
Can reverse auctions — and e-procurement in general — sour a good supplier relationship? One of our readers wrote in with this question, worrying that reverse auctions may put pressure on supplier margins to such an extent that it is detrimental to the buyer-supplier relationship. In a reverse auction, suppliers compete for the buyer’s business by underbidding one another. This increased competition among the supply base ought to lead to lower prices for buyers, although it also runs the risk of undermining a supplier relationship that has taken time and effort to build. What’s the point of developing a strategic supplier relationship if you’re going to use an automated auctioning process anyway?