I interviewed Alun Rafique who discussed eSourcing Adoption.
Today I’m looking forward to hearing your views on e-sourcing in the supply chain. Can you first provide a brief background of yourself and your company?
Hi, Dustin. Thank you very much; very pleased to be here. My background is as an engineer; originally, I’m a nautical engineer. I worked in engineering and then fell into procurement, as a lot of people do. I worked for PWC for a while and sold engineering-simulation software before coming around to what I thought was the love of my life and helped self-managed e-auctions. After they came about back in 1995 or so, by the time I was getting involved with selling the auctions, I really felt, with a few other colleagues, there’s a better way of doing it, and helping people do auctions themselves was a big part of that. We left and developed Market Dojo. Market Dojo really focuses on helping procuring people work more efficiently by providing online tools around category strategy, innovation, and, obviously e-sourcing with a focus on the auctions, which is where we started.
Can you explain what e-auctions are?
We started with e-auctions. They were a great place to start in terms of online tools, and there’s a paradigm shift in the market toward people wanting to do more online. There’re obviously consulters out there who help people with the auctions, and they do some great work, although a lot of skills are now within companies to allow people to do these themselves, and e-auctions essentially can be run on a forward or reverse basis. If it’s a forward basis, you’re looking to sell something, and if it’s a reverse basis, you’re looking to buy something. Essentially, they’re online tools where you create an event and suppliers or participants bid if it’s a forward auction and the price will either go up or down. The suppliers or participants will be informed of their rank, or if it’s an open auction, they’ll see the lead bid and they’ll have to beat that. There are a few other different types of auctions out there as well, but most commonly in the supply chain, within the procurement world, with buyers, they help buyers negotiate more efficiently and effectively with their supply base.
How can e-auctions be utilized, and who can benefit from them?
If you look at the procurement world, on the buying side, they can be utilized in a number of areas. You can look at them being used for buyers. You can look at goods or services, for example, and there are two things you need to make them a success, and that’s definition and liquidity. Once you have those, you can have people bid for the goods and the services. And the buyers can benefit from a very efficient negotiation, and the suppliers can benefit from a very easy and transparent process.
Where have you seen success?
In terms of success, we’ve seen in all areas of the procurement world, and they generally, it tends to be the proactive contingent of buyers that the first people to uptake e-auctions and e-sourcing. They could be used anywhere in the industry, but it’s really the biggest success in the procurement people who’ve wanted to take on new tools. As long as you have the right preparation—such as, with e-auction, you have the right specifications and definitions, the right market liquidity, as I mentioned earlier, where you need to have the right number of suppliers in there who not just can provide you with the goods and services, but who are also willing to bid for the goods and services. As long as you have the right preparation in there, any auction can be a success. They’re much faster than traditional negotiation. There is a big more up-front preparation which is required, but if you’ve done the up-front preparation, the negotiation and implementation is much quicker.
And we’ve seen success across all kinds of industries, anything from manufacturing to retail. We’ve seen success in all kinds of companies, so from the very small $2 million in turnover to Fortune 100 industries. And people run auctions of all sizes, from a few thousand pounds to a few hundred million. You’ve really seen success across a wide variety of areas and they’re becoming more popular, but it does tend to be a kind of proactive community who are generally adopting the auctions. We’re getting to a point where more and more people are adopting them, but it’s still, I think, very much underutilized within the industry.
Thanks for sharing today on the topic of e-auctions in the supply chain.
My absolute pleasure. Very nice to be here. Thank you very much, Dustin.
About Alun Rafique
Co-Founder, Market Dojo, eSourcing made simple