The safety case against reverse eAuctions
July 6th 2007 The BSIF Distributor Association has been increasingly concerned about the results achieved, through the bidding process of reverse eAuctions.
While the association understands the perceived up front gain of Reverse eAuctions, current experience has indicated that potential outcomes are frequently unsatisfactory, expensive through hidden costs and risk additional injuries through unplanned product substitution created by major price pressures.
A recent study of the use of Reverse eAuctions in the NHS, conducted by the ABHI (Association of British Healthcare Industries), concluded that the cost benefits gained through reverse auctions were substantially overstated. Additionally the cost and disruption of introducing new suppliers was severely understated (and this was a frequent occurrence due to the nature of reverse auctions) and despite rigorous attempts to police the reverse auction, substitution of cheaper alternative product was common, particularly with a new supplier who had based his price upon alternatives and needed to drive them in to gain margin. The supply of safety equipment has many similarities.
Like the healthcare industry, the BSIF Distributor Association is keen to ensure that the right products are supplied on-time and at the most advantageous price and any bid process must encompass all three essential goals. The association, whose members account for 95% of all safety items traded in industrial or commercial organisations, are concern that the price of getting safety wrong is very high, not just in hidden costs, but injuries and fatalities.
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