The Foodtrader Reverse Auction System

Buyers are now finding new, efficient ways of reducing purchasing costs. One way of doing this is to implement a reverse auction system in the purchasing cycle, a process that eliminates the need for expensive and inefficient tendering for goods. Suppliers can offer keener prices and like the efficiency and speed of the system.

Unlike standard auctions, a Reverse Auction is one where a buyer informs suppliers of the intent to buy a product and the suppliers then bid the price down. The use of reverse auctions, controlled by the buyer, allows a single buyer to communicate with many different suppliers at the same time for a multitude of different products.

How it Works:

1 Buyer selects the suppliers of each product or group of products. He can use his current suppliers or take additional suppliers from the Foodtrader.com database.

2 Each supplier is notified by e-mail that he has been selected to participate in the auction. Either the buyer or Foodtrader can provide the training.

3 Each selected supplier receives by e-mail a full specification requirement for the items to be in the auction prior to the time of the auction for his review. In addition, he receives all information about the type of auction to be held, together with its time and date

4 On the date of the auction each supplier logs on the system (using a pre-authorized password) and makes his offer on the products required. On his screen he can see his offers as well as the price offered by all other members of the auction. He cannot see the identification of the other suppliers in the auction. He can make as many offers as he wants in order to obtain the business.

5 The buyer can see all information including the prices, terms, and identity of each participating supplier. The buyer can send real-time messages to any supplier in the auction that only that particular supplier can read. The buyer may conduct as many auctions simultaneously as he wants. The buyer does not need to be on line at the time of an auction. He can review the results at any later time.

6 The decision of the buyer can be made at any time. At the close of the auction an automatic e-mail is sent to all suppliers thanking them for their efforts and tells them that a final decision will be made within a certain period of time.