TLMI issues 'concern' over reverse auctions

“Counter-productive” is just one of the terms used by the Tag & Label Manufacturers Institute, Naperville, IL, in a statement it issued about reverse auctions that involve two or more converters bidding down the price on a label order.

The statement says that the procurement of labels requires “an ongoing relationship or heavily connected processes between the supplier and the customer... Members feel it is far more important for label products to run well in a customer’s plant in order to minimize the total applied cost.” The organization goes on to say that many converters feel they have little choice about reverse auctions, “particularly when a customer decides to hold a reverse auction on a job the converter has previously run.” Others that participate, TLMI says, simply have too much excess capacity.

“Beyond unit pricing, customers would probably realize a lower overall cost if they took into consideration the paperwork, the cost of the transaction, the quality and delivery considerations that ultimately cost the customer time and money,” notes one TLMI member. “I think they miss that when they get involved in an auction, because the lowest-cost bidder is least likely to be able to provide those services.” —AO

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