The best application of reverse bid is for e-procurement; a strategy used by purchasing and supply management organizations to reduce spending as part of strategic sourcing and other supply management activities.
A reverse bid is different in that a single buyer offers a contract for bidding. Multiple sellers are then able to offer bids on the contract. As the bid progresses, the price decreases as sellers compete to offer lower bids than their competitors whilst still meeting all of the specifications of the original contract. The buyer is able to see all the offers and to choose the supplier who meets all criteria.
Bidding performed in real-time via the Internet results in a dynamic, competitive process. This helps achieve rapid downward price pressure that is not normally attainable using traditional static paper-based bidding processes.
The buyer may award the contract to the seller who bid the lowest price or to suppliers who bid higher prices depending on the buyer's specific needs with regard to quality, lead-time, capacity, or other value-adding capabilities.
The use of this site help buyers determine which supplier is likely to provide the best value in providing goods or services. The Site helps you create relevant buyer and seller business data, including constraints.
Reverse bids are used to fill both large and small value contracts for both public sector and private commercial organizations. In addition to items traditionally thought of as commodities, reverse bids are also used to source buyer-designed goods and services