Porter

Our discussion today made me think about my job prior to coming back to school.  I worked for a retail services company that did anything from new store roll-outs to sourcing non-resale products.  I worked in the sourcing division, finding suitable suppliers for our clients' RFQs.  The suppliers would download the RFQ documents from our site and eventually submit bids and participate in "online negotiations" (less contentious term for reverse auctions).  I didn't know much about purchasing before I started, but I learned quickly that suppliers were not fans of the new online bidding process.  Our clients loved it - they were able to easily distribute RFQs and collect bids from several suppliers at once.  The suppliers had to figure out how low they could reasonably bid, and though most hated it, some said it helped them to improve their understanding of the true cost of their products, and it gave them insight into competitive pricing - even if they did not know who they were competing against. During those two years, I learned more about hangers, fixtures, signs, cardboard boxes, gift boxes, plastic bags, fork lifts, and janitorial supplies than I ever thought was necessary.  But I mostly learned about the contentious relationship between buyer and supplier and how the online bidding process had severely strained the relationship.

This is one situation where intimacy gave way to efficiency.  It was a great way for our clients to distribute RFQs; answer suppliers' questions in a forum, so they only had to answer once; collect bids and specs; and store all of the information, so they could use it again the following year when the contract was up.  The suppliers were not allowed to contact the client directly - they had to go through us.  Again, this is a very efficient way to handle the bid process, but it takes the intimacy out of the relationship.  I would be curious to find out about the long term effects this has had on the buying company.  Do the suppliers work as hard to please if they know they'll be easily dropped the following year by the next low-price provider?