Reverse Auctions the Gold Rush is Over!

Is anybody still using these things? If they are and you are reading this then I guess I am about to stir a hornets nest!

I read probably the best article ever on reverse auctions a couple of months ago By Mohanbir Sawhney at CIO.com called: Reverse Auctions Cutting Costs. In the article he points out the historical facts that the biggest reason these became popular is because GE claimed huge savings by doing them. Mohanbir also points out that Reverse Auctions can be damaging to supplier relationships. I believe most are finding out that this statement is quite true. I have talked with several suppliers who have out and out refused to do reverse auctions and have told even valued, long time customers that they would rather lose the business than participate in a reverse auction. Suppliers are revolting because of the consumption of time involved in responding to a reverse auction. Often times these auctions are open for hours and usually tie up an estimator and a production manager during the entire auction attempting to shave pennies off an already profitless project. Reverse auctions may serve a purpose in industries where there are bloated profit margins. But in the print industry where the profit leaders are netting between 2 and 3 per cent and the rest are lucky to net .5% profits, reverse auctions can be detrimental to a printers business. I know someone will claim they are saving 20% or better on jobs they have quoted using a reverse auction but I would counter that they were probably using the wrong supplier in the first place. The bottom line is you could probably research suppliers, submit and receive well priced quotes in less time than it takes to conduct a reverse auction. I would also venture to guess that you will get comparable pricing with less work on every one's part.

Reverse auctions are a fad in the print industry and fads usually last about 18 months. Is anyone even doing reverse auctions anymore? If you are maybe you should seriously take a look at the time involved in conducting a reverse auction and what suppliers you are quoting with. As a wise man said at Print Oasis in 2005 "Reverse Auctions, I wouldn't do'em"