Price fixing

May 27th, 2006 at 01:31pm David Bush - Iasta

For those who do not know, I live in Indianapolis, and we have had a recent wave of exciting price fixing scandals in the construction industry which I have run across in local news.

I have found these events to be especially interesting because we have traditionally had more problems with suppliers in the construction industry than any other. Suppliers are very resistant to bidding and have very active associations that strongly urge all members to refuse bidding. Eventually, it works and the suppliers break rank but it is a harder road to hoe than just about any other type of bid.

Here in Indiana, the construction lobby was able to get written into Indiana purchasing code that construction equipment cannot be bid through reverse auction. Those are some powerful and organized groups to be able to pull that off.

Fortunately strategic e-Sourcing isn’t just about reverse auctions, its about better decision making support. When faced with suppliers such as these, it makes sense to have a strategy that includes multi-round sealed bids followed by decision optimization. A strategic e-Sourcing strategy without a reverse auction could still result in the following benefits:

• lower costs
• simplification of process by using 1 means to distribute, gather and analyze sourcing info
• shorter cycle time by using 1 means to distribute, gather and analyze sourcing info
• centralized documentation on all supplier intractions
• centralized documentation of buyers decision making process and constraint analysis

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Entry Filed under: General, Reverse Auctions, Suppliers, e-Sourcing Marketplace