Current adoption and future prospects of electronic reverse auctions in the Austrian automotive industry

TABLE OF CONTENT

ACKNOWLEDGEMENTS

ABSTRACT

TABLE OF CONTENT

LIST OF TABLES

LIST OF FIGURES

LIST OF ABBREVIATIONS

1 INTRODUCTION
1.1 BACKGROUND, SUBJECT AND REASONS FOR SUBJECT CHOICE
1.2 RESEARCH OBJECTIVES AND QUESTIONS
1.3 RESEARCH METHODOLOGY
1.4 LIMITATIONS OF THE RESEARCH
1.5 RESEARCH STRUCTURE

2 LITERATURE REVIEW
2.1 PROCUREMENT IN SUPPLY CHAIN MANAGEMENT
2.1.1 e-procurement
2.1.2 e-auctions
2.2 ELECTRONIC REVERSE AUCTIONS
2.2.1 Mode of operation
2.2.2 Benefits and criticisms
2.2.3 Future prospects
2.2.4 Adopters
2.3 THE AUTOMOTIVE INDUSTRY
2.3.1 eRA adoption in the automotive industry
2.3.2 The Austrian automotive industry

3 CONCEPTUAL FRAMEWORK

4 METHODOLOGY
4.1 RESEARCH PURPOSE
4.2 RESEARCH APPROACH
4.3 RESEARCH STRATEGY
4.3.1 Sampling
4.4 DATA COLLECTION METHOD
4.4.1 Primary data collection through a telephone survey and semi-structured interviews
4.5 DATA ANALYSIS
4.5.1 Computer Assisted Qualitative Data Analysis
4.5.2 Data analysis with NVivo

5 FINDINGS, ANALYSIS AND DISCUSSION
5.1 CURRENT EXTENT OF ERA USAGE
5.1.1 Non-adoption reasons and criticisms
5.1.2 Adoption reasons and benefits
5.2 CURRENT WAY OF ERA USAGE
5.2.1 General way of usage
5.2.2 Before the auction
5.2.3 Auction
5.2.4 After the auction
5.3 FUTURE PROSPECTS FOR THE EXTENT OF ERA USAGE
5.4 FUTURE PROSPECTS FOR THE WAY OF ERA USAGE

6 CONCLUSION
6.1 CONCLUSION OF RESEARCH
6.2 RELIABILITY AND VALIDITY
6.3 CONSTRAINTS, LIMITATIONS AND IMPLICATIONS
6.4 FURTHER RESEARCH

LIST OF REFERENCES

APPENDIX
APPENDIX 1:TIME SCHEDULE
APPENDIX 2:LIST OF COMPANIES CONTACTED FOR RESEARCH STUDY
APPENDIX 3:INTERVIEW GUIDELINES FOR ERA ADOPTERS AND NON-ADOPTERS
APPENDIX 4:INFLUENCING FACTORS OF ERA REUSE INTENTION

ACKNOWLEDGEMENTS

Without the help and support of several people, this piece of work carried out in order to achieve the Master of Science in International Supply Chain Management, would not be as it is now. For this reason I want to give special thanks to several people.

First of all I would like to thank my supervisor Dr. Shunmugham Pandian for his support and recommendations regarding my research.

Moreover, I want to thank the purchasing managers and purchasing agents who were willing to sacrifice their time to support my work.

In addition, I want to thank Mama, Papa, Peter, Martina, Reini and Burgi Oma for their encouragement to go abroad and especially my parents for enabling this study.

Thanks to all the nice people I met during my Master studies abroad - it was an amazing time with lots of fun and nice experiences which I’ll never forget. Special thanks to my travel partner Zoe who became a really good friend.

Finally, I want to thank Lukas for his everlasting mental support [illustration not visible in this excerpt].

~ Wer immer macht, was er schon kann, bleibt immer der, der er schon ist ~

~ Wer kann schon von sich sagen, dass er seinen Traum lebt? ~

ABSTRACT

Especially after the recession, it is of interest whether electronic reverse auctions (eRAs), as e-procurement tool with a high cost saving potential, are attractive for companies. Therefore, the purpose of this study is the investigation of the current eRA adoption and future eRA prospects in terms of extent and way of usage in the Austrian automotive industry.

Data were collected from purchasing managers and purchasing agents of 20 companies which belong to the 24 top-selling Austrian automotive companies. Quantitative data was collected from 20 companies regarding the extent of eRA usage. Furthermore, 18 of these participated in semi-structured interviews for qualitative data collection regarding reasons for (not) using eRAs and the way of eRA usage.

Results of the data analysis show that the extent of eRA usage is and will remain quite low in the Austrian automotive industry and even adopters’ eRA spending is fairly low. In conclusion, eRAs do not seem to contribute a lot to achieve cost savings in the Austrian automotive industry and are considered to be rather disliked by Austrian automotive buyers.

Although findings cannot be generalised to the whole Austrian automotive industry they still might have the implication that buyer-supplier cooperation will prevail in the Austrian automotive industry in the future as it obviously contributes more to gain a sustainable competitive supply chain advantage than eRAs. Moreover, if other industries and countries have similar attitudes towards eRAs as Austrian automotive buyers, it might have negative implications on eRA tool providers, though this needs to be investigated in further research.

LIST OF TABLES

Table 1: Research structure

Table 2: Time schedule

LIST OF FIGURES

Figure 1: Conceptual Model

Figure 2: NVivo tree node structure

Figure 3: NVivo set creation

Figure 4: Current extent of eRA usage

Figure 5: Future prospects for the extent of eRA usage

LIST OF ABBREVIATIONS

illustration not visible in this excerpt

1 INTRODUCTION

1.1 Background, subject and reasons for subject choice

The goal of supply chain management is to maximise customer satisfaction at the lowest possible cost in order to maximise supply chain surplus (Hugos, 2006; Bhagwat and Sharma, 2007; Skjott-Larsen et al., 2007; Shin et al., 2010). Due the fact that in 2008 the economic crisis hit almost the whole world, saving costs got even more important for companies (Haarman, 2009). Especially the sourcing proc- ess represents a huge cost driver within supply chain management (Hugos, 2006). Within the sourcing process, costs can be reduced through making the whole busi- ness process more efficient and also through cheaper sourcing. E-procurement helps to increase process efficiency through process automation, increased speed of in- formation exchange and increased transparency (Hugos, 2006; Skjott-Larsen et al., 2007). Electronic reverse auctions (eRAs), as an e-procurement tool, additionally de- liver the benefit of stimulating competition and getting able to source from the cheap- est supplier. Hence, they combine advantages of process efficiency and sourcing at cheap prices (Tassabehji et al., 2006; Amelinckx et al., 2008). Especially during or after hard times like recessions, companies should make use of tools with a high cost saving potential (Grundy, 2009). As eRAs obviously offer many benefits, it is of inter- est to which extent this procurement tool has been adopted. The automotive industry is a highly competitive industry and is therefore very well suited for the adoption of eRAs (Amelinckx et al., 2008; Zhao et al., 2009). Austria’s automotive industry was chosen because the ability of doing the research study in the researcher’s native lan- guage was regarded to be better. Moreover, although Austria is a small country, it has a highly reputable automotive industry with internationally well-known companies like Magna, BMW, KTM and MAN.

1.2 Research objectives and questions

The overall aim of this research is to investigate the extent and way of eRA usage in the Austrian automotive industry. However, as it takes some time from the decision to implement such a tool until it can finally be used; not just the current adoption but also the future prospects of eRA adoption represent a research objective. Based on this, the following research questions were designed referring to the Austrian automotive industry:

Current adoption

1. How many companies do currently use eRAs?
2. Why do companies source with eRAs?
3. Why do companies not source with eRAs?
4. How do companies use eRAs and what do they source?

Future prospects

5. How many companies intend to use eRAs in the future?
6. What is intended to be sourced via eRAs in the future?

1.3 Research methodology

This research changes from a deductive into an inductive approach and is of explora- tory nature. Quantitative data were collected from 20 Austrian automotive buying companies through a telephone survey. Moreover, qualitative data were collected from 18 out of these 20 companies through semi-structured in-depth interviews. The interviews were conducted partly face-to-face and partly via telephone. After that, data were analysed with the support of the qualitative data analysis software NVivo.

1.4 Limitations of the research

In addition to budget constrains, the main limitation of this research is the time restriction of four months for carrying out the research. This led to a very tight time schedule (Appendix 1) which allowed just four weeks for the primary data collection.

1.5 Research structure

This research study consists of six chapters, which in summary have the following content:

illustration not visible in this excerpt

Table 1: Research structure

2 LITERATURE REVIEW

2.1 Procurement in Supply Chain Management

A company’s sourcing strategy is a main contributor to supply chain performance and influences the competitiveness of the whole supply chain (Razuk et al., 2009). Sourc- ing encompasses strategic decisions in a company’s acquisition process of goods and services in order to produce and provide added value to customers. It involves information search, contract negotiations and supplier management. Procurement is linked to sourcing and encompasses operational decisions regarding the acquisition process. It includes ordering as well as delivery and payment of goods and services. It is an important business process in firms across all industries and a big part of spend management in organisations (An and Fromm, 2005; Hugos, 2006; Arndt, 2008). Due to the economic crisis which hit almost the whole world in 2008, saving costs got more important than ever (Haarman, 2009). Traditional procurement prac- tices are costly and time-consuming as they are associated with high business proc- ess inefficiency. Additionally, they are prone to error. In order to deal with problems of traditional procurement, many organisations adopted electronic procurement (e- procurement) tools (Carter et al. , 2000; Skjott-Larsen et al. , 2007; Arndt, 2008).

2.1.1 e-procurement

E-procurement is the application of IT to automate and streamline procurement transactions and it is believed to facilitate improved productivity and sustained profit- ability. In order to increase business process efficiency, firms increasingly resort to the use of e-procurement tools in their procurement process (Wagner and Schwab, 2004; Skjott-Larsen et al. , 2007). These tools permit efficient and effective materials management and help to reduce total procurement costs, not only through process automation but also by providing a wider access to the supplier market. This enables buyers to find the cheapest supplier easily (Knudsen, 2003; Smart and Harrison, 2003; McIvor and Humphreys, 2004; Zhao et al., 2009). Increased supply chain per- formance and improved competitiveness represent benefits of e-procurement (Skjott- Larsen et al. , 2007; Tassabehji et al. , 2007).

E-procurement benefits are enabled through the applications intranet and extranet. The intranet is a company internal information and transaction platform that facilitates business process improvement within the company. The extranet is an intranet ex- tension for business partners. It is an information and transaction platform that facili- tates business process improvement between buyer and seller. Also known as pri- vate marketplace, it represents a one-to-many buy-side-solution as just the buying needs of one company are fulfilled (Wannenwetsch and Nicolai, 2004). Moreover, e- procurement enables many-to-many exchanges i.e. between many buyers and many sellers, on Internet-driven electronic marketplaces (IEMPs) (Skjott-Larsen et al. , 2003; An and Fromm, 2005).

IEMPs can be used for buying and selling. Buying is facilitated on the one hand on buy-side marketplaces were buyers aggregate and open a market to several suppli- ers, and on the other hand on neutral marketplaces were many buyers and sellers come together to exchange on third party operated marketplaces. Moreover, IEMPs can be distinguished between vertical marketplaces, which are industry specific, and horizontal marketplaces with a functional focus e.g. office material. Furthermore, IEMPs differentiate between open and closed marketplaces. Open marketplaces are accessible to everybody that follows the rules of the marketplace and are character- ised through a low level of cooperation. Closed marketplaces are accessible just for selected suppliers and are characterised through a high level of cooperation e.g. in- dustry specific e-marketplaces. Finally, e-marketplaces differentiate two pricing mechanisms. A fixed pricing mechanism is provided through e-catalogues, whereas a variable pricing mechanism is provided through requests for proposal (RFPs) with supply and demand driven prices, and electronic auctions with competition driven prices (Skjott-Larsen et al. , 2003; Grieger, 2004; An and Fromm, 2005).

2.1.2 e-auctions

Electronic auctions are also called online auctions or simply e-auctions. They are electronic bidding events where resources are allocated and prices determined (Jap, 2002; Nair, 2005). Hence, they belong to the negotiation step of the procurement process (Knudsen, 2003). It can be distinguished between English and Dutch auc- tions. English auctions start with a low price, the price ascends and the highest bid- der wins the auction, whereas Dutch auctions start with a high price, the price descends and the lowest bidder wins the auction (Teich et al., 2003; Carter et al., 2004; Daly and Nath, 2005; Nair, 2005).

2.2 Electronic reverse auctions

Dutch auctions (Teich et al., 2003) are more commonly known as electronic reverse auctions (eRAs) but are also called online reverse auctions (oRA) (Smart and Harrison, 2003) or downward price auctions (Emiliani and Stec, 2002; Kumar and Maher, 2008). They are real-time dynamic bidding events between one buyer and a group of suppliers who compete online via auction software to win a buyer’s business to supply goods or services (Kaufmann and Carter, 2004; Hur et al., 2006; Razuk et al., 2009). Buyers adopt eRAs because they combine benefits of a more efficient sourcing process through reduced sourcing cycle time (Emiliani and Stec, 2002; Parente et al., 2004) and cheaper purchase prices through fostered competition (Jap, 2002; Parente et al., 2004).

2.2.1 Mode of operation

In an eRA, one buyer, several suppliers and an auction software provider are in- volved (Parente et al., 2004; Arnold et al., 2005; Emiliani, 2005). Additionally, to pro- viding the auction platform, software providers offer service-support for inexperienced auctioneers or ones with just a small auction spending. More experienced auction- eers or ones with a huge auction spending rather bring auctions in-house as this will be more cost efficient (Mabert and Skeels, 2002; Hur et al., 2006; Hur et al., 2007). The more service is consumed from an auction provider, the higher are the costs (Arnold et al., 2005). eRA costs have to be paid either as a monthly fee or as a com- mission percentage of the savings achieved (Kumar and Ma]her, 2008). Mabert and Skeels (2002) found, that in 2002 a monthly fee for an auction software provider was about $ 75,000 including consulting, support and commission. For another provider the fee was 5%-25% of the purchase price savings depending on their monetary value (Mabert and Skeels, 2002). When eRAs are adopted, not just the eRA fee but the total cost of ownership (TCO) should be taken into account (Jap, 2002; Arnold et al., 2005; Tassabehji et al., 2006; Hur et al., 2007). Thus, not just resource require- ments, but also supplier switching costs have to be considered (Mabert and Skeels, 2002; Wagner and Schwab, 2004; Emiliani and Stec, 2005; Kumar and Chang, 2007; Amelinckx et al. , 2008; Caniels and Raaij, 2009; Razuk et al. , 2009). Once, eRAs are implemented in a company, several preparations need to made before the auction can take place.

The first step is the buyer’s decision which goods or services are intended to be sourced. Yet, not everything is suitable for sourcing via eRAs. Product or service re- quirements have to be clearly defined in an RFQ (request for quotation) which cannot be altered anymore once it is sent out to the suppliers (Mabert and Skeels, 2002; Carter et al., 2004; Kaufmann and Carter, 2004; Wagner and Schwab, 2004; Kumar and Chang, 2007; Amelinckx et al., 2008; Crane, 2008; Caniels and Raaij, 2009; Razuk et al., 2009; Hawkins et al., 2010). This makes the information exchange in eRAs between buyer and suppliers quite restricted (Nair, 2005; Lösch and Lambert, 2007). Hence, just items with exactly known buying parameters at the time of prepar- ing the RFQ can be sourced via eRAs (Jap, 2002; Mabert and Skeels, 2002; Daly and Nath, 2005; Tassabehji et al., 2006; Lösch and Lambert, 2007; Amelinckx et al., 2008). Make-to-order goods are thus not suitable (Caniels and Raaij, 2009; Razuk et al., 2009; Hawkins et al., 2010). Apart from that, generally all kinds of goods and ser- vices can be sourced via eRAs (Kaufmann and Carter, 2004; Hur et al., 2006; Razuk et al., 2009).

Though, eRAs are regarded to be best suitable for items with a low specification de- gree because they just require a minimum of information exchange (Jap, 2002; Skjott-Larsen et al., 2007; Mithas et al., 2008; Razuk et al., 2009). Hence, arm’s length buyer-supplier relationships are most common out of eRAs (Skjott-Larsen et al., 2003; Smart and Harrison, 2003; Mentzer, 2004; Humphreys et al., 2006; Radkevitch et al., 2009). Mainly indirect items belong to items with a low specification degree and are thus very appropriate for eRAs (Smart and Harrison, 2003; Tassabe- hji et al., 2006; Kumar and Chang, 2007; Skjott-Larsen et al., 2007; Avery, 2008; Kumar and Maher, 2008; Earls, 2009; Razuk, Arkader and Braga, 2009; Hawkins, Gravier and Wittmann, 2010). They encompass maintenance, repair and operations material (MRO) and operating resource management material (ORM) like office ma- terial (Skjott-Larsen et al., 2003). Especially generic goods are most commonly sourced in eRAs as they require almost no specification because they differentiate just through the price (Jap, 2002; Hartley et al., 2006; Schoenherr and Mabert, 2007;

Razuk et al., 2009). As indirect and generic goods are easy definable and do not really contribute to a companies competitive advantage, they are also called noncritical or non-strategic items (Skjott-Larsen et al., 2007).

In contrast to that, goods and services with a high specification degree are regarded to be not suitable for eRAs because they mostly have a need for explanation and thus require more information exchange than items with a low specification degree (Smart and Harrison, 2003; Mentzer, 2004; Emiliani and Stec, 2005; Lösch and Lambert, 2007; Amelinckx et al. , 2008; Mithas et al. , 2008; Razuk et al. , 2009). It can be difficult to clearly explain product specifications in a written RFQ and suppliers might not understand them correctly (Jap, 2002; Schoenherr and Mabert, 2007; Radkevitch et al., 2009). Furthermore, as items with a high specification degree are rather difficult for competitors to replicate, they highly contribute to a companies suc- cess and competitive advantage (Hugos, 2006; Skjott-Larsen et al., 2007) and are also called strategic items (Skjott-Larsen et al., 2007). Supplier inputs are critical in this product category; hence they should be sourced from strategic suppliers (Mentzer, 2004; Hugos, 2006; Skjott-Larsen et al., 2007). Contrary, as eRAs are said to hinder relationship building and destroy buyer-supplier relationships, they are not suitable for sourcing strategic items (Smart and Harrison, 2003; Emiliani and Stec, 2005; Lösch and Lambert, 2007; Amelinckx, Muylle and Lievens, 2008; Razuk, Arkader and Braga, 2009). Hence, buyers rather abstain from using eRAs and prefer usual face-to-face negotiations with known suppliers to source highly specific goods (Jap, 2002; Schoenherr and Mabert, 2007; Radkevitch et al., 2009).

Nevertheless, some authors argue, that highly specific items can still be sourced with eRAs (Emiliani, 2000; Emiliani and Stec, 2002; Jap, 2002; Kaufmann and Carter, 2004; Hartley et al., 2006; Hur et al., 2006; Schoenherr and Mabert, 2007; Amelinckx et al., 2008; Tan et al., 2008; Hawkins et al., 2010). As long as product requirements are clearly definable and suppliers understand them correctly, long-term buyer- supplier relationships are not necessarily required and eRAs are suitable for sourcing (Kaufmann and Carter, 2004; Wagner and Schwab, 2004; Caniels and Raaij, 2009). Moreover, relationships can indeed be build up out of eRAs (Parente et al., 2004; Radkevitch et al., 2009).

After the good or service that is intended to be sourced is determined, item require- ments are fixed in the RFQ. Additionally to that, the RFQ encompasses quantity and quality specifications, service requirements, terms and conditions and other impor- tant, item related issues. Moreover, auction date, auction time and auction format need to be determined (Jap, 2002; Mabert and Skeels, 2002; Daly and Nath, 2005; Tassabehji et al., 2006; Lösch and Lambert, 2007; Amelinckx et al., 2008).

Regarding the auction format, it can be distinguished between open and sealed bid auctions with rank- or price-based visibility and hard or soft closing. In open bid auc- tions every bidder can see the other bidders’ bids whereas in sealed bid auctions the bidder does not know anything about the other bids. Regarding visibility, depending on the open or sealed bid format, a supplier can see all other bidders’ ranks or just its own (Jap, 2002; Carter et al., 2004; Daly and Nath, 2005). Referring to the auction closing, hard closing auctions have a fixed closing time whereas soft closing auctions continue as long as there is enough bidding activity (Jap, 2002; Daly and Nath, 2005). In eRAs, the sealed bid format (Jap, 2002) with rank-based visibility (Carter and Stevens, 2007) and soft closing is regarded to deliver the highest buyer satisfac- tion (Jap, 2002; Amelinckx et al., 2008). In addition to the auction format, auction rules and guidelines as well as contract awarding criteria have to be clearly defined before suppliers are selected and invited to the eRA (Jap, 2002; Nair, 2005; Amelinckx et al., 2008).

Prior to inviting suppliers, the buyer evaluates them regarding their qualification to meet his requirements and selects the most suitable ones (Lösch and Lambert, 2007). In order to stimulate competition, unknown suppliers should not be shunned to be shortlisted by the buying company (Jap, 2002; Mabert and Skeels, 2002; Crane, 2008). After the supplier selection, the buyer invites them to the auction through sending out the RFQ and auction related information and moreover hopes that many suppliers will participate (Lösch and Lambert, 2007). If the eRA has a high monetary value, it will be more attractive for suppliers to participate, which furthermore stimu- lates competition, drives down prices and allows higher savings (Jap, 2002; Mabert and Skeels, 2002; Carter et al., 2004; Kaufmann and Carter, 2004; Wagner and Schwab, 2004; Hartley et al., 2006; Hur et al., 2007; Kumar and Chang, 2007; Lösch and Lambert, 2007; Amelinckx et al., 2008; Crane, 2008; Caniels and Raaij, 2009;

Razuk et al., 2009; Hawkins et al., 2010). Wagner (2004) adds that the monetary eRA value should at least be about $ 130,000 to attract a sufficient number of suppli- ers.

At least three suppliers should participate in an eRA so that it is worthwhile conduct- ing (Hartley et al., 2006; Tassabehji et al., 2006). During the scheduled auction pe- riod, which is usually about an hour, bids are successively lowered down through the suppliers’ bids (Mabert and Skeels, 2002; Schoenherr and Mabert, 2007; Kumar and Maher, 2008; Caniels and Raaij, 2009). Finally, the contract is awarded, not neces- sarily but most likely to the lowest bidder. Nowadays, eRAs can cover multiple attrib- utes or dimensions, thus additional components to the price can be taken into con- sideration when suppliers are awarded a contract (Kumar and Chang, 2007; Lösch and Lambert, 2007; Atkinson, 2008; Tan et al., 2008; Ray et al., 2009; Strecker, 2010). Multiple attribute auctions work through using weighted evaluation criteria (Atkinson, 2008) or a ranking scale where the price is placed according to the buyers requirements (Tan et al., 2008). Awarding contracts via eRAs usually makes up 5%- 25% of a buying company’s total annual purchasing volume and offers the buyer several benefits (Kaufmann and Carter, 2004; Hur et al., 2006; Razuk et al., 2009).

2.2.2 Benefits and criticisms

eRAs offer many benefits but still receive lots of criticisms. Major discussion points are the efficiency increase of the sourcing process, purchase price savings and sup- plier participation in eRAs (Humphreys et al. , 2006; Tassabehji et al. , 2006; Caniels and Raaij, 2009). Parente (2004) mentions that buyers can actually not lose in eRAs as they are rather in favour for them, whereas forward auctions are rather beneficial for suppliers. eRAs enable for buyers financial savings through an efficiency increase of the sourcing process and lower product prices for sourced goods and services (Emiliani and Stec, 2002; Jap, 2002; Mabert and Skeels, 2002; Carter et al., 2004; Kaufmann and Carter, 2004; McIvor and Humphreys, 2004; Parente et al., 2004; Wagner and Schwab, 2004; Daly and Nath, 2005; Emiliani, 2005; Nair, 2005; Hartley et al., 2006; Humphreys et al., 2006; Tassabehji et al., 2006; Giampietro and

Emiliani, 2007; Hur et al., 2007; Kumar and Chang, 2007; Lösch and Lambert, 2007; Schoenherr and Mabert, 2007; Amelinckx et al., 2008; Kumar and Maher, 2008; Atkinson, 2009; Caniels and Raaij, 2009; Razuk et al., 2009). Mostly, financial savings can be achieved quickly, because eRAs usually have a fast return on investment (ROI) as revenues can be identified quite early (Carter et al. , 2004; Emiliani, 2005; Razuk et al. , 2009). Thus, eRAs help to increase working capital and cash flow (Emiliani and Stec, 2002; Carter et al., 2004; Razuk et al., 2009).

An efficiency increase of the sourcing process is facilitated through a reduced sourc- ing cycle time based on more efficient price negotiations (Emiliani, 2000; Jap, 2002; Carter et al., 2004; Kaufmann and Carter, 2004; Parente et al., 2004; Arnold et al., 2005; Emiliani, 2005; Nair, 2005; Humphreys et al., 2006; Tassabehji et al., 2006; Giampietro and Emiliani, 2007; Hur et al., 2007; Schoenherr and Mabert, 2007; Amelinckx et al., 2008; Kumar and Maher, 2008; Atkinson, 2009; Caniels and Raaij, 2009; Razuk et al., 2009). Many witnessed a cycle time reduction of around 30% (Atkinson, 2009). Through these time savings, purchasing managers can focus more on supplier relationships when eRAs are not suitable (Carter et al., 2004). In contrast, Amelinckx et al. (2008) mention that companies often do not consider the huge time effort it took them to get eRA expertise, prepare for eRAs, make the RFQ, select sup- pliers etc. when assessing procurement process efficiency. Especially the RFQ preparation for complex products can take a very long time and might prove difficult (Emiliani, 2000). Moreover, due to inaccurate planning of buyers and suppliers, re- quirements often change and negotiations are required after the auction (Tassabehji et al., 2006; Kumar and Maher, 2008). Hence, the benefit of a reduced sourcing cycle time is often overrated (Amelinckx et al., 2008). Nevertheless, less paperwork (Carbone, 2005; Razuk et al., 2009) and an increased transparency of the sourcing process are additional efficiency benefits (Mabert and Skeels, 2002; Kaufmann and Carter, 2004; Wagner and Schwab, 2004; Schoenherr and Mabert, 2007). Moreover, eRAs are not complex to learn (Jap, 2002), they can be conducted 24/7 (Nair, 2005) and offer the buying company a wider market access which can help them to ration- alise and restructure their supply base (Wagner and Schwab, 2004; Daly and Nath, 2005; Hur et al., 2006; Schoenherr and Mabert, 2007; Amelinckx et al., 2008; Avery, 2008; Razuk et al., 2009). Through a wider market access many new suppliers from all around the world can be invited to the eRA and market competition is fostered (Jap, 2002; Kaufmann and Carter, 2004; Daly and Nath, 2005; Hartley et al., 2006; Humphreys et al., 2006; Hur et al., 2007; Schoenherr and Mabert, 2007; Tassabehji et al., 2007; Kumar and Maher, 2008; Caniels and Raaij, 2009).

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