A Dutch auction is a unique and dynamic bidding process that is increasingly popular in procurement. Unlike traditional auctions where prices decrease, in a Dutch auction, prices start at the lowest point and increase at predefined intervals until a supplier accepts the current price. The auction ends as soon as a bid is accepted, ensuring a quick and efficient procurement process. Here's a step-by-step guide for suppliers on how to quote in a Dutch auction.
In a Dutch auction, the buyer initiates the auction and invites suppliers to participate. The auction's key feature is that prices start low and rise incrementally at intervals set by the buyer. Suppliers compete by deciding at which price point they are willing to accept the offer. The first supplier who accepts the price wins the auction, and the bidding ends immediately.
Accessing the Request
Once the Dutch auction is initiated, you can access the request through the "My Requests" page. Click the request name, you will be directed for "General" tab of the request. This page provides a comprehensive overview of the auction, including essential details such as:
- Message from Buyer: Any specific instructions or information provided by the buyer.
- Start and End Date: The timeframe within which the auction will take place.
- Contact Person: The buyer’s contact person responsible for the request.
- Buyer Company Name: The company that initiated the auction.
- Currency: The currency in which the transaction will occur.
On the General tab of the request, you also have the option to Share Access to the request with your colleagues, send a message to the buyer, or blacklist the buyer company if you do not wish to receive future requests from them.
Quoting for Items
To review the items being auctioned and to accept the buyer's price, you need to navigate to the "Items" tab. This tab is crucial because:
- Item-by-Item Auction: If multiple items are listed, the auction will proceed one item at a time. The next item will only be available once the auction for the current item concludes.
- Price Counter: For the active item, a countdown timer will indicate how long the current price is available for acceptance. Prices may change after the interval or the item may be closed if no further prices are offered by the buyer.
- Accepting the Price: When you are ready to accept the current price, simply click the "Accept Price" button.
- Once accepted, the auction for that item ends, and you are immediately awarded the contract. No other supplier can offer a counter-bid after the price is accepted.
If another supplier accepts the price before you, a message will appear stating "Another supplier was faster," indicating that the auction for that item has ended.
Communicating with the Buyer
Effective communication is key in a Dutch auction. The "Message" tab within the request allows suppliers to view the history of personal messages exchanged with the buyer. If you need to contact the buyer:
- use the message button located on the "General" tab;
- use the chat button near item name on "Items" tab.
Any new messages from the buyer will be indicated by a counter next to the "Message" tab.
Conclusion
Participating in a Dutch auction requires quick decision-making and a clear understanding of the auction process. By following these guidelines, you can effectively navigate the auction, ensuring you make timely and competitive bids. Remember, in a Dutch auction, speed is crucial—the first supplier who accepts the price wins the auction and secures the contract.