What about the Internet and e-commerce?

"If purchasers want surprises, then e-auctions can deliver, according to Gene Roth, corporate purchasing and supplier diversity manager at Enterprise Rent-A-Car. He told conference delegates that five e-auctions saved $15.6 million – about 36 per cent – on his budget for general goods and services.

However, some delegates were afraid e-auctions would scare off major suppliers with which they have had good service and relations for years.

Roth told purchasers to hold firm: “If suppliers see e-auctions pass them by and they are losing business without trying for it, they will want to join in.” But purchasers must also tackle suppliers' concerns about confidentiality and fairness of the process to give everyone a better insight into e-auctions.

Purchasers must keep this fairness in mind when assessing risk, noted Lisa Cooley, associate director of corporate purchases training at Procter & Gamble. Having a supplier share risk should be the “price of entry” to a successful supply chain, she said. But purchasers should manage the supplier's investment in the deal “as though it were their own money”. For example, if your company fails to meet the order quantities promised to a major manufacturer, “you fail to fill the supplier's capacity and undermine its cost structure”. This may initially be the supplier's problem but the purchaser's company may suffer the long-term consequences, she warned. These include suppliers charging higher prices in case this happens again and an unwillingness to invest in new equipment to help customers. Understanding this issue and exploring it with suppliers is essential risk management practice."

E-auctions may be appropriate for 'nuts and bolts' contracts, but there comes a point where it's not suitable - consulting services, for example - where some of the softer issues, such as skills, come into the equation.

Sellers may feel that online auctions depress their margins and allow large corporate buyers to drive down prices, while bumping up the conditions they need to fulfil.

Buyers have taken well to the technology: it has helped them cut prices by 15 per cent. It is not surprising then that the use of e-auctions is growing at 75 per cent a year in the USA . But buyers, unless they are careful, will kill off re-emerging markets. Buyers can make life a misery for sellers, sometimes by using unethical practices.

The Chinese emphasis on family ties also spills over to the importance of personal relationships. Even though the Internet allows for one2one transactions, the Internet is merely a communications tool. In fact we believe that for most businesses personal relationships will become even more important in a business environment that is becoming increasingly faceless and anonymous.