Reverse Auctions -- Sold to the Lowest Bidder
In response, AGC has produced a communication targeted to the CEO/CFO-level corporate executive, Fogel notes. "It's a PowerPoint presentation of the facts and implications for all sides of reverse auctions."
PIASC's Lindgren says most people who are in the trenches buying printing—and responsible for it being done correctly and on time—don't like this buying approach, but may be forced to go along with it. He advises printers to learn how to play the game correctly.
"The first thing printers should do is continue to build relationships to ensure that they are always among the designated handful of preferred suppliers," the association exec counsels. "When bidding, keep in mind the customer's behavior in terms of change orders. With some projects, the change orders are worth more than the original job. In those situations, printers can be more aggressive on pricing."
Susan Greenwood, president of AGC, reports that her staff and association members are working hard on a number of fronts to educate Corporate America about the implications of reverse auctions. "It's one of the most important issues we are looking at," she says. "The traditional print buyers know reverse auctions are not the right approach. It's the CEOs and CFOs that don't understand the process, and we need to change that.
"We're telling them about all of the wonderful benefits, for both parties, of the relationship that are lost in this process," Greenwood continues. "Also, the reported savings are a fallacy."
"When it comes to print production, the business model doesn't work," adds Vicki Keenan, AGC vice president of government affairs. "The lowest price isn't necessarily the best value."
The presentation at PIA's President's Conference showed there was definite interest on the part of members to learn more, reports Mary Garnett, vice president of executive development. "It was just one part of our overall action plan to get the word out," she notes.