How to get your suppliers to bid against each other

1. Invite the suppliers you'd really buy from. Three to five is usually plenty. More names mean more replies to read, not more competition.
2. Give everyone the same lines. One item per line, with a quantity and unit, plus the delivery, payment terms and anything else you'll judge on. If the requests differ, so will the quotes, and you can't compare them. An RFQ template has the lines laid out for you.
3. Say it's competitive, and how you'll choose. Tell suppliers you're asking more than one of them, and whether you'll judge on price alone or on price and lead time.
4. Set one deadline for everyone. A date and a time, in the request. No supplier gets extra time the others didn't.
5. Keep a second round in reserve, without promising one. If suppliers know a second round is coming, many keep their best price for it. Say you may ask for a final price, and use it when the first quotes come in close.
6. Close the loop. Tell the winner, and tell the others promptly that they didn't win this time. A supplier who hears back is more likely to quote next time.

A short paragraph in the request is enough. For example:

We're asking three suppliers to quote for this order, and we'll choose on price and lead time. Please send your best price for each line by Thursday at 5pm. We may ask for a final price before we decide.

For a live auction, add one sentence on how it works: they can lower their price as often as they like until it closes.

Competition doesn't have to cost you a good supplier. Suppliers are used to quoting against others. What upsets them is a process that isn't straight.

Do:

• Tell your regular supplier you're getting other quotes before the request goes out. Hearing it from you is better than finding out.
• Keep the rules you announced, even when the result surprises you.
• Offer something real when you ask for a sharper price, if you can: a bigger order, a regular one, or quicker payment. Only promise what you'll do.

Don't:

• Make up a lower quote to push a supplier down.
• Pass one supplier's quote to another by email. In a good auction tool the lowest price may be on screen, but never whose it is.
• Quietly let your favourite supplier match the lowest price after the deadline. If the others find out, they stop quoting.

If only one supplier can supply the item, there's no one to compete with: ask for a quote and negotiate. When a reverse auction works, and when it doesn't covers the other cases.

Not for the first two routes. Email and a spreadsheet handle quotes by a deadline and a best and final round. The work is in lining up the replies: our free quote comparison tool does that part, with no account.

A live auction is the part that needs a tool, because every supplier has to see where they stand while the bidding is open. Three things matter most for getting suppliers to take part:

1. Suppliers bid from an email link, without signing up. A supplier who has to create an account to bid on one order often won't.
2. A last-second bid can't win. If someone takes the lead at the end, the clock should extend so the others can answer.
3. You can try it free on a real order before you pay.

What to look for in a reverse auction tool has the full list. Try SourcingHQ free.

What it costs: some tools are priced for big procurement teams. If you'll only run a few auctions a year, check what you'd pay for the number you'll actually run, and whether it renews automatically. SourcingHQ's plans and pricing are on one page.

SourcingHQ is a sourcing assistant that collects quotes from your own suppliers, with a live reverse auction you switch on when you want them to compete.

• Setting up. Describe the purchase in a chat, or forward an inquiry email, and you get a draft request with the line items filled in from what you wrote or from the text of the email. The AI doesn't invent line items or price limits, and you review everything before it goes out.
• Quotes by a deadline. One request goes to every supplier you invite. Each RFQ collects quotes by a deadline, and suppliers can change their quote before it closes. Reminders go to suppliers who haven't replied.
• A live auction, when you want one. When you want them to compete, switch on a live auction, where suppliers bid against each other until it closes and see whether they're the lowest. You can also require each new bid to beat the current lowest. It needs at least two suppliers and a max price on every line. You choose open or blind, and in a live auction, if someone takes the lead in the last 2 minutes, the clock resets to 3 minutes. Suppliers can also get an alert when they've lost the lead.
• Suppliers. Invites go out in your company's name, and you can see the delivery status of each one. Suppliers quote from an email link without creating an account, and they never pay. Suppliers never see who else is invited.
• Choosing. You compare every quote line by line in a comparison report, with PDF and Excel export, and award the whole order to one supplier or split it line by line.

The AI never sends, awards or contacts suppliers on its own. You decide each of those.

SourcingHQ has a free plan with 3 RFQs and 1 seat. It isn't a trial and it doesn't expire, and the 3 RFQs are a total, not a monthly allowance. Paid plans are a one-time payment that covers 12 months. Suppliers never pay, and every request can have as many suppliers as you like. Each request you send counts as one RFQ, live auction or not, and if you cancel it before it starts, you get the RFQ back. See plans and pricing.

Try SourcingHQ free on your next real request.