TLMI Expresses Concern Over Reverse Auctions

The Tag & Label Manufacturers Institute (TLMI) - North America's leading trade organization representing tag and label converters - has expressed growing concern among its converter members over the emergence of reverse auctions as a purchasing method by a growing number of label buyers. Reverse auctions involve two or more converters bidding to lower the price of a given job to the end user. 'This focuses solely on cost to the virtual exclusion of the other critical factors end users should consider in selecting a converter: service, innovation and quality,' said the TLMI statement.

'The TLMI feels that reverse auctions are counter-productive to the procurement of labels, which require an ongoing relationship or heavily connected processes between the supplier and the customer. Many TLMI converter 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 and for our labels to help sell the customer's products.'
TLMI believes that many converters who take part in reverse auctions feel they have little choice, particularly when an existing customer decides to hold a reverse auction on a job the converter has previously run and invites them to take part. Others who participate simply have so much excess capacity in today's difficult economy that they'd rather make "almost no profit" than "no profit" at all.