and the other suppliers have much higher pricing, this auction style gives no incentive to the incumbent to move even lower. He can take first place, and may remain there for the entire auction. So it is important to have some idea how far apart the incumbent is from the other suppliers. Also, by running this type of auction, you may reveal to the incumbent, not only is he the lowest price, but he may learn that he is significantly lower if none of the competitors can beat his bid. This may be information you do not want him to discover.
In this type of auction, the price ratchets down by a fixed increment every few minutes and the suppliers are presented with the offer price and an accept/decline button to push. As the auction proceeds and the price drops they are asked to accept or decline each incremental price shown. Continually accepting the prices shown means that the auction for that supplier will continue. If the price drops below a price the supplier can accept, he must push the decline button. If the supplier declines, fails to accept, or time runs out, the auction ends for that supplier. It does not however end for other suppliers. They may continue to accept the pricing as it lowers until they too drop out of the auction. The auction ends when all suppliers have dropped out, or time runs out.
This type of auction reveals nothing to other suppliers, which is important when you do not want suppliers to discover market information or their position relative to the competition. It provides an incentive to all suppliers to accept bids until they no longer can. This overcomes one of the disadvantages mentioned in Open bid auctions. It can also be run when there only a few suppliers available. It does not however necessarily convince suppliers, especially the incumbent that they have significant competition in the marketplace. They may even suspect they are bidding against themselves. One of the other advantages over a ranked event is that a Japanese eAuction will help prevent bid shadowing. This is where an incumbent will follow first place to be close but not to win the event knowing that a switching cost might negate some benefits of a small price saving. A Japanese auction gives no indication to the incumbent how the others are doing.
It is important to decide in advance what information you want to reveal in auctions before you select the auction type. Also, what kind of market and competition do you want to stimulate during the auction process. Once you have decided these factors, you can select an appropriate auction strategy.
CC Image courtesy of Kevin Dooley
The Daily Mail recently published an article about how elderly people had been auctioned off to care homes on the internet.
Of course, the Daily Mail specialise in creating provocative content which people will want to read. This article received 740 comments, which is far better than my average blog post.
Market Dojo does not provide the IT system identified in the article. We did want to provide an alternative viewpoint on the story.
So, lets take the key points in turn…
At least a dozen local authorities are listing vulnerable people’s details
There doesn’t seem to be any suggestion that the local authorities are sharing details with anyone other than those approved to see them. Indeed, the registration process seems to be very thorough. In common with Market Dojo, only approved companies would get access to the details of the event. These details would be required in any kind of tender process to enable to vendors to bid accurately against the requirement.
Ages and care needs including medication sent to up to 100 care firms
Well, yes. It is wise to provide details if you want to find a provider who can care for the person based on their individual needs. I am quite sure that an ethical firm would require this information before they would be able to provide an offer of care for someone. Without knowing their individual needs, how could they be expected to provide proper care for them? Using an electronic approach allows you to spread the net wider, which means finding a better match for the individual’s needs and the auction element of this is simply for the last stage to negotiate the price.
They pick which people to bid for – and cheapest offer nearly always wins
Yes, this isn’t suprising. Generally this only happens after the following steps have taken place:
– The suppliers have been screened to ensure they can offer the level of care which is required.
– The screened suppliers have assessed the persons needs to ensure they can provide the appropriate level of care.
– All suppliers have agreed to meet the required SLA’s (Service Level Agreements)
This makes it unlikely that the cheapest supplier is offering an inferior level of care. In fact, by comparing bids from several suppliers, it is easy to identify anyone who is cutting corners and offering a much lower price than everyone else.
‘eBay-style’ system ‘awful’ and ‘just uncivilised’
The comments seem to refer to the funding crisis for elderly care. This is a cause I completely support and commend Roz Altman for speaking out on this issue. For local authorities who have been tasked with using fewer resources more efficiently, a reverse auction makes a lot of sense. The process can be completed faster, leaving the clients and their families with a shorter period of uncertainty at a very difficult time. By putting strict quality criteria in place (a point mentioned but not emphasied in the article) the local authority get the best possible standard of care, whilst ensuring that private companies are not able to make excessive profits at the taxpayers expense. Again it should be noted that this is no different from any tender process except by the use of an auction the negotiation is more efficient, and not to mention completely transparent.
Health group leader: ‘It’s an absolute disgrace – it’s like a cattle market’
It wasn’t clear to me why the system had been compared to a cattle market. I suspect that this was because an auction was used to match them with care firms. Whilst it’s true that cattle markets use an auction approach, I think that is really where the similarity ends. An auction is an efficient and fair method to identify the best match for a specific set of requirements. Whilst price is a factor, auctions can also consider quality factors as the councils quoted in the article clearly said.
The article did raise some serious issues where vulnerable people had been sent to homes which were zero rated on a councils own quality scale. I’m glad that these problems were highlighted. I would have liked to see more investigation into the reasons why. When used correctly, an auction can help prevent this type of issue. They provide a clear view of the different choices available. I think it’s quite wrong to relate these issues with the use of an auction system for the sake of a good headline. In fact this is far more related to how the SLA was defined and how the contract was awarded and managed.
– Unlike eBay, the details shared on reverse auction systems are only available to companies who are approved to see them and who have agreed to the SLA’s
– Using an online tool simply increases efficiency. It saves time and money allowing those resources to be used in other areas. In reality the process is no different from any paper based tender.
– Auctions are an efficient method to find the best offering for a particular set of needs. They do not need to focus only on price.
– Contract management needs to be carefully reviewed to ensure all SLA’s are adhered to following the tender. Any suppliers deviating from these would not be a result of the method for price submission but rather refers to their attention to detail and rigor during the tender process.
We are very proud of our eAuction platform. It was our initial business proposition and still draws in the crowds. We have users from companies ranging from one million in turnover to many billions, running tenders on all types of goods and services from values of thousands to hundreds of millions.
No other platform gives gives you the ability to call in in the morning and run an auction in the afternoon without the need to train the suppliers. We recognise that preparing for an eAuction can be challenging, and the system should help with this challenge, not be an additional hurdle to overcome.
Our platform also has many capabilities from including a Pre Qualification Questionnaire to weighted auctions. See more of our functionality here.
However, in this blog we really wanted to show you the cool parts of our interface. (Click here for the video)
This is an overview of the eAuction screen. Colourful, compact and nearly everything is ‘click-able’ for further information, which can be seen in the following images.
These can be changed live during an auction. You can see the pause button and also the ability to change the heart of the eAuction settings such as the duration, the dynamic close, changing who it applies to and also altering the min and max bid decrements.
We have a great live feed to keep you up to date with the goings on without the need to look at all the lots individually. It is also there for the suppliers so they can see the latest and greatest.
Lot Matrix – ‘The summary’
See an overview of the event from a lot perspective with bespoke total calculations.
Notice the ‘stock market’ type updates highlighting where the bids have been placed.
Lot Matrix – ‘The lines’
See the event overview from a line item perspective with a click of a button.
Lot Matrix – ‘The suppliers’
See the line items by supplier.
Lot Matrix – ‘The detail’
Lastly, with another click, you can see the suppliers, by component, by line item in real time during the eAuction
See who is active, send messages, place proxy bids and you have the ability to delete bids all from within the auction interface
See the graphs
Check out your results graphically displayed in real time. No need to wait for a periodic refresh as we use new technology to display bids as soon as they come in.
If you want to see this for yourself then you can simply sign up for free and try everything out in our sandpit. Welcome to the Dojo!
Competition works! But only if customers want it.
The Slovenian Consumers’ Association (ZPS) has demonstrated that a fresh approach can save money. In cooperation with external partners ZPS conducted an auction for the purchase of electricity and natural gas for households. The result was an average 21% reduction in electricity prices and a 15% reduction in the price of natural gas. 24,000 households joined the “change and save” campaign and will benefit from significant reduction in their energy bills, with the same service level they are used to.
Reverse auctions have become available to both businesses and individuals.
10 tips for creating savings with the reverse auctions:
Auctions by the EFEKTO PRO perform for our clients usually bring savings of between 10 and 40%.
We have the pleasure of a guest post from one of our clients, Terri Hudson, who represents Baker Wanless and eQuiddity. She is has many years experience of running auctions and has shared her thoughts on the Japanese auction format.
Many people often question the use of Japanese Auctions with me. Why use them? What are the benefits? How is this fair? So I thought I would share my views on Japanese Auctions to illustrate the benefits of this auction type and when and why to use it.
So what is a Japanese auction? A Japanese auction is where there is no free bidding by suppliers. The software drops the price automatically (typically 1% every 5 minutes) and the supplier simply needs to ‘Accept’ or ‘Decline’ that price drop. The Market Dojo platform makes it very easy for bidders to take part. The screen is fresh and bright. Accept is coloured black and Decline in red to avoid mistakes and the screen refresh is fast so bids are received in no time at all. The platform also gives the buyer the ability to adjust the decrements and time gaps during the live auction so as suppliers get familiar with the process the buyer could look to reducing the time between drops from 5 minutes to 3 minutes.
Throughout 2013, Baker Wanless / e-Quiddity ran between 45 and 50 Auctions through the Market DoJo platform and 90% of those were deployed as a Japanese build and identified savings in the region of €20m for our clients. Some would argue that you could achieve the same or similar results through more traditional auction builds, however this is debatable.
To begin with, Japanese auctions provide a level of commercial confidentiality on categories that sit under goods for resale. For example, one bidder would not find it difficult to work out what another bidder’s margins are if they were given full visibility of the end result and positioning during the live event, because the retail selling price is in the public domain. This is particularly sensitive with incumbent suppliers. In many cases, the time between the live auction to award of business and the first delivery of the goods can often take around 3 to 4 months and it is important that the buyers maintain healthy relationships with their suppliers during a tender process.
The other benefits include the fact that when a supplier has reached their exit price, they are free to exit the auction and leave. It does not stop the auction for others, only for them, and means there is no benefit to them watching the auction further. Other methods may result in the supplier continuing to watch the auction whilst it continues with the other bidders in order to gain free market information.
As a buyer, you would notice that in more traditional eAuction methods, incumbents don’t tend to perform well. They typically will tailgate the leading bidders and remain 2nd or 3rd ranked in an attempt to demonstrate a competitive yet non-leading bid. This is because they feel they don’t need to be the best price. If the difference between them and another bidder is not significant the buyer is unlikely to change supplier. The Japanese format removes visibility of the ranking meaning that they are unable to tailgate and must put their best foot forwards when bidding.
Why not give it a try? We are experts at running them now and would be delighted to work with you and show you how it’s done, so get in touch.Domestic eSourcing – a follow-up to Spend Matters
This article is a follow-up piece by Nick Drewe, co-founder of Market Dojo, who used the Market Dojo eSourcing tool to let a contract with local builders for his own home extension. The series of articles (found here, here and here), written in late 2013, was picked up by Peter Smith at Spend Matters who raised some interesting observations.
Several months have passed since I conducted my domestic eSourcing event involving some 96 Bristol-based builders. The outcome of the event was implemented savings to the tune of 33% versus my best pre-tender offer. Furthermore, due to the preparation that is typically required to enable an eSourcing event to be run, the implementation was simply a case of ‘sign here please’. The contract has since been signed with the successful builder and work is due to start imminently.
The reason I bring this up is that I stumbled upon the coverage of Part 2 of this series by Peter Smith at the excellent Spend Matters UK blog. You can find the original article here. Peter raised a number of interesting points, which I attempted to answer via the ‘Comments’ facility on the blog. However, I would like to re-address some of those points here, as they deserve further attention in my view.
First of all Peter asks:
“Can auctions be used for pretty much anything?”
The first thing that popped into my mind was that I wasn’t necessarily running an eAuction. At this point, I was conducting what would be more formally recognised as an RFP, using online scored questionnaires and a bespoke pricing structure. Ultimately, the RFP was all that was needed, as it became clear that any further significant cost savings would arise from changing the specification and not from negotiating the rates.
As I mentioned at the time, I did think about running a weighted tender, taking into account the supplier questionnaire responses, my opinion of their site visits and testimonials from their previous clients. I decided against this because although a weighted tender helps to identify the overall top performers, sometimes you just have to go with ‘gut feel’ – totally illegal in EU Procurement rules, I know! I simply wouldn’t know what price to quality ratio to set, nor how much weighting to assign to aspects like the client testimonials until I actually heard from the clients. If the clients were all impassive, I would largely disregard this criterion. However, if the clients were passionately pro or against a particular supplier, it would weigh heavily on my mind, perhaps far more so than the price itself. In a word, a weighted tender would have been too ‘rigid’, whereas sometimes there are merits in having a fluid decision-making process.
“And perhaps most striking, is the thought that there might be domestic applications for some B2B eSourcing tools. Might a consumer be able to use sourcing tools when buying a new car? a holiday?”
Now this I know the answer to – yes, absolutely! Aside from my case in point, which is the first example I know of that incorporates a true business-to-business eSourcing tool for a domestic purpose, there are a host of other ‘eSourcing’ tools that can be used by consumers. There were numerous eSourcing tools for the building trade, such as RatedPeople.com or MyBuilder.com. Buying a new car via reverse auction can already be done on AutoeBid.com. Another example I used was when I recently transported a sofa from my flat in Bristol to my parents house in Sussex. I sourced the delivery using AnyVan.com. In the end my final price was entirely free by piggy-backing off an existing delivery, although my parents gave them a fiver for carrying the sofa upstairs!
Electronic sourcing is about finding online the right supplier at the right price for the right goods or services that you desire. A good eSourcing tool will make this task easier, quicker and more effective for you, and so the fact that there are so many eSourcing tools for consumers is testament to those benefits. The question is, as the internet becomes more ingrained in our daily lives, which of B2B or B2C will adopt eSourcing more comprehensively? At this rate, I’m inclined towards B2C.
Anyhow, before we deviate too far from the main topic, let’s get back to more from Peter:
“One barrier [to eSourcing]is that you need to have some real competition to get the benefit of tools and indeed of the processes themselves. So it is less applicable if you definitely know which hotel in Obertauern you want to visit, as in our case!”
The reliance upon competition is certainly true. However, the trick is to create competition. If you want an iPad, you know Apple is the only manufacturer and so you might think you have zero competition. However, there are many distributors, retailers, stockists etc. that you can involve. They each have regional, time-bound or even personal targets to meet. They have their own margins they can play with. I’ve run an eAuction in the past where an Apple stockist outbid Apple themselves!
In the hotel example, whilst Peter knew which hotel he wanted, he could have created the competition by involving other hotels that he may equally have been attracted to if the price was right (and there should always be such a price, e.g. if another 5 star hotel offered rooms for £10 a night perhaps?). So in the eSourcing context, invite hotels that you could be incentivised to book with and see what they can all offer. Perhaps you’ll find a reason to book with another, or perhaps you’ll head back to the original choice but with a better deal. Other consumer eSourcing tools like LateRooms.com or Trip Advisor might also be able to find you that deal despite the initial lack of competition.
A final point raised by Peter was:
“Another issue of the consumer is that we often don’t have significant repeat business to offer, unlike most corporate situations. So if Nick accepts a low bid, will the builder really care about doing a great job, knowing that he probably isn’t going to buy another project for some time, if ever?”
Now this simply comes down to finding the right supplier, someone who will respect your value of business. It has very little to do with the eSourcing process itself. If I asked Balfour Beatty to sort out my house extension, I’d be laughed at and quite rightly! As the largest construction company in the UK, what would they care about my project? However, if I approached a company that has an excellent reputation but is still in their early days and wants to use this opportunity as a stepping stone for greater things, they will be devoted to the project so they can use it as a flagship case study for their future proposals.
Hence this comes back to using an element of ‘gut feel’ when awarding the contract, as you get a sense of this motivation only when you meet the suppliers. As it happens, the builder I signed the contract with was not the most competitive and yet I signed with them for exactly those aforementioned reasons.
Anyhow, that wraps up some of my thoughts when I re-read the commentary that Peter kindly provided on the original piece. Since then we’ve negotiated a new kitchen and bathroom (aggregated together to leverage the extra spend) and boy did we wish we had reverse auctioned that to save time! We were actually glued to the phone in the car trying to finalise which supplier we were supposed to drive to whilst our three shortlisted suppliers went back-and-forth undercutting each other! It was worth it in the end, as we did implement a 50% saving from the initial discounted offer, but a part of me wonders what would have happened in an eAuction. I guess we’ll never know!Market Dojo is 3 years old!
Last Friday we proudly turned 3. If we were talking about a human rather than a company, we might look a little like this guy:
However, we are a business and to reach this milestone is a great accomplishment. According to the Entrepreneur Weekly, 44% of businesses fail by Year 3. Yet here we are, still self-capitalised having turned down investment offers along the way, and still growing at over 100% year-on-year with even steeper growth projections in our pipeline as some of our newest innovations hit the market.
We asked each of the three co-founders of Market Dojo for their highlights of the last 12 months:
In September we released ‘Samurai’. Building Samurai was a much bigger project than our previous enhancements, and we learnt a lot of lessons along the way. Working with new people and making so many improvements to MD was a great experience, particularly when it was all over. It’s also given us the ability to tick many more boxes for our customers and allowed us to work with a much bigger range of organisations.
We have fantastic clients, who are all working on great things with our software from simple RFQ’s to complex weighted auctions. Many of our developments are client led and so we ensure our direction is in line with your needs. The latest client and reseller is ABM Global solutions in the Philippines who we extend a warm welcome to. We could not do this without you all so please accept our greatest appreciation. You can see some case studies on our website. A massive thanks to all!
Nick Drewe: there have been quite a few to consider, such as achieving a 100% renewal rate on our annually paid licences to signing up very recognisable high street brands as customers, or even being nominated for a supply chain award by one of our customers, Arqiva. It’s all pointing towards the fact that our clients like what we do for them. However, for me there is one highlight that does stand out and that is the award of our second grant from the Technology Strategy Board. The first grant enabled us to build and release Samurai, which was immense. However, with this second grant we’ve created a whole new module within eProcurement, one that does not exist at the moment. Fitting in somewhere between Spend Analysis and eSourcing, we hope to announce Category Dojo later this year. Sadly I can’t elaborate too much at the moment, but drop us a visit at eWorld next month where we might be able to let you in on it!A fantastic article about Market Dojo on Buyers Meeting Point
Buyers Meeting Point has written a great article about our new Samurai release. We were so pleased, here it is in full:
In October 2010, Buyers Meeting Point received an email from Nick Drewe, the co-founder of a then new-to-market eAuction solution provider based in the U.K. He asked to have Market Dojo listed in our vendor directory, introducing their offering as “very easy to use, has all the professionalism that you would expect, and is offered at a transparent price level.” We have since gotten to know Nick and Market Dojo’s other co-founder Alun Rafique quite well. Their belief in the value proposition of their solution has caused them to invest in development that makes that value apparent to us as well.In the two years since they launched, much has changed – both for Market Dojo and in the spend management solution landscape. Market Dojo has steadily increased their presence through successful application of their technology and industry recognition of their thought leadership. They have been recognized by the U.K. public sector, receiving two Technology Strategy Board (TSB) grants to develop additional functionality. They recently announced the release of Samurai, an upgrade of their solution nine months in coming. This new release brings a revamped user interface and new functionality that increases the breadth and depth of the solution.
While they made their initial entry to the market with a focus on auctions, including less commonly found event types like Japanese auctions, Samurai adds best-of-breed RFx capabilities to the solution. With an eye to the strategic need for collaboration with suppliers, Market Dojo has also added an innovation portal for soliciting and accepting well-defined ideas for improvement from the market and a ‘sandpit’ where buyers can validate the presentation and setup of events by test-driving them before release to suppliers.
Of the changes included in Samurai, the one most likely to make an impact in procurement organizations is the addition of scoring capabilities that can be applied when weighting the information and prices collected in RFx’s and eAuctions. While scoring itself is hardly a new idea in eSourcing, Market Dojo’s approach is closely tied to their philosophy on procurement decision-making and the relationship between procurement and the rest of the organization. Much has been made of procurement’s (sometimes precarious) relationship with Finance. Beyond questioning savings calculations and realization, many Finance groups have trouble accepting the ‘transformational math’ used in scoring scenarios that allow too much subjectivity into what should be an objective evaluation process.
Market Dojo supports two approaches for scoring, both linear in nature:
In the first case, non-leading prices are scored purely against how they rank in the market, as represented by the participants. In a pro rata (or proportionate) scoring scenario, both the market and the buying organization’s expectations are reflected in the pricing score.
While the RFX or eAuction is under way buyers can clearly see the breakdown of the price and non-price scores in real time, adding transparency into the negotiation and decision-making process. This breakdown can be clearly communicated to the participants as well, mitigating the risk of participants challenging the award decision. Furthering the need for transparency, price and non-price scores are independent of one another, which is fair and consistent for the participants. If a participant earns a score of zero in the qualitative (questionnaire) portion of an event, they can stay in the process (if allowed to by the host) by offering a competitive price.
The additional capabilities added to Market Dojo with the release of Samurai allow them to compete for business with a broader base of prospective clients. They have expanded their reach in the sourcing process while their established place in the negotiation phase.And yet, with all the growth and change, Nick’s introductory statement holds true. Market Dojo is still easy to use, professional, and transparent. Two years after launch, Market Dojo saw £120 million auctioned through their solution in a single month. Buyers Meeting Point looks forward to seeing and hearing more from the Market Dojo team as more companies harness their solution to manage spend and innovate with their suppliers.
For immediate release
Market Dojo celebrate their second birthday with a year of amazing growth
Last week marked Market Dojo’s second successful year in business, with a massive ten-fold increase in the previous year’s revenues. Co-founder Nic Martin was delighted with this important milestone, “the last 12 months have been a fantastic period of growth for our young company and has really proven that our business has the key ingredients to succeed, from a great product, excellent customers and a brilliant team”.
The rapidly expanding software technology company, based in the South West, offers an online application that helps businesses negotiate more easily and efficiently with suppliers via the internet. Businesses can also run reverse auctions where suppliers compete to win contracts to supply goods and services.
Market Dojo now has in excess of 25 customers who use the application up to 5 times a day to receive quotes from suppliers for goods and services as varied as electrical cables, paper bags, van and car hire, brake pedals, machined parts and office furniture.
“What makes us unique is that we have taken a concept that was previously restricted to large businesses, due to the complexity and cost of existing software, and made it accessible even to small-to-medium sized businesses”, explains fellow co-founder Alun Rafique.
Their ambitions now lie in building the customer base, both home and abroad, as well as releasing a whole new product upgrade which is just around the corner.
Today, we are really pleased to announce some great new features for Market Dojo. We believe these reflect our four core beliefs: being collaborative, transparent, agile and to have fun doing it.
Here are the highlights…
Translated Market Dojo into German and Russian
We added these specific languages in direct response to customer needs. We are well aware that our users are based all over the world, and for many of them, English is not their first language. This release also lays the groundwork for more languages in the future. We are already planning improvements to the public areas of the website in these first two languages with a new web design planned for July.
Bigger file uploads
Several customers told us they needed to include bigger files with their RFQ and Auctions Events. We have increased the maximum file size to 10Mb, to allow even more detailed documentation to be included.
Improved Edit Mode
Changes happen. When they do, it is important that they are correctly communicated to all affected parties. We have learned that when you are dealing with dozens of people in several different timezones, more focus and detail in the information you provide up front will save time later. Previously Market Dojo automatically notified everyone of changes to an Event, now this is done at the Hosts discretion, so only those who are affected will be informed. Hosts are able to include a detailed message explaining exactly what has changed.
More upload/download formats
Previously, data imported and exported from Market Dojo was only in CSV (comma separated values) text format. Now, we also support Excel (XLSX) format files. This format will address problems for users in countries where the comma is not used in CSV files and also give us more flexibility in the format of reporting we provide. Currently this is a ‘beta’ feature, and we are really keen to get any feedback on how this works in the field.
Improvements and bug fixes
We have made more than 20 improvements and fixes to give our users a better a experience. These range from changes to which information is shown first at various stages of an Event, to clearer messaging and integration to our customer database.
We have had a lot of fun putting this release together, but we are really looking forward to is hearing how it helps our customers. Do let us know what you think!
About: Market Dojo provides accessible eSourcing software. Find out more at www.marketdojo.comWould we participate in a reverse auction?
Reverse auctions and even e-sourcing software has become a commodity product. There are numerous players in this market offering broadly the same functionality. Sure, some have a few more bells and whistles and others can integrate nicely with other e-procurement solutions, but on the whole there is little to distinguish between them aside from cost and aesthetics.
So, if I had responsibility as a buyer for a large company to implement an e-sourcing solution, why would I not consider conducting a reverse auction to settle the negotiation and how would I go about such a thing?
Well, if you look at the key ingredients for a successful e-auction, purely and simply it comes down to being able to accurately and robustly define what you need and to ensure you have enough capable and interested participants who can meet those needs.
In terms of e-sourcing software, I would draft up the core features and functionality that I would look for in any capable vendor. Now, I could do this the complex way and draft up a weighted RFI followed by a weighted auction to allow bidders who have “special” features to score more highly, but then why make this difficult. Simply knock up the list of “must-haves” and make each participant verify that they can satisfy the requirements. I would request a 2 hour web-demo with each participant to help me decide whether or not to include them in the bidding process. Since the whole process will be run on “Buyer’s Choice”, I will decide post-negotiation which participant to award the business to, taking into account the price of their solution as well as the other features and service levels that they can be distinguished by.
Having done this, I have my list of capable and interested participants. To complete my requirements, I would also compile my commercial and contractual terms, such as length of contract, number of users, approximate number of sourcing events, suggested payment terms, my training requirements and so on. This would allow my participants to submit accurate and sustainable quotations.
The next step is to conduct the negotiation and for this we could choose the reverse auction. The interesting step here is to pick a platform on which to conduct the auction, as it would most likely be inappropriate to use the software of one of the competing vendors, even though I could probably source a free event from them! Perhaps one of my earlier unsuccessful candidates would supply this, which would at least be something of a consolation for them.
With the auction and hence price negotiation complete I would be in the position to award the business, using my buyer’s choice to take into account all the other differentials.
So, would we as a company participate in such a process?
The short answer is most certainly yes! Whilst some organisations refuse to take part reverse auctions on the basis that they are too price-focused and that they drive you to prices that are unsustainable, we would actually be very keen to take part in any such opportunity as we know this is not true.
Firstly, the sales process is much shorter. A buyer would be approaching us with a genuine interest to buy and has been given the green-light from above. We would not have to spend much time at all writing proposals, reviewing proposals, re-writing proposals and so on! Instead, the buyer has taken the time to lay all of this out for us in advance. All we have to do is examine whether it is within our core capability and interest to supply it and at what price. Since we know from experience that the entire reverse auction process and award decision takes approximately 8 weeks, this method is far quicker than the 6 months it can take in a traditional process.
Secondly we have huge belief in our business model and offering to the extent that we think we would perform very well under competitive pressures. Should we not be successful, at least we have live and dynamic market feedback on how we compare to our genuine competitors. If we continued to be unsuccessful against the competition then it would provoke us to carefully review our business, thereby mitigating the risk of longer term failure that would inevitably have occurred should we not have pitted ourselves against the competition.
As for the potential objections, sure the auction itself is focused on price however the award process is not. During the process, as a participant I would be in regular dialogue with the buyer, building up the relationship, advising where the specifications are not quite right, being supportive, proactive and punctual. Let’s not forget that the negotiation is still part of the sales process and so by demonstrating a high degree of professionalism and that you are a company that can be trusted, you are greatly influencing the buyer’s decision once the auction is over. This can make the difference between success and failure, despite your ranking in the auction.
The only ground for objection here is that the auction is simply too effective as a negotiation tool. With my buyer’s hat on, sometimes I do wish that suppliers I am negotiating with stopped offering me all these extra services and features that I don’t want and simply reduced their price for those that I am actually asking for! This is where the auction is so powerful.
As for auctions leading to unsustainable contract pricing, this is where you need to do your groundwork and stick to it during the auction itself. Sure, it can be tempting during an auction to submit that “one last offer” only to later realise you cannot commit to it, but it is in no one’s interest for this to happen. The buyer is looking for a capable partner at the most competitive price level and we as a participant are looking for a new customer at a price level that allows us to grow. There is certainly middle ground here where both parties can win. Again, if you keep losing out whilst bidding on auctions, it is time to take a look at where you are leaking costs or to re-think which markets you should be competing in. Perhaps all those additional service levels and quality accreditations are simply not important to your customers, or on the other hand, perhaps your run-of-the-mill offering is not specialised or distinct enough to convince your customers to partner with you. An auction plus award decision offers genuine market feedback combined with specific personal feedback. You can really use this to your advantage to improve your sales performance in future activities. In fact, should you be successful in an e-auction, why not shout it from the roof-tops. You have just positioned your company as one of the best in the market. What a fantastic statement to make when you are next in a sales dialogue.
One final note is that we as an e-sourcing and e-auction software vendor, who encourages organisations across the globe to tender their business via this approach, really should be able to put our money where our mouth is and wholly support any buyer who would like to auction us.
Well, it would be our pleasure!
About: Market Dojo provides business-to-business e-auction and e-sourcing software. Find out more at www.marketdojo.comOur Press Release (A bit late!!)
Market Dojo celebrates their 1 year birthday!
Market Dojo, an innovative Bristol-based software company, recently celebrated their first year in business. The company, incorporated on the 2nd August 2010, is looking to soon become global with potential clients in Greece, Peru, US and Germany.
Co-founder Alun Rafique reflected, “It has been a fantastic year in which we have learned a lot and come a long way. We’ve been very surprised by the level of interest that we have seen, not just from the small-to-medium sized companies but also from the larger enterprises.”
Market Dojo offers easy to use, professional e-sourcing software to help businesses save time and money on their purchases. The key benefits of their software include increased efficiency, centralisation of information, repeatability, transparency and auditability of the sourcing process.
To date Market Dojo has helped their clients average savings of approximately 30% from e-auctions alone, as well as bringing major efficiency improvements for all involved. The more standard Request for Quotation activities have seen similar results, which is all the more significant given each client averages 15 new sourcing activities a month.
Even more impressively, their clients have generated an average return on investment with Market Dojo of little over 2 weeks!
Alun Rafique looks forward to the next year with huge enthusiasm, “We have laid a great foundation for the future. We have established the business and proven the benefits of our product, so it is now a case of expanding the sales and marketing activities to bring the benefits to many more companies.”
About Market Dojo:
We offer Business to Business e-Sourcing software [RFQ’s and Auctions] to help companies save time and money when negotiating for their goods and services.
Our guiding philosophy has been to develop cloud-based software-as-a-service (SaaS) suited for the in-house professional.
It is designed around three core ideas:
Our software costs just £1,000 per sourcing event or £5,000 for a single-user annual licence to run as many sourcing events as you wish.
For more information please refer to www.marketdojo.com
Key contact: Co-founder Alun Rafique, 0117 230 9200, firstname.lastname@example.org.
*This has since been beaten, and we have had a client register, purchase the software and run an auction within a 48 hour time period. Amazing! Some of our more experienced users are now so familiar with the process that they can turn set up an auction with questionnaires within 45 minutes.
About: Market Dojo provides business-to-business e-auction and e-sourcing software. Find out more atwww.marketdojo.com.