Can Electronic Reverse-Auctions Destroy Business Relationships?

Abstract

The fast-paced world of business in the early twenty-first century has created ever decreasing time periods between the waves of cycles. This phenomenon can lead to dramatic changes in prevailing practices in very short periods of time. In fact, it almost appears that management thought leaders are in direct conflict in some situations. Such a shift has occurred in recent years in terms of thoughts about the relationships between business buyers and sellers. Japanese businesses lead the movement towards trust-based relationships becoming sole-source arrangements in the 1980s. Management gurus worldwide were applauding this practice. By the late 1990s the antithesis was occurring as thought leaders began advocating not only the avoidance of sole-sourcing but the use of what could be viewed as a practice that made long-term relationships between buyers and sellers impossible. This was the dawning of the era of the electronic reverse auction. Is this a good thing or a curse?