The Role of Supplier Quality in e-Procurement Negotiation

Abstract

<p><strong>Purpose:</strong> 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.</p><p><strong>Methodology/Approach:</strong> 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.</p><p><strong>Findings:</strong> 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%.</p><p><strong>Research Limitation/implication:</strong> 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.</p><strong>Originality/Value of paper:</strong> The paper is original and not published in other publications.