The Role of Supplier Quality in e-Procurement Negotiation

Abstract

Purpose: The purpose of this study is to examine the significance and the role of supplier rating as a formalised supplier quality measure to achieve better- negotiated prices and to identify price premium resulting from improved rating. Methodology/Approach: Data from real B2B environment of electronic reverse auction SW solution ProeBiz were obtained and processed. Data from the reverse rating approach were used where the default rating value is 1 and improvements of rating lead to decreasing the rating value. Except standard descriptive statistics, non-parametric correlation and Kruskal-Wallis tests, the knowledge discovery techniques by decision trees CHAID algorithm were used. Findings: From our empirical research results, there is the evidence of a significant positive relation of supplier quality or rating improvements on a negotiated price for suppliers. Improving rating from the default value (1.00) to (0.98-0.95) can lead to better- negotiated prices for suppliers in English auction expressed as price premium in the value of 4%. Research Limitation/implication: Research has several limitations, esp. in the size of the sample and sectorial view as the research is based on data from construction, electro-mechanics and logistics sector. Originality/Value of paper: The paper is original and not published in other publications.

Keywords

• rating
• supplier quality
• electronic reverse auction
• price premium
• e-procurement