You don’t repeat reverse auctions!

Reverse auctions are controversial. Suppliers bid their lowest rates on-line and prices keep going down and the buyer’s organization is happy. Inefficiencies in the supply chain reduce, transparency increases and suppliers are on their toes. Sounds not very collaborative and that’s what I had though so far till I went yesterday to the CAPM Seminar "Sourcing the Pfizer Way".

The seminar was held at the Global R&D center of  Pfizer,Groton  and was kindly organized by Mary Kachinsky of Pfizer and participants learned a great deal  about sourcing particularly  in a knowledge intensive environment where all your internal clients are highly qualified  scientists and physicians involved in drug discovery.

I had missed Sam Dowell’s great presentation at NECON 2007 where I had presented as well. The "aha" moment came for me, when I realized (after a question) that you don’t repeat reverse auctions. You do them initially to rationalize your supply base and also when you are checking out overseas suppliers for price. You invite bidders after a thorough pre-screening and always invite several suppliers in multi-country reverse auctions so that there is enough "same country" competition. And most important, you do not necessarily go with the lowest bidder and make that very clear, upfront. But once you decide suppliers you try to make the relationship work …

Leave a Reply

%d bloggers like this: