Business-to-Business (B2B) online reverse auctions have become a popular way to source products and services. Due to their relative newness and conflicting reports, however, several myths and misconceptions about them still exist. Investigates the truth behind five common myths associated with reverse auctions and, based on insights obtained from 30 case study companies, provides prescriptive evidence and direction for supply managers regarding how not to fall victim to these myths. Presents useful guidance to achieve the following realities: First, while a lower price is one objective in reverse auctions, it is often not the most important, and can easily be complemented with non-price attributes; Second, commodity items are usually easier candidates for reverse auctions, but non-commodity items can also be bid successfully; Third, reverse auctions can frequently hurt buyer-supplier relationships, but there are many ways to prevent this from happening; Fourth, while first-time bidding events generally result in higher savings, continued cost advantages are possible; and Fifth, even though there is a decline in reverse auctions usage, they are here for the long run.

Reverse e-auctions, which enable suppliers to compete online in real time, are changing the way organizations select their suppliers. Explores how five large firms in different industries learned to use e-auctions and how e-auctions were integrated into their purchasing processes. To implement e-auctions successfully, organizations should: build e-auction competencies; organize for knowledge management; create a holistic sourcing process; focus on the total cost of ownership; and experiment with e-auction designs. Draws key observations from the case studies and presents implications for supply managers.

Many firms have implemented company-wide systems called Enterprise Resource Planning (ERP) systems, designed to integrate and optimize various business processes, such as order entry and production planning, across the entire business. Such systems are complex, and implementing one can be difficult, time consuming, and expensive. Limited reports in the popular press suggest that these systems have achieved mixed success at best; some imply that failure of implementation threatens the existence of the company. Here we present an objective view of ERP systems, based on interviews with operating managers, IT personnel, and consultants. The dominant reason for adopting ERP was to simplify and standardize IT systems; the second most common reason was to have access to accurate information. Cost of implementation generally ranged from 1.5% to 6% of annual revenues, with the software portion of the costs being just the tip of the iceberg. Implementation time varied from 12 months to 4 years. Return on investment in ERP was mixed--from 5% to 20%. For all the negative press ERP systems have received, our interviews indicated that all firms represented in our sample were pleased with them, despite some problems. Successful implementations were characterized by thorough senior management involvement, a cross-functional implementation team, clear guidelines for performance measurement, and detailed plans for training users. Importantly, a single ERP system does not provide an end-to-end solution, as most companies use other systems for specialized functions. Overall, though, the future of ERP is very promising.

As products become more complex and global in scope, product development managers rely increasingly on suppliers for help. Limited resources necessitate developing close, long-term relationships with a few of the most important suppliers. But partners often struggle in these relationships because of conflicting needs and objectives. The OEM's wish list consists of providers with scarce resources and capabilities, including turnkey solutions, a shared strategy, and contributions to new product development; support of global product strategies (market knowledge or access and local presence); and minimized risks (assurance of good design, confidentiality, and demonstrated ability). The supplier's wish list consists of rewards for up-front involvement, protected business interests, and a share in the payoffs. OEM and supplier needs can be balanced by honoring the Ten Commandments for their relationships: three for OEMs (don't manage all suppliers equally, realize that good suppliers are hard to find, demand more of suppliers but learn to be a good customer as well); three for suppliers (recognize that competition is getting tougher and broader based, explore new business sourcing arrangements, use speed to alleviate the need to maintain propriety in NPD); and four for both parties (don't let distance hamper performance, keep score, be creative in using capabilities of global partners, and develop and encourage trust).