Online Bidding:
A Bad Idea Whose Time Has Come

By Landy Chase

Most of us have come to realize, through trial and error, that not all advancements in technology turn out to be a step in the right direction. Case in point:  I am hearing from several of my clients that some companies (or rather, the purchasing managers of some companies) have begun using a procedure known as "online bidding" to order products and services from suppliers.

This new way of conducting business is modeled after the online auction company Ebay.com, and works as follows: When a need arises within a company for goods or services, the purchasing manager sends out an email to multiple suppliers requesting bids for the opportunity. Sales people who wish to participate then submit "quotes" to the email address of the company requesting the bid. In this new selling environment, there are no meetings, no discussions of needs, no relationships, and no loyalty. You simply submit a price and wait for a reply. If your bid is not as low as a competitor, you receive a boilerplate email that says, in effect, "sorry, you did not submit the lowest bid; however, feel free to grovel further."

Surely some bright, well-meaning individual in purchasing came up with this concept, and it seems to be catching on like wildfire with those minions whose measurement of success is getting a pat on the head for shaving a nickel here and a dime there. These days, I am getting a lot of requests for advice on how to handle this new gimmick from a lot of sales people. Folks, there is but one appropriate method for responding to an online bid request: In as polite and professional a manner as possible, treat these incoming emails like the "spam" that they are, and inform the bone-heads who send them your way that (a) your company is not in business to be the least expensive option, (b) your title is not "Order Taker", and (c) you and your company are not commodities. In other words, tell them to take a flying leap.

Why? Because not all companies are worthy to be your customers. Because doing business with these companies is a dead-end road. Because any potential customer who has no more regard for your company than to waste your valuable time with such "monkey business" as online bidding is not a company with whom it is worth your time to do business with. Surely there is not a better litmus test for drawing a line of demarcation than for companies who want to reduce your role in their accounts to pecking away at your laptop, playing a game of penny-ante with your valuable selling time.

I know that there are a number of people on the purchasing side of business that will disagree with me. They will read this piece and conclude that I am just another disgruntled sales type who is frustrated by another clever obstacle to getting a foot in the door. To those individuals, I say this: my reasons for taking this position have nothing to do with closing a sale, and everything to do with the ramifications of what your new decision process is likely to wreak down the road for those within your company who depend on you to make good, sound business purchases. To those of you who employ online bidding, I submit the following six points for your consideration:

1) By making your decision solely a matter of price, you show a flagrant disregard for the long-term needs of the individuals within your company who ultimately use the products and services that you have been entrusted to purchase. In effect, you are selfishly placing your desire to nickel-and-dime your vendors over the needs of your personnel who need quality products and services with which to conduct business.

2) You will quickly develop a reputation among quality, higher-end vendors as an undesirable account to do business with. More and more of your "requests for bid" will be ignored, until ultimately you will find yourself swimming alone in a pool of bottom-feeders who collectively represent the worst of their respective industries.

3) The quality of both the products you purchase and the service you receive will be a source of constant frustration to those within your organization who use them, because companies who don't make a fair profit on transactions with you are not going to care a whit about servicing you after the sale.

4) Because you show no loyalty to your vendors, you will receive none in return. You will be at the end of the line when supplies are limited, personnel are shorthanded, and inventories are low.

5) Eventually, someone above you will become fed up with the quality of the items that you are being requisitioned, and the way in which their needs are being serviced. At this time, heat from above will be applied in your direction. Let us hope that it is not your boss who is holding the blowtorch.

6) Within a year, you will realize that you and your company are far better off by treating your sales representatives and their companies with the courtesy and respect that they deserve. You will also realize that the money you have been saving is costing you many more times its value in terms of poor servicing from your vendor base. At this time, online bidding will take its rightful place on the garbage heap of misguided strategic initiatives, and you will be a wiser, more effective purchasing manager for the experience.

 In the meantime, I suggest you watch your back!  It won't be long before a large number of your peers are going to want to slather honey in your ears and tie you to an anthill. Buyer beware!

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