The Research On The Application Of Reverse Auction In Procurement Management

Procurement is the most common form of economic activity. It exists both in people's daily lives and business operations. With the development of market economy, procurement has developed from a simple commercial transaction to a professional, an important means of reducing cost for company. With the rapid development of electronic commerce, e-procurement is becoming the leading way of purchasing gradually.Reverse auction which originated in the eighties of the last century has drawn wide attention of the theoretical circle and corporation circle for its outstanding efficiency and effectiveness.Reverse auction procurement model is based on online auction. Purchasers release demand information of product or service through internet, Suppliers can participate in the auction at the same time via internet to compete for the orders. It is a resource allocation method centered on price competition which can improve efficiency and reduce cost greatly.The researches of reverse auction procurement mainly focuse on qualitative analysis of the advantages and disadvantages of reverse auctions, its risk, the impact to relationship of buyers and suppliers, influencing factors of its implementation effect etc.These years we can find some quantitative analysis from foreign literature.However, their researches only consider single kinds of item situation.As we know, multi-kinds of item procurement is very common, unfortunately there is no systematic research on it.On the basis of summing up the basic theory of auction and e-procurement this paper proposes the concrete implementation process of reverse auction in procurement practice, analyzes the important meanings of cost discovery mechanism of reverse auction to the buyers, suppliers and whole society, then analyzes some factors affecting cost saving proportion of reverse auction based on the sample of 83 reverse auctions data from wdxl science and technology company limited.Three conclusions were drawn as follows:1. Characteristics of items have huge impact on cost savings ratio of reverse auction. Those have fierce competitive market and can not afford a decisive role in the production and operation of enterprises such as packaging material, MRO accessories are suitable for reverse auction, and lead to a larger proportion of cost saving. Those don't have fierce competitive market and play a decisive role in the production and operation of enterprises such as production equipment lead to a small proportion of cost saving.2. Number of suppliers involved in bidding have positive correlation with cost saving proportion of reverse auction.3. Number of suppliers's bids have positive correlation with cost saving proportion of reverse auction.Considering that in actual procurement situation buyers often purchase more than one kinds of items, and these items often have complementary relationship, therefore, this paper focuses on the reverse combinatoria auction procurement modeling by two ideas:1. Free-combination reverse combinatoria auction procurement. Establish a three-stage conceptual bidding model. Stage I:Bid for single kind of item. Determine the lowest price of any single kind. StageⅡ:Bid for any combinations.In this stage suppliers can bid for any combinations of items.Finnaly determine the optimal allocation result that leads to lowest procurement cost. StageⅢ:One-time sealed reverse combinatoria auction. Compensate for the profit loss of the purchasers caused by the "late bid" phenomenon. This paper introduces the idea of game theory, analyzes bidding strategy of bidders and comes to the equilibrium price of bidders.Then uses integer programming method to determine the optimal allocation.2. Limited-combination reverse combinatoria auction procurement. Aims to the specific requirements of reverse auction procurement, this paper introduces the theory of cluster analysis and optimizes the clustering distance formula, then proposes the appropriate method to determine auction package for buyers.