Strategies for enhancing procurement:

• Properly Order a Two-Stage Evaluation Process
  
  Qualifying and ranking suppliers and their products prior to the transaction increases competition by increasing the number of suppliers invited to the auction and by adding credibility to the procurement process. By eliminating the ability to influence the outcome of the transaction after the price is finalized suppliers must offer their lowest prices. The OptimalCommerce^TM expert auction software eliminates any additional work required to transact with multiple suppliers.



• Use Non-discretionary Price Mechanisms in Place of Open Outcry Systems
  
  Presenting all suppliers with a uniform price in each round instead of allowing suppliers to offer discretionary prices at will has several benefits to both suppliers and buyers. For suppliers, a uniform offer allows them to eliminate noise associated with bid strategy (sniping) in favor of concentration on determining their best price. For buyers, the potential for anti-competitive behavior (signaling) and insincere participation is eliminated. Both parties benefit from a speedier and more predictable event.



• Prevent Premature Process Termination
  
  Any supplier who wants to bid lower should be allowed to with the condition that the transaction must come to a timely conclusion. This balance is only possible when three conditions are met. First, all suppliers must be allowed to bid simultaneously. Second, suppliers who want to be considered must bid every round. Third, all suppliers must be allowed to bid until no one is willing to bid lower. If these three conditions are not met the lowest price cannot be obtained. If the transaction is terminated before all suppliers have been offered a last opportunity to submit another bid, the lowest price will not be obtained.



• Maintain Stable Selection Process & Criteria During the Negotiation or Auction
  
  The transaction process for bidders must be simple and credible. When suppliers know for certain that they will be eliminated from consideration if they do not bid lower, they continue to bid until they can no longer profitably do so. Efficient suppliers win more business with higher profit margins even at lower prices.



• Use Benchmarking to Set Priorities Not Prices
  
  Comparing your procurement results to others' is useful for setting priorities but it falls far short of competition for setting prices. As a buyer, you can neither be assured that the transactions' circumstances were significantly similar nor that the procurement processes used to set prices were best-practices. Benchmarking may result in self-fulfilling expectations rather than indicate the efficiency of suppliers.



• Adopt Comprehensive Negotiation of Contracts
  
  Limit the number of terms or features to a small, discrete number of points in order to increase competition. Separately negotiating each line item of a disaggregated service offering with a single vendors increases the time it takes to arrive at an agreement while allowing suppliers to move profit from term to term or feature to feature. Suppliers are inherently more knowledgeable about how they make money than you can be so the advantage of increasing the number of discussion points accrues to them by giving them additional opportunities to create hidden costs.