Assessment on criterions

The factors were calculated using principal component analysis and varimax rotation to get factor loadings (Table 5-3 Eigen-value and proportion of the total variance). Each factor can be explained in factor naming (Table 5-2 Nine factors naming); structure of the factor matrix represents various variables to the factor contribution degree (under orthogonal revolution axis structured matrix, which also represents various variables and factor of correlation coefficient). Generally, an indicator is above 0.4, however, experts think that factor eight is the preparation time and also plays a major role in the bidding event. Thus, the measure of 0.394 would possibly contribute to the effect of bidding.

Variance

Factors Initial traits Varimax rotation

Total Variance% Sum% Total Variance% Sum%

1 5.778 21.402 21.402 3.032 11.229 11.229

2 2.629 9.735 31.137 2.677 9.915 21.144

3 2.024 7.496 38.633 2.113 7.825 28.969

4 1.686 6.244 44.877 1.980 7.333 36.302

5 1.615 5.983 50.861 1.827 6.767 43.069

6 1.317 4.878 55.739 1.806 6.687 49.757

7 1.225 4.536 60.275 1.778 6.586 56.343

8 1.097 4.062 64.338 1.605 5.946 62.289

9 1.009 3.736 68.073 1.562 5.785 68.073

Table 5-4 Matrix of the variables on using e-auction tool Factor 1 E-auction system stability and reliability

V17 Stability 0.850 21.402

V18 Security 0.778

V19 Reliability and fairness 0.740

V16 Adaptability 0.615

Factor 2 Participation willingness

V6 Fair bidding 0.839 9.735

V5 Commitment from buyer 0.780

V20 Participation rate 0.480

Factor 3 Choose the right procurement time

V23 Surplus supply from the supplier 0.729 7.496

V10 Right timing 0.719

Factor 4 Procurement expert’s price setting ability

V14 Price listing ability 0.703 6.244

V13 Future demand estimation 0.586

V4 Change on procurement procedure 0.548 V15 Decrease in possible alliances from buyers or

sellers 0.476

V25 Best result achieved for buyer and seller 0.452 Factor 5 Select the right supplier

V22 Supplier’s commitment after bidding 0.755 5.983 V26 Supplier measurement and assessment index 0.642 V21 Supplier preparation before bidding start 0.394 Factor 6 Buyer’s negotiation power

V1 The volume of sales 0.794 4.878

V2 The scale of buyer 0.786

Factor 7 Standard setting and exploitation from new suppliers

V12 Ability to attract new suppliers 0.820 4.536

V9 Product specification 0.764

The first factor was named e-auction system. It has four variances such as system stability and system security. An e-auction bidding usually takes thirty minutes and bidders normally bid ten minutes before the section ends. Bidding may be extended when required. Therefore, the system’s stability and security are vital in the bidding process. The system security also plays an important role in e-auction. Details such as bidding price or participants can be disclosed during the process with prior agreement. Other than the above, reliability on software system increases the number of participants due to fairness of a business transaction. Lastly, easy adaptability decreases transaction error.

The second factor, which depends on participation willingness, includes three variances. Rules and procedures must be clearly stated prior to each event.

For example, quality standard, deadline, after service, etc. Next, each buyer commitment must be fully met. This will increase the trust and goodwill. Lastly, the goodwill of a company affects the participation rate.

Choosing the right procurement time is the third factor in this study. It concludes with two variances. Surplus supply gives advantages to the suppliers

Factors Eigen

value

Total variance (％) Factor 8 Accommodation on product adjustment and adequate time measurement

V8 Adjustment on procurement type 0.723 4.062

V27 Rules and procedures informed before bidding

began 0.501

V11 Communication between parties before bidding

began -0.473

V24 Services provide from system -0.440

Factor 9 Company support

V3 Full support from manager 0.709 5.785

V7 Full support from participate department 0.632

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that allow competing with prices. Right bidding time may result in a good purchasing bargain.

The fourth factor is the procurement bargain ability. There are five variances to be discussed. When considering price listing, the team should put a good assessment on price setting. This will affect the participation rate of the auction event. Having a good estimation on future demand allows more time on finding resources and negotiating prices. Thirdly, procurement procedure and process need to keep up and improve with time, which can be characterized in product specification and estimated in a possible procurement scenario. Thus, design of the best bidding plan avoids obscurity and misunderstanding. Fourthly, procurements need to effectively decrease the bidder alliance so that the monopoly or oligopoly bidding result. Thus, bidding must be terminated immediately when it happens. Lastly, sudden cuts on the price will increase the future purchase price. In order to prolong the business, the buyer and seller need to grow along the same line to achieve optimum demand and supply result. This called the win-win strategy.

Factor five is to select the right supplier. This has three variances. The first is the commitment of the supplier after the bidding ended; the buyer should carefully select the supplier according to the product manufacturer to avoid discrepancy. Deposits are made prior to when the e-auction begins. When bidding ends, second deposit on agreement will be made to ensure the bidder to fulfill and accomplish his task. The second variance states that assessment must be done to ensure quality and those standards meet expectations. This will avoid improper supplier selection that might affect product quality, service cost, and delivery date. Lastly, preparation time is crucial prior to the start time of bidding.

This will give time for the suppliers to work on the cost structure. Not only will this save time for both parties, but it will also help avoid emotional bidding to occur.

The sixth factor is the negotiation power from the buyer. According to the examples we used, most of the companies are well established firms. Therefore, negotiation power plays a major role in the procurement decision. For example, a volume driver or fame driver may attract more suppliers to participate in the event.

The seventh factor is the standard setting and exploitation on new suppliers.

Competition in price and quality will determine who gets the deal if more suppliers participate at the event. Thus, the procurement team plays an important role in finding the right supplier. The second issue is standard setting; the more definite description of the product, the less confusion may occur.

The eighth factor is the accommodation on product adjustment and adequate time measurement. This means that each event should be tailor made to the specification of the products through characterized differences on every product and carefully analyzed to discover the possible supplier. The second variance is that participants know the rules and procedures and practiced with the system prior to the e-auction. Next, however, discrepancy between buyers and sellers must not occur in the assessment from the bidder, where the bidder can acknowledge further improvements about the e-auction with which they participated. Lastly, the system provider needs to educate the user on how to use the system and provide adequate information on system usage.

Factor nine is support from the company. The first variance is the support

from the managers. Full support from the top managers will accelerate optimum results. The next variance is to gain support from participating department. Good communication and interpretation give the advantage to relief from discrepancies between the procurement team and the participating department.

5.4 Conclusion

E-auction has been widely used by many corporations around the globe. In this study, we discussed the factors that led to the success of B2B e-auction.

With the questionnaires we collected and the use of the factor analysis method to analyze, we concluded nine key success factors from the results we received.

The results showed that e-auction brings effective procurement cost reduction, minimizes negotiation time, and creates transparent procurement processes. In addition to the above mentioned, it is not a tool to trap competitors. The study showed that the existence of a positive e-auction may replace a traditional procurement procedure to evolve into a more effective and transparent pricing negotiation.

Thus e-auction participants have to set their price limitation before entering an e-auction, calculate the cost to produce the goods before entering the reverse auction process, and plan for cost saving without sacrificing critical capabilities such as quality and standard. We found that not every supplier is capable or willing to participate in e-auction. The reason may be because they need extensive training and the other drawbacks are that the number of manufacturers participating also affects the final decision. To stay competitive, suppliers have to differentiate themselves from the product and provide on time

efficient services. When selecting the suppliers, the original supplier may face price changes or profit cuts from the competitors. E-auction should be used as a corporate strategy to stay competitive in the market. Thus, further research can focus on the e-auction pricing strategy and the changing nature of e-auction competition.