Manufacturers Expand Use Of Online Auctions

ByPeter Strozniak Manufacturers are increasing their use of online auctions and marketplaces to buy products and services, but they are not expanding Web-based collaboration with suppliers, concludes a new e-business survey compiled by the National Assn. of Purchasing Management and Forrester Research Inc. The survey found that 25.1% of manufacturers purchased products or services via an online auction during the second quarter of 2001, versus 20.9% during the first quarter, according to the NAPM/Forrester Research Report on eBusiness. Based on surveys completed by supply management executives, the report measures the adoption of Internet procurement and tracks online activity for both manufacturing and non-manufacturing firms. Manufacturers are also increasing their use of online marketplaces. The survey found that 25% of manufacturers used an online marketplace to buy goods or services in the second quarter, up from 21.5% in the first quarter. The survey also showed that manufacturing companies are increasingly purchasing direct materials online. During the second quarter, 51.8% of manufacturers bought some direct materials over the Web, significantly up from 36.3% in the first quarter. For indirect materials, 72.9% of manufacturing companies said they made online purchases in the first quarter, up from 69.4% in the first quarter. Interestingly, manufacturers are not significantly expanding their use of the Internet to collaborate with suppliers. While 40% of manufacturers said they were using the Web in the second quarter to collaborate with suppliers, that's up only slightly from 39.7% in the first three months of 2001. Nevertheless, 77.8% of manufacturers continued to surf the Web in search of new suppliers during the second quarter, down slightly from 78.9% in the first quarter. Manufacturers also have become more satisfied with the online capabilities of their current preferred suppliers. In the second quarter, 60.4% of manufacturers rated their suppliers' online capabilities as either excellent or good, while 39.6% rated their suppliers' online capabilities as either very poor or bad. In the first quarter, 56.3% of manufacturers said their suppliers' online capabilities were excellent or good, and 43.7% reported their suppliers' Web capabilities were very bad or poor. Although most manufacturers reported that they are in the early stages of online purchasing, 77.8% of manufacturing companies said the Internet is somewhat important or very important in their overall purchasing plans over the next 12 months. What's more, 4.8% of manufacturers said the Internet is critical, while 17.4% said the Internet is not important in their overall purchasing plans for the next 12 months. The NAPM/Forrester research report is based on the survey responses of 390 companies, including 208 manufacturers and 182 non-manufacturing businesses. Based in Cambridge, Mass., Forrester is an emerging technology research firm. Tempe, Ariz.-based NAPM is an educational organization for supply management professionals.