Dutch auction
A Dutch auction is a fast-paced auction format designed to encourage quick supplier decisions. Dutch auctions are designed to accelerate sourcing by rewarding fast supplier decision-making. Buyers can configure three distinct modes to suit different competitive strategies and award preferences:
1. Single Winner (Default)
The original Dutch auction format is the "Single Winner" mode. The auction starts at a low price that increases over time. The first supplier to accept the current price wins, and the auction ends immediately. This fast-paced mode is ideal when you want to award quickly and incentivize aggressive supplier participation.
2. Multiple Winners
In this mode, when one supplier accepts the current price, the auction does not end. Instead, all other suppliers are notified and given the opportunity to accept the same price. This allows buyers to capture broader supplier engagement while maintaining price competitiveness. It’s especially useful when you’re sourcing from a panel of suppliers and want to secure multiple awards at the same threshold.
3. Run-to-End
The "Run-to-End" mode allows suppliers to individually accept prices as they increase — but the auction continues running until the ceiling price is reached or the scheduled close time. The auction does not end when a price is accepted. Instead, all accepted prices are collected, and the buyer can review and determine award allocations after the event concludes. This mode gives buyers maximum flexibility to assess market interest and optimize award decisions across multiple criteria (e.g., price, capacity, risk).
How Dutch auctions work
Start auction at a low price
Create your auction by adding line items and inviting suppliers. Set an initial price below the expected cost (e.g., $100) and define how much and how often the price will increase (e.g., 2% every 2 minutes).
Run auction with price increases
As the auction runs, the price automatically increases at the intervals you’ve set. Suppliers can monitor the auction and decide when to accept the price.
Suppliers accept as price increases
At each price increase, suppliers can choose to accept or wait. What happens next depends on the auction mode selected:
In Single Winner mode, the first supplier to accept the current price wins the auction, which ends immediately.
In Multiple Winners mode, once a supplier accepts a price, the auction remains open, allowing other suppliers to also accept that price before it closes.
In Run-to-End mode, suppliers can accept prices individually as they rise, and the auction continues until the ceiling price is reached or the event ends. Afterward, you can review all accepted bids and determine award allocations.
Once accepted, suppliers will need to finalize their bid, after which you can proceed with awarding.
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