Illinois Reverse Auctions Redux -- When Journalists Selectively Quote to Skew Stories
Last week, I penned a column suggesting a number of reasons why my home state of Illinois should pursue a reverse auctioning tender process for significant portions of its spend in an attempt to drive transparency amidst a long bipartisan history of corrupt contracting. Academic and reverse auction expert David Wyld -- who I first encountered at FreeMarkets many years ago when he was conducting primary research in the area -- wrote a follow-up to my post in a column that shared some alarming news about the story that I was not aware of. According to Prof. Wyld, "As the head of the Reverse Auction Research Center and one of the leading academic experts in the area, I was interviewed by the story's author, Paul Merrion." Yet his quotations and perspective did not make it into the piece.
In Prof. Wyld's words, the author "chose not to use my material and my quotes on the benefits of reverse auctions for the public sector and lots of details that I provided to him on what has been done successfully by national, state and local governments by shifting procurement spending to reverse auctions and introducing competitive bidding to replace opaque processes and 'good old boy' deals." Rather, according to Dr. Wyld, Crain's opted to use the "insights," of Dr. Robert Emiliani, who has built a career -- and a book of consulting and research business -- by railing against auctions in favor of lean principals.
He notes that "What Mr. Merrion chose to do instead was to feature the 'insights' of Dr. Robert Emiliani ... As anyone who has followed the reverse auction market knows, Dr. Emiliani has been a long-time critic of reverse auctions, and while so, Mr. Merrion chose not to include any of my mostly pro-reverse auction material/quotes, while allowing Dr. Emiliani to offer his opinion." If Crain's had done their homework on Dr. Emiliani -- even just reading some of the archives from Spend Matters -- they would have learned that he is known for presenting a single-sided view of the argument, seeking press and coverage by offering an incomplete and unbalanced view of the role of reverse auctions in both the public and private sector. Moreover, they probably would have discovered that he has benefited financially from taking such an aggressively negative stance by advancing his own practices and services as an alternative.
Thank you, Prof. Wyld, for sharing the true story of the sloppy and one-sided reporting in the Crain's story. Given that I'm on the line for what promises to be a rising tax bill in Illinois, I don't intend to drop this issue anytime soon. Even though they're far from perfect -- and far from ever being a universal sourcing approach -- reverse auctions could not be a better fit to expose the past malfeasance within this state.
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I hope you continue to tackle this important story for our State.
At the 11th hour, just before going to press, a student editor, an ardent female sports fan who had failed to either read or to understand the article, added to the bottom of the piece, "GO GO MEDFORD BEAT MALDEN!!!"
Our research on reverse auctions, which ended in 2006, was never intended to “drive up the potential audience for the ‘lean’ services and training” that I provide, or to advance my “own practices and services as an alternative.” The reverse auction research is a completely separate activity from my work in Lean management, which has been solely focused on the narrow topic of Lean leadership for the last 15 years - not supply chain, reverse auctions, or anything else related to procurement. This is why our reverse auction research papers are posted on a different web site, http://www.technology.ccsu.edu/personnel/informati....
I have not, nor have I had any desire to “make a career out slamming reverse auctions.” Prior to becoming academics in 1999, my co-author and I worked at United Technologies (Pratt & Whitney) for many years. In the mid- and late 1990s, we were supply and commodity managers responsible for supplying commercial and military engine hardware to the assembly floor (annual spend of $106 million in 1997). We were charged with managing numerous reverse auctions and also implementing the results with our suppliers. So we have deep, direct, first-hand knowledge and experience with reverse auctions. (I was also responsible for implementing Lean in manufacturing, as a business unit manager in the mid-1990s, and in my tier 1/2/3 supply chain as a supply/commodity manager, in collaboration with our CI group).
“Regarding “seeking press coverage,” I do not do that. Reporters come to me and seek my views, based on the dozen academic, peer-reviewed papers that we have written. In about half the cases I turn down reporter’s requests for interviews and instead refer them to our papers which are posted online at http://www.technology.ccsu.edu/personnel/informati....
We benefitted financially from our reverse auction research twice in 2001, when we ran a total of two training workshops titled “Buyer and Seller Strategies for Online Reverse Auctions.” (I think we made $1500 per session). We did this as a university-sponsored activity, not as a private training session. We have not done any training since then, either for a university or for ourselves. I did reverse auction consulting once in late-2001 for one small business in the Hartford area. I have not done any consulting since then; I am simply a teacher and a writer.
Also, please note that in pursuing our research, we did not accept direct or indirect funding from any source, either in support of or against reverse auctions. All research was conducted as free and independent works by the author(s). Further, we did not directly own stock, long or short, in any provider of reverse auction services. These and other facts explaining our work and our intentions are contained in the FAQ section of our reverse auction web page located at http://www.technology.ccsu.edu/personnel/informati....
I am an advocate of non-zero-sum (win-win) sourcing strategies in the course I teach in supply chain management, and, generally, non-zero-sum approaches to management and business overall. My business experience and our research shows reverse auctions to be zero-sum (win-lose, at least for incumbent suppliers) in most cases, which is inconsistent with non-zero-sum Lean principles. We fully explain this in our numerous journal papers on reverse auctions.
Ultimately, I bet that we agree on far more than we disagree. By the way, I often use spendmatters.com content (with attribution, of course) in my lecture notes for the supply chain management course I teach once-a-year at CCSU because it keeps me up-to-date on various strategic sourcing and spend analytics topics.
Thank you,
Bob Emiliani
http://www.technology.ccsu.edu/personnel/informati...
Thanks for taking the time to respond in such detail. I had hoped to respond with a more thoughtful reply sooner, but got tied up. In any event, I would welcome the chance to have a discussion with you on this. I’m not sure you realize how influential your work has been in a number of circles that I and many others in the sourcing world operate in.
Perhaps it is the misinterpretation of some of your arguments -- and I do believe based on a number of the points you make about “win/win” that we have some great common ground for a discussion -- but I’ve found myself defending the select applicability of auctions and direct negotiations after a number of executives have read what you have had to say on the subject and taken it at what I think is a surface reading level. This goes back many years and seems to come up in conversation at least once a quarter with someone on the practitioner or consulting side of the procurement and supplier management world.
If I was incorrect in the statements, I apologize, though as someone who has spent part of his earlier career in marketing, I think we would absolutely both agree pragmatically -- if not academically -- that a great way to call attention to an idea is to take an extreme opinion on it. The problem lies in situations where this opinion is taken: A) either as gospel; or B) out of context.
You have a lot of followers who are clearly not as rigorous and analytical as you are, and are not trained to question and probe -- or to rely on data in the same way. If I came off as too extreme or sensational in the way I presented my commentary, I apologize, but it is something I have been thinking about for a long time. No excuses, though.
I hope we can have a chat about our views here and hopefully find a way to let a good discussion and debate inform everyone’s opinion.
Thank you
Dave
Reverse auctions are not an end-all-be-all fix - but with the right analysis of spend data, market conditions, KPIs, vendor capabilities etc - total best value results can be attained that deliver for all parties involved.
Public sector buyers probably need at least as much hand-holding and training as private sector buyers, but with that addressed I can't see why reverse auctions would fail in Illinois?
Having managed and delivered literally hundreds on eautions over the last 8 years in both the public and private sector here’s my view…. When you essentially have a business’s reputation at stake in terms of how they interact with their supply base it needs very careful management. Engaging the incumbent, educating suppliers on participation, lotting strategy, data analysis, technical management of the event, choosing the appropriate eauction type, communication during the event, post auction analysis….. and the list goes on…….. bottom line is this there are bad eauctions run every day generally by people who do not know what they’re doing. If an organization needs the benefits of an eauction program bring in some experts to do it!
To use one of my favorite movie quotes…’ What we have here is a failure to communicate!’ The bottom line is this…. In 2010 managing a good eauction IS a sourcing project, and to managing a good sourcing project requires an eauction. The perennial debate about eauctions being a ‘tool’ in the toolbox is becoming somewhat redundant, eauctions should be core to every sourcing project for every serious sizeable company…..anybody want a debate??? ;)