A Practical Approach to Multi-Attribute Auctions

In most electronic auctions conducted over the Internet today price is still the only decision criteria for the best bid. This is true for all sorts of auctions in the electronic business areas consumer-to-consumer (c2c), business-toconsumer (b2c), and business-to-business (b2b). Especially for many situations in the b2b area there are other important attributes apart from price to be considered for decision making. Therefore the area of multi-attribute auctions gains more and more interest in the scientific community as well as from software vendors of electronic business products. But the approaches offered so far suffer from some limitations. Theoretical approaches are not applicable to (b2b) real world scenarios, commercial software does not cover all situations. To overcome these limitations we developed a practical approach to multi-attribute auctions, that will be presented in this paper. in an auction leads to lengthy manual preand postprocessing for the auctions. Therefore the electronic procurement process can be improved by considering other attributes apart from price in the auction. Although different names are used to describe this type of auctions, we will call them "multi-attribute auctions". The problem in multi-attribute auctions is to fmd out which bid is the best one. This problem cannot be solved by simply comparing one variable, as it is the case in single attribute auctions, where the bid with the highest/lowest price is the best. In a multi-attribute auction a combination of variables has to be considered to fmd out which bid fits best the auctioneer's requirements. For a bidder it is also not easy to bid in a multi-attribute auction: he has to adapt his bid to the attributes and possible valuations of attributes in order to beat the leading bid. Our main interest lies in the area ofb2b auctions. Since DaimlerChrysler has carried out a number of electronic auctions for the procurement of various goods, for the rest of this paper we will concentrate on reverse auctions. DaimlerChrysler started in 2000 to use electronic reverse auctions in the procurement process. These auctions, or Online Bidding Events (OBEs) as they are called, are carried out over the COVISINT platform, the e-business marketplace for the automotive industry [3]. The OBEs are no real auctions, since the decision making for the best bid is not completed during the on-line process, but is made off-line after the process. The OBE is used to fix the price for the good purchased. In 2002 DaimlerChrysler handled a procurement volume of over 10 billion Euro in over 500 OBEs for non-productive as well as productive material [4]. This shows that OBEs are an important tool in the procurement process and are