Manufacturers Expand Use Of Online Auctions

Jan. 13, 2005
By Peter 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 ...
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.

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