Reverse Auctions -- Sold to the Lowest Bidder

Servador has answered that concern by offering a job engineering service, Beyer asserts. "We put a great deal of time and development into our online RFQ, scheduling, project management, access to resources, etc.," he notes. "As an independent supplier, we're able to offer unbiased job engineering. Print customers may get advice from their suppliers, but that expertise is based on the type of equipment a printer has in its shop or that is available at any given time. That perspective may or may not be in the best interest of the customer."

Process expertise is critical to the success of reverse auctions as a sourcing solution, Beyer asserts. Solutions such as Freemarkets, Ariba, Oracle and PurchasePro treat print like a commodity that they know little or nothing about, he notes. "That's when the bad things happen."

The bottom line is that print suppliers shouldn't make bids with which they are not comfortable, Beyer says. "With a reverse auction, many times the low bid does not win the business. So, if a supplier posts a comfortable price and finishes second or third, it still has a fair chance of getting the business."

Sandy Alexander's Grossman agrees with that point. "When you bid on a project—whether it is via fax, e-mail, in person, online, etc.—you should submit your best number," he says. "With a reverse auction, we're recommending printers go in one time with a best number and that's it."

Commercial printers can't function with price being the only differentiator, Grossman adds. "It weakens the entire industry and, ultimately, it's not good for anyone."

Knowledge Is Power

The printing exec notes that the business trend seemed to catch on faster in the New York area. He attributes this to the volume of work purchased in the area.

Fogel adds that the push isn't coming from the ad agency and graphic design world. "It's from the Fortune 100 companies where a point of access is gained through people who are not familiar with the print purchasing or production process," he explains.