A reverse auction is a time-bound electronic sourcing event in which eligible suppliers compete under defined rules, commonly by improving price or another measurable offer element. It is suitable only where specifications, participation, comparability, and market conditions support fair competition. Quality, risk, service, capacity, and total cost should remain governed outside or alongside the auction.
In plain English
It is a controlled online competition in which qualified suppliers improve their offers.
Illustrative example
At Northstar Industrial Systems, technically qualified suppliers bid on a standardized packaging requirement after procurement confirms auction rules, opening positions, extensions, and award governance.
- Related terms
- Competitive bidding; RFQ; Total cost of ownership; Award scenario
- Lifecycle stages
- Source; Award
- Stakeholders
- Procurement; Supplier; Finance