Well done foil producers!

27 February 2003

Converters' congratulations must surely go to EAFA – the European Aluminium Foil Association – who, in taking the lead in pressurizing for good trading practices in Internet trading platforms, has been invited by the EU Commission to participate in its recently appointed Expert Group (see news story).

Several materials suppliers – particularly to the packaging industry – have expressed their concern about 'e-auctions' or 'reverse auctions' to me over the last few months (see this column December, 2002). All suggest electronic auctions are here to stay, but most ask for clear protocols to be set up.

EAFA has been calling for good trading practice rules covering transparency, clear specification and acceptance criteria, security checks and third party audits for the last two years. To date its guidelines have been supported by 11 trade bodies in Europe. Potentially a pretty powerful coalition, it is claimed to represent more than 6,000 companies in Europe with a total turnover of about €90 billion.

Apart from the hazards to the seller – dummy bidders and prices driven down to silly levels - these auctions can present real hazards to the buyer.

Caveat emptor is not at first sight something most people would suggest about e-auctions. But EAFA so rightly points out that low initial prices can mean high end costs. "Whilst bargaining for lower prices can be rewarding for a buyer" – whose performance may be measured on savings – the result "may be waste due to late delivery, low quality and poor machinability."

And that can lead to downtime on lines and waste. Not a recipe for a healthy balance sheet for any buyer.

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