3 Reasons to Use Online Reverse Auction

by | Aug 24, 2020

Reverse Auction For Online Trucking

Before I begin to talk about the advantages , it is worthwhile to explain how a reverse auction works for online truck & vehicle procurement. Reverse auction is a process of price discovery where the lowest price bidder wins the bid for vehicle requirements in any bidding indentation. Sometimes the auction is undertaken with a ceiling price rather than floor price.

Reverse auction for trucks, trailers and other vehicles can be run physically as many normal auctions work. However, running the technology driven reverse auction confers many advantages otherwise not available with conventional physical processes. The advantages help companies not only in reducing the transportation costs but also help in enhancing the velocity of supply chain and make it highly responsive. In the process, online reverse auction provides businesses an edge in market with faster response to customers need without incurring extra costs.

Transparency & low cost

Online reverse auction offers great advantage by making the entire process visible. Companies are facing information asymmetry as the decision makers do not have any idea of the extant vehicle procurement processes. Online auction ensures clear audit trails with complete information on bidding process.

A well designed system can understand the pattern in the bidding process which is likely to offer strategic insights to the companies. For example, data can reveal the share of various transporters, bidding participation, pricing trends. High Speed and wider reach. A good online procurement system can shave off substantial efforts made by the logistics team and thus enable them to devote higher share of workday on value-addition rather than mundane tasks.

The online system has virtually no limitation in terms of reach and that too instantly. Wider reach offers higher participation and consequent competition lowers tariffs.

All that is possible with automation of tasks such as vehicle indentation. Vehicle indentation tasks typically involve vehicle planning, getting quotes from transporters, following up with transporters & ensuring the right vehicle arrives in time. At present, indentation of trucks is done mostly with humans.

A reverse auction system combined with basic tracking system and intelligent logic can reduce hard and tedious work significantly. Tools like TOP ( Tool for Online Procurement ) have shown to reduce the efforts by more than 50% in many cases.

Robust Data & Actionable Insights

Integration and automation with reverse auction could lead to less human intervention and ensure better & holistic data. Presence of large amount of high quality data prepares a strong foundation for great strategic insights. Such unpolluted data can be processed with clever algorithms to deliver tangible advantages to decision makers. Some of such decision points may include insights on bidding strategy for different routes, vehicle types, seasons etc, can be tailored with right inputs from the system.

Data driven insights will replace hunched based subjectivity of the people involved in designing the procurement process. For example, mostly 2 variants of procurement are observed viz. spot bidding or multi-year contracts. However, analysis based on reverse auction process is likely to provide more nuanced strategies .



It is high time companies implement technology based reverse auction mechanisms due to significant advantages offered by such systems. Online procurement system are one such mechanism which can offer lower costs and high responsiveness with transparency, speed , reach , automation and data driven insights. Even a small company can benefit immensely with these high ROI systems.

Online reverse auction platforms offer immediate benefits with variable costs. Companies are spared from investing high amount of money and months, if not years, in developing their own systems. The advantages are too big to ignore and businesses with old ways are going to face inevitable competitive pressures if these easy wins are not secured fast enough.


About TransportHub

TransportHub is the First SaaS based Ecosystem to automate road freight logistics. Easy to use and proven plug-n-play hardware & software ecosystem helps companies improve efficiencies immediately. We help clients reduce costs by 10%+ and/or improve efficiencies by >50%. 

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