Effects of Buyer-Supplier Partnership through Online Reverse Auctions: An Empirical Study of Taiwan''s IT Industry

• Main Authors: Cheng-Yi, Su, 蘇正儀
• Other Authors: Chien-Fu, Chen
• Format: Others
• Language: zh-TW
• Published: 2004
• Online Access: http://ndltd.ncl.edu.tw/handle/81574360515510305107

碩士 === 淡江大學 === 國際商學碩士在職專班 === 92 === Online reverse auctions have been a popular topic over the past several years because they often result in tremendous savings for buyer. In a dynamic global economy, effectively managing the procurement process to help cut costs is critical to long-term success for more and more MNCs. Within B2B sector, e-Commerce has greatest potential for growth and that encourages continually on application of electronic procurement and development of electronic trading communities. Online reverse auction is one of the most highly promoted forms of B2B e-commerce. Suppliers compete for the right to the contract by bidding reducing prices, until a final price—the lowest—brings the auction to an end, is one of the best ways of using free market techniques to obtain the most competitive prices by negotiation with suppliers automatically from buyer side. The process on price negotiation is exactly the reverse of a traditional strategic sourcing, particularly face-to-face negotiations, in favor of software and web-based services provide by some companies online. An uncertain multi-relationship has taken the place of one on one specified relationship of transaction in the past. Despite the move in recent years towards closer and nicer partnership in the supply chain (Matthyssens, P. and Bulte, C. Van den, 1994), buyer has turned to an electronic strategic sourcing service to find rock-bottom prices for certain purchases on many production parts and materials. The changing by an automatic negotiation agent would squeeze supplier’s profit margin if the buyer just focus on price, not on their total procurement cost. And it would diverge from the buyer-supplier partnerships in supply chain which have been enhanced for long-term. This study examines the impact of online reverse auctions on buyer-supplier relationships of Taiwan’s IT industry through case studies, analyzing primarily the buyer and supplier perspective through participant interviews. An Analytic Hierarchy Process (AHP) is used by the Expert Choice to identify some real tangible benefits and conflicts on buyer and supplier by compared with six criteria, such as business opportunities, competitive information, transactional platform, purchasing productivity, profit and buyer-supplier partnership at the same time. Then we found online reverse auction that can offer tendering and transactional cost and platform advantages, such as competitive purchase prices, prompt market information, transparent competition and penetrating new markets for both parties. Especially for the buyer, it does offer a competitive procurement process than before. But the reverse auction process is "contradictory to the long-term benefits associated with collaborative/cooperative buyer-supplier alliances". Concerning the impact of buyer-supplier partnership, this study found the decision priority for buyer using online reverse auctions are increasing supplier competitiveness, reducing procurement cost, offering a transparent transactional platform, getting prompt market information, increasing sourcing resources, increasing purchasing productivity. And restructuring sales profit, generating new partnership, increasing business opportunities, getting a transparent transactional platform, increasing purchasing productivity, getting prompt competitive information are the priority for supplier to supporting online reverse auction. This perceived conflict, the study found, "is primarily caused by the tool''s emphasis on awarding business based on aggressive price competition instead of long-term total cost of ownership considerations" and " if a fully communication done with participated suppliers before and after auction ". Finally, with a win-win strategy, we do not think the online reverse auction should be employed as a price weapon to ruin a long-term buyer-supplier’s partnership instead as a procurement process improvement tool by MNCs. How Taiwanese IT suppliers can survive under a new partnership agreement, which has generated already by buyer and supplier? Well preparation and fully communication are two keys to a successful auction event. This study summarizes the promises or reasons that buyers and suppliers use reverse auctions and the risks they might face accordance. And a successful guideline and conditions for using online reverse auction appropriately are also provided for further reference.