Let us see some common myths surrounding online auctions: MYTH #1: Only very familiar, particular or consistent items can be auctioned: The myth came into being because no one understood how to measure criteria other than price. Total cost auctions take price and no-price factors, such as delivery time or customer service, into account, and they allow a customer to weight each factor accordingly. This is only a myth because when someone with sourcing expertise takes a creative approach to defining or breaking down the item in question, that item or its components can generally be auctioned. Face-to-face negotiations have long proven this fact. The myth that only internet-savvy suppliers can participate in an online auction is wrong. In order to participate in an Internet based online auction, the suppliers merely need to be able to log on to the Internet, log in to a web site, and log their bids. Suppliers don’t have to know how to navigate the World Wide Web or use any sophisticated search engines to participate. Once existing suppliers believe that the buyer really will change where he takes his business, a competitive environment is created.

For example, a particular auction site held an auction for telemarketing services that resulted in an 18% cost reduction. The auction involved over 60 suppliers and more than 700 bids. The study shows that apart from products, services can also be auctioned. For example, a buyer may auction off the purchase of 10,000 PCs over a two-year period. Once they have done that, the possibilities are almost endless. They minimize the flow of information between buyers and their suppliers, while maintaining the terms, conditions and integrity of the business relationship between the two parties. The new Best Practice was “integrating the electronic kanban system” with a manufacturers current purchasing system.