Do Reverse Auctions Violate Professional Standards and Codes of Conduct?

During the e-business boom of the 1990’s, reverse auctions became a new business tool for purchasing/procurement that promised increased reductions in supplier costs. The benefits of reverse auctions have been substantiated but not without debate. One of the debates is the ethical considerations inherent with these new business processes. Our study investigates whether reverse auctions violate corporate or professional standards of conduct. This chapter examines some of the professional standards/codes of ethics available including the Institute of Supply Chain Management (ISM) and a selected number of organizations including Dell and GE. Further, the chapter presents a framework that can help an organization determine if reverse auctions, and the way they run them, are ethical.