What is a Reverse Auction?
A reverse auction is a means of collecting bids for procuring products and services that has many advantages over the traditional sealed bid, catalog, or electronic catalog processes. Instead of going through the costly and time consuming process of contacting suppliers by phone, fax, etc., the reverse auction enables an organization to define what product or service they want and then receive bids from pre-approved suppliers for the best price and terms available on the market. The transparency of reverse auctions enables suppliers to place competing bids for the Buyer`s product or service request, creating an online, competitive bidding event that ultimately results in the best possible market price. Reverse auctions are totally web-based, and create an online version of the sealed bid process with the competitive edge of an auction.

Who is using Reverse Auctions now?
All Branches of Government, Agencies, City and State governmental departments, as well as thousands of private sector businesses from around the world are reaping the benefits of reverse auctioning. In fact, many City and State governments have mandated the use of reverse auctions to achieve cost savings for their taxpayers and have changed their laws to allow for the use of such competitive bidding events.

What is an ITB?
ITB is short for "Invitation-To-Bid", and is in essence a detailed description of a Buyer`s need for materials, products or services. It can include detailed descriptions, formal bid documents, shipping information, dates, times and even terms and conditions. Once a list of pre-determined and pre-approved suppliers is identified, the ITB is sent out requesting their participation to bid in the online event. Suppliers will use this ITB, which will be available online, to determine if they can supply the product or service, given the specifications the Buyer has outlined in the ITB. This makes it very important for the Buyer to be as detailed as possible when creating the ITB.

How do negotiations and settlement between the Buyer and the Selected Supplier take place?
The same way it is done today. Current processes and procedures for both the exchange of goods and payment may be followed. The reverse auction simply fits right into current procurement practices as a dynamic pricing tool for collecting bids.

Can I stipulate where and with whom I want to do business?
Yes, part of auction maintenance process is to outline with whom you want to do business as well as where product is to be delievered and under what delivery terms.

How many suppliers will need to participate to make this a worthwhile event?
The answer to this question varies, but realistically you need more than one bidder to generate competitive bidding.

How easy is it for suppliers to participate in these online auction events?
Supplier participation couldn`t be easier. There is no cost to register and participate in auctions. A supplier needs only access to a Web browser and they are up and running. There is no hardware, software, or internal resource requirement for suppliers. Further, unlike our competitors, the Synergy Advantage service was developed without using any specialized software that is blocked by the numerous firewalls that are currently in use within many organizations today.

Am I obligated to award to the lowest bidder if I use this service?
No, the Reverse Auction is not just about saving the you money, but also about saving time and increasing efficiencies, so, you should make your selection based upon the best value for you. You may find that one supplier with slightly higher bids can supply all of your requirements and that several other bidders were the low bidders for certain lots. If it will save you more in shipping costs by purchasing all the products from the one bidder then you would save by purchasing from all the low bidders, then you may choose to purchase all from the slightly higher bidder. You select suppliers based upon what is most important to you. The Reverse Auction tool is here to increase competition and gather pricing efficiently.

How long does a Reverse Auction take?
This can vary from auction to auction, but the Buyer sets the auction duration. Most real-time Reverse Auctions take place over the course of 30-minutes to one hour, with 3-minute extensions occurring if bidding continues beyond the allotted time. A Buyer also has the option to stretch an auction out to several days, or even weeks.

What are Current Supplier Cost and Target Price?
The Current Supplier Cost (CSC) and Target Price can be used for many different purposes. For instance, the CSC might be the most recent historical purchase price paid for the product or service being sought, or it could be an average of quotes obtained for the product or service. It may be used to gage the savings achieved through the reverse auction, or it may be used as a starting point for the bids received through the reverse auction. The Target Price may be the goal price the Buyer wishes to achieve through the reverse auction. Several optional names for these components are available, e.g., instead of "CSC", "Market Price" or "Historical Purchase Price" may be used to represent this figure. Target Price may be replaced with "Desired Price" or "Goal Price."

What types of products and services can be procured through Reverse Auctions?
Literally any product or service that can be competitively bid can be procured through use of the Synergy Advantage Reverse Auction Service.

What browser works best with this Reverse Auction platform?
Any browser is compatible with this reverse auction platform, however, it is best to use the latest versions of Microsoft Internet Explorer or Firefox.

Besides cost and procurement savings, what other benefits will I see from utilizing or participating in the Reverse Auction?

• Sourcing time can be cut in half. What normally takes months, can be reduced to a matter of days or weeks.
• Increased responsiveness by qualified suppliers
• Expansion of supply resources
• Market transparency
• Efficiency