Forward Auction

A forward auction in procurement is a type of auction where buyers compete to purchase goods or services by placing progressively higher bids, and the item is sold to the highest bidder. It is the traditional auction model, opposite to a reverse auction, where suppliers compete by lowering their prices.

In procurement, forward auctions are less common but are typically used when an organization wants to sell surplus inventory, obsolete equipment, or scrap materials. The goal is to maximize revenue from the sale by attracting multiple interested buyers who bid against each other.

Key Characteristics of Forward Auctions:

• The seller is usually the organization, and bidders are external buyers.
• The auction starts at a base price and increases with each bid.
• The highest bidder wins once the auction ends.

Benefits:

• Helps recover value from unused assets
• Increases sale prices through competition
• Provides a transparent and efficient sales process

Forward auctions can be conducted via specialized auction platforms or e-procurement tools that support auction functionality.