Bidding strategies in reverse auctions for the automotive industry procurement
Author(s)Galland Lopez, Michel, 1973-
Massachusetts Institute of Technology. Engineering Systems Division.
Sandy D. Jap.
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The Information Era has brought along a myriad of revolutionary changes. The Internet in particular has given new forms to old paradigms. It is quite a challenge for companies to decide which of all these options best suit their business model and their strategies, hopefully one that also provides them with a competitive edge. One of these new alternatives is online auctions used as a procurement tool. And because of their novelty, it is still unclear whether they are a flawless method of decreasing costs. Although there are many issues concerning this topic, the one addressed here is how the bidders' behavior during the auction (the strategy used to place their bids) affects the outcome, for them as well as for the company setting up the event; and how managers on both sides can maximize the benefits. The basis for the study was a recent auction conducted by autoparts maker Visteon for the procurement of a plastic hose. On the supplier side, the results show that those companies that had a target price before entering the auction, would obtain the most benefits (less sacrifice in profits), since Visteon did not award the projects solely based on price. On the buyer side, having a rich mixture of bidders (diverse in size, location, quality concern for example) enables a more dynamic process (lower prices).
Thesis (M.Eng.)--Massachusetts Institute of Technology, Engineering Systems Division, 2000.Includes bibliographical references (leaves 48-51).
DepartmentMassachusetts Institute of Technology. Engineering Systems Division.
Massachusetts Institute of Technology
Engineering Systems Division.