Communication is the Key to Reverse Auction Success

Andy Chiang
Andy Chiang
Director, Product Management, Coupa Software

Andy is the product manager for Coupa Invoicing and Coupa Sourcing. Prior to Coupa, Andy worked in strategic sourcing and supply chain at Gap Inc. When not at work, he enjoys sourcing honey from his home apiary.

Read time: 8 mins
A Gavel Lying on Money

gavel-moneyTo get the best pricing from an electronic reverse auction, you need engaged suppliers. That doesn’t happen by chance. Buyers must communicate early and often to make suppliers feel comfortable with the processes. That way, they can put their best foot forward during the auction.

As the buyer, you want to make sure suppliers know how to use the tool to place bids. You also want them to get all their questions out on the table in advance so they’re clear on all the rules and requirements. That way, during the event all they have to worry about is their pricing strategy.

This is especially important with suppliers who have never done a reverse auction, or who have never done one with you. Cloud-based e-sourcing tools are easy to use, and they make the process more transparent and collaborative. This can sometimes be harder for new suppliers to get their heads around than the mechanics of using the tool.

Communication, Communication, Communication

Your first communication should be an email before the event launch. Let them know an invitation to the event is coming, and what system and domain it will be coming from, so they can white list you. Once you launch the event, check in with everyone to make sure they received the invitation.

Next, work to get all communication flowing through the message board in the sourcing tool. One of the great benefits of e-sourcing is that you only have to answer questions once, and the answer is visible to everyone. All suppliers get the same information at the same time, which saves the buyer a lot of time and creates a single source of truth for the event.  

All the messages are stored with the sourcing event, so that sourcing managers can find them easily months or years later, even if the original person who ran the event is no longer with the company.  Messages in a personal email folder are much harder to find, much less piece together all the conversation threads with all the suppliers.

Suppliers who are new to e-sourcing may not take to the message board immediately. They’re used to a one-shot approach to communication where the buyer sends out an RFP, calling for questions by a certain date. The buyer collates the questions and answers and emails a big Excel document back to all the vendors.

Gentle Retraining

With e-sourcing, suppliers ask questions on the message board, and the buyer broadcasts the answer back.

It’s much more efficient and collaborative, but there’s some retraining required. Suppliers new to the process will often continue to ask you questions via email or by phone. Retrain them by taking their question via email, but responding to it using the message board.

The system will email them whenever the buyer posts a message. You keep pushing them back to the message board to get their answers until using it becomes habit.

Another way to get suppliers using the message board is to seed it with a few questions and answers. Wait a day or two after you launch the event. If you don't see any questions come through, then seed a question and answer out there as if a supplier had asked it.

This shows how the platform works, and also nudges people to get engaged with the process sooner rather than later. As the buyer, you don’t want to deal with a whole bunch of questions at the end. Seeing other suppliers asking questions puts a little pressure on everyone to get moving.

Relationships First

You may also want to consider including a training session on the software. Today’s software is easy to use, so the training can be brief. Suppliers will feel more comfortable. Buyers will get another indicator of how prepared and engaged suppliers are.

This training can be completely anonymous, with all questions answered through a web chat. You can log in as a test vendor and show them all the steps necessary to place a bid.

None of this should replace phone calls or even face-to-face communications. Many deals aren’t decided on price alone; relationships matter too. If you’re sensing disengagement or confusion from suppliers, it’s okay to reach out. Have a conversation and figure out what's holding them up. Just be sure to share any material information with everyone through the message board. Chances are if one supplier is struggling with something, others are as well.

The tool is there to avoid a lot of manual work for everyone, but if suppliers need a little hand-holding to get started, that’s okay too. The goal is to prepare suppliers to give you their best price, have a positive experience, and be ready for future reverse auctions.