How the 'Auction Cube' Supports the Selection of Auction Designs in Industrial Procurement

TL;DR

This paper introduces the 'Auction Cube,' a novel method to assist procurement professionals in selecting appropriate auction types for industrial procurement, aiming to optimize reverse auction usage.

Contribution

It proposes a new decision-support method that guides users in choosing suitable auction forms based on market and supplier criteria, addressing the complexity of auction selection.

Findings

The method simplifies auction selection process.

It improves procurement efficiency and effectiveness.

It helps prevent misuse of auction types.

Abstract

It is well known that rightly applied reverse auctions offer big commercial potential to procurement departments. However, the sheer number of auction types often overwhelms users in practice. And since the implications of a wrongly chosen auction type are equally well known, the overall usage of reverse auctions lacks its potential significantly. In this paper, a novel method is being proposed that guides the user in selecting the right combination of basic auction forms for single lot events, considering both market-, as well as supplier-related, bijective criteria.