IMMEDIATE ISSUE
Prepare a plan and schedule for reverse auctions of 21 packages consisting of 290 components.
BASIC ISSUES
1. Technology applications in supply chain management
2. Electronic reverse auctions
3. Supply processes
4. Supplier relations
5. Negotiation
6. Cost management and total cost of ownership
Student Assignment
1. As Richard Kaplan, what how would you set-up the reverse auction? Be specific in with respect to visibility (e.g., what the bidders would see during the auction), length of the auction, policies for extending the length of the auction and target pricing.
2. What policy would you use to award business to suppliers?
3. How do you think the suppliers will react to your proposal to run a reverse auction? What would you do to convince them to participate?
DISCUSSION QUESTIONS
1. What will you do if only two or three suppliers decide to participate in the reverse auction?
2. Do you think that if a supplier submits the lowest price for a package he or she should be awarded the business? Would you be prepared to negotiate prices following the auction if you felt there were opportunities for further reductions?
3. How do you think the suppliers would react if you awarded business to suppliers without consideration for lowest quoted price?
4. What happens if one or two suppliers end up winning the majority of the packages?
5. How would you respond to a supplier that refuses to honor their pricing from the reverse auction?
6. Where do you feel them ultimate savings will come from? How much influence does the reverse auction event contribute to price reductions? What are the other factors?
Instructions
Read the case and respond to the questions under Student Assignment & Discussion Questions. This should be submitted in the form of an essay that contains 5-6 paragraphs that include information and references from chapter 4. In addition, feel free to use out side sources as well.