Reverse Auctions and Supplier Consortia

Abstract

Competition between supply chains has resulted in firms carefully examining the relationships that they have, or are contemplating having, with other links in their chain. While the main focus of this book is on a specific type of relationship, that of the reverse auction, other forms of buyer-supplier relationships exist. In order to better understand the implications of the reverse-auction relationship, managers should also analyze the alternatives and the environment of relationships in which reverse auctions operate. The focus of this chapter is on an alternative buyer-supplier relationship, that of the supplier consortia. Within the six dimensions of the framework proposed by Parente, et. al. (2004), this chapter examines this little-studied collaborative group and proposes a spectrum to begin to understand some aspects of buyer-supplier relationships. The chapter includes a theoretical classification framework for supplier consortia. It then compares and contrasts supplier consortia to the reverse auction concluding with a prescriptive decision process that can help managers better analyze the most appropriate form of buyer-supplier relationship for their firm and their supply chain.