Parts prices to drop in Dutch auction?
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• A major commercial vehicle manufacturer is negotiating to buy components using a novel auction method that could halve the price of parts. Watford-based Reverse Auction Tenders fRatS) Ltd refuses to reveal who the manufacturer is but says reverse auction tendering could cut the manufacturer's parts costs by 30% and in some cases up to 50%.
The system relies on a live phone link to allow several chosen suppliers of services or ports to continually reduce their price as they hear their competitors' offers. If a bid falls below a predetermined floor reserve, the tenderer has the right to reject it if he thinks product quality could suffer. RotS director Paul Fletcher says the system could cut costs for vehicle manufacturers and converters wherever there is competition to supply ports.