The complexities of e‐reverse‐auction‐facilitated aggregated procurement in digitally clustered organisations

Abstract

Purpose

The purpose of this paper is to present the findings of a study into aggregated procurement in digitally clustered organisations. It brings together key principles including business clustering, e‐procurement, aggregation and buyer‐seller relationships. The paper identifies complexities associated with conducting reverse auctions for clustered organisations.

Design/methodology/approach

A case study of a reverse auction carried out by an independent intermediary forms the basis of the paper. Data presented and analysed include pre‐auction and auction performance of participants.

Findings

Aggregating company spend and sourcing through reverse auctions poses several challenges. These include a selection of suitable products and services, the behaviour of buyers and sellers in a clustered environment and the identification of a suitable business model for the independent intermediary. It also indicates that not all participants may benefit or benefit significantly from clustered auctions.

Research limitations/implications

Understanding of participant behaviour before, during and after e‐reverse auctions in single and clustered organisations needs to be better understood. Differences in the mechanisms between single buyer and multiple buyer auctions also need more clarity.

Practical implications

For clustered reverse auctions, there is a need to identify products with low build complexity and significant value‐add. Otherwise, it may be necessary to form “clusters within the cluster” in order to attain true aggregation.

Originality/value

This study examines participant actions in intermediary‐facilitated multi‐buyer and multi‐seller e‐reverse auctions. It identifies a number of behavioural issues that relate to this context and that impact on the success of auctions in a digital cluster context.

Citation

Adebanjo, D. (2010), "The complexities of e‐reverse‐auction‐facilitated aggregated procurement in digitally clustered organisations", Supply Chain Management, Vol. 15 No. 1, pp. 69-79. https://doi.org/10.1108/13598541011018139