Preparing well for an Auction is key to helping to ensure a successful Auction. The following is a brief checklist that may be used to help you prepare for and build an Auction in SAP Sourcing.
Building an Auction:
There are several tabs on the Auction that need to be populated with information when you build your Auction. It is important to review the information in each tab to ensure that it is correct and complete:
- Line Items
The steps provided below are intended to help you gather the information required to do this.
Collect Spend Data for the Auction Category:
This includes current and target baseline pricing against which to measure savings and performance to your goals.
Determine What Information You Will Disclose to Provide Feedback to the Suppliers During the Auction:
When you are building your Auction in the system, you will want to choose the type of Auction based on the information
you have decided to disclose:
- Leading Bid
- Leading Bid and Rank
A primary goal of the feedback strategy in an Auction is achieve market pricing.
Identify Internal Stakeholders to be Added as Collaborators to the Auction:
Note that collaborators must be created as users in the system before you are able to add them as collaborators
to an Auction.
Establish the Date and Time of the Auction:
You will want to allow enough time for suppliers to prepare and to conduct training and a Mock Auction if you decide to
provide training and / or do a Mock Auction:
- Determine when you will run the actual Auction.
- Ensure that you schedule the Auction on a day when there are not many other concurrent activities.
Determine How Long Each of the Phases Will Run:
There are several phases involved in an Auction. Depending upon the nature of a particular Auction, time allotted for
each phase may vary:
- Preview – this period allows suppliers to become familiar with the Auction before placing any bid.
- Pre-bid – this period allows suppliers to submit a bid prior to the competitive bidding period. It allows you to react to
the bid and provide early feedback to the supplier.
- Open – this is the period during which competitive bidding takes place.
- Close Pending – this is the period during which the buyer may reopen the Auction for any reason at his or her discretion.
Determine When to Have Time Extensions Added to the Close Time of the Auction:
- Inactivity Window (in minutes) – this is the number of minutes before the Auction is to close when, if a bid is
placed during this period, a time extension is added to the close time.
- Overtime Duration (in minutes) – this is the number of minutes to be added to the close time of the Auction if a
bid is placed during the “Inactivity Window”.
It is common for the Inactivity Window and Overtime Duration to be set to either 2 minutes or 5 minutes each. However, this should be set to what makes sense for a particular Aucdtion. Typically, there is significant bid activity within the last minutes of an Auction.
Identify any Information that You Want to Provide to the Suppliers, including File Attachments:
- Information may be added in the Information tab.
- Often, this is used to provide specific instructions for a particular Auction to the suppliers.
- Suppliers are able to review information provided during the Preview period of the Auction.
Identify the Specific Goods and Services that will be Added as Line Items on which the Suppliers will be Placing Bids:
At minimum, for each line item, you will want to identify the following pieces of information:
- Description of the good or service
- Quantity of the good or service
- Bid Improvement (in terms of a percentage or a fixed value)
For measurement purposes, you should also include:
- Current Price for each good or service
- Target Price for each good or service
Optionally, if you have enabled these fields, you can include:
- Start Price for each good or service
- Reserve Price for each good or service
Identify Incumbent Suppliers and Potential (Qualified) Suppliers to be Invited to Participate in the Auction:
Note that suppliers and the associated contacts must be created in the system in order to invite them to an Auction.
Identify the key contact at each supplier that will place bids on the day of the Auction:
At minimum the following details for each contact are important:
- Email address
- Telephone number
Ensure that each contact for each supplier is created in the system so that they have a user id and password to access
the Auction at the specified time.
In addition, you might want to consider running a Mock Auction to prepare the suppliers. Some reasons to consider a Mock Auction are:
- Many suppliers do not participate in Auctions on a regular basis.
- Running a Mock Auction gives the suppliers an opportunity to experience the Auction before the actual event to be better prepared to participate in the “real thing”.
- Helping the suppliers to prepare and become familiar with the system generally leads to better participation by the suppliers and better results for the buyer.
- Generally, running a Mock Auction tends to highlight any issues that should be resolved in preparation for the “real thing” and tends to lead to a smoother event on the day of the live Auction.
If you choose to run a Mock Auction, generally, you will want to schedule it just a day or two prior to the actual Auction so that the experience is fresh in the minds of the suppliers.
Determine the Auction Event Terms, if any, that Suppliers Must Accept Prior to Accessing the Auction:
The terms may include statements about confidentiality and how suppliers may or may not use the information provided in the Auction.
Review Auction Tabs for Completeness:
- Header details including name of Auction, category of spend, collaborators to be invited.
- Schedule details of when the Auction will take place.
- Information details to be provided to the suppliers.
- Line Items for goods and / or services in the quantities on which the suppliers will be bidding.
- All Suppliers have been added to the Auction.
At this point, you are ready to conduct your Auction. The next step is to run the live Auction according to the schedule. Once you run the Auction, you will want to do an analysis to determine what worked well and what might be improved for the next time.