Reverse Auction- Adjustment factor functionality
Prokuria enables users to activate and utilize adjustment factors to correct and adapt prices and auction conditions.
In a sourcing event like a reverse auction, the logic for applying an adjustment factor typically involves modifying the bid prices submitted by suppliers based on predefined criteria. This adjustment factor can be used to incentivize certain supplier behaviors or to account for various factors such as quality, delivery time, or volume discounts.
Here’s a simplified example of how the logic might work: Define Criteria by determining the factors that will influence the adjustment factor, such as quality, delivery time, or volume and set adjustment rules. Establish rules for how the adjustment factor will be applied based on these criteria. For example, higher-quality bids might receive a positive adjustment, while late deliveries might receive a negative adjustment.
Using Adjustment Factors in Prokuria (Example Scenario):
- The Buyer creates an auction by filling in all necessary details, including sections such as “General info,” “Settings,” “Suppliers,” and “Items.”
- Next, in the “Settings” section, the Buyer activates the “Allow adjustment factor” option, which opens up the option of using adjustment factors.
Once the option is activated, in the “Supplier details” section, the Buyer can input the adjustment factors for which supplier he may choose. This adjustment factor is not visible to suppliers and the platform will not notify them in any way that an adjustment factor applies.
The adjustment factor impacts the following fields:
- Bids submitted by the supplier will be multiplied by the Adjustment factor
- Starting price will be divided by the Adjustment factor;
- Minimum step will be divided by the Adjustment factor;
- Best bid will be divided by the Adjustment factor.
To exemplify, let’s consider 3 suppliers with different adjustment factors.
- Starting price/um set by the buyer: 4,000.00;
- Min step set by the buyer: 10.00.
- Supplier A: 1.10 – in a reverse auction this means that the price offered by this supplier will be higher;
- Supplier B: 0.90 – in a reverse auction this means that the price offered by this supplier will be lower;
- Supplier C: 1.00 – in this case, no impact on the price;
The Buyer publishes the auction, and suppliers will submit their bids.
Response page (supplier page)
On the response page, the following information will be adjusted based on the adjustment factors set by the buyer. For example:
Supplier A:
- Starting price/um set by the buyer is 4,000.00. On the supplier’s page, the starting price adjusted is: 3,636.36
- Minimum step/um set by the buyer is 10.00. On the supplier’s page the minimum step/um adjusted is: 9.09
- Bid submitted by supplier A: 3,500.00.
Supplier B:
- Starting price/um set by the buyer is 4,000.00. On the supplier’s page, the starting price adjusted is: 4,444.44
- Minimum step/um set by the buyer is 10.00. On the supplier’s page the minimum step/um adjusted is: 11.11
- Bid submitted by supplier B: 3,500.00.
Supplier C:
- Starting price/um: 4,000.00, no impact with the adjustment factor
- Minimum step/um: 10.00, no impact with the adjustment factor
- Bid submitted by supplier C: 3,500.00
Buyer’s page:
On the “Compare responses” page, the Buyer will observe the adjusted values of supplier’s bids. For example:
- If Supplier A bids 3,500.00, then in “Compare responses”, the “Your bid/um” field will display as 3,850.00
- If Supplier B bids 3,500.00, then in “Compare responses”, the “Your bid/um” field will display as 3,150.00.
- If Supplier C bids 3,500.00, then in “Compare responses”, the “Your bid/um” field will remain as 3,500.00.
These adjustments reflect the application of the adjustment factors set by the buyer, ensuring consistency and fairness in the evaluation of supplier bids.
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