Online Purchasing Activity Rises In 2002's Fourth Quarter

Compiled ByJill Jusko Online purchasing activity of both indirect goods and direct goods increased during the fourth quarter of 2002, according to the latest Report on eBusiness, a report issued by the Institute for Supply Management (ISM), Tempe, Ariz., and Forrester Research Inc. that tracks online activity. Not only were more organizations purchasing online, but the amount they purchased increased as well. Manufacturers, however, were less likely to procure via the Internet than their non-manufacturing counterparts. According to the survey conducted to compile the quarterly report, some 85.3% of all organizations bought indirect materials over the Internet, while a much lower percentage, 70.3%, purchased direct materials online. Both of those percentages were higher than was recorded for the previous quarter, however, when the percentages came in at 81.9% and 63.8%, respectively. While there have been increases in most areas covered by the latest Report on eBusiness, "there are still a lot of budgetary concerns as well as issues dealing with connectivity and return on investment," says Edith Kelly-Green, ISM spokesperson and vice president and chief sourcing officer for FedEx. "One respondent commented that 'It is difficult to integrate with current systems and has limited value at present time,' while another noted that 'We have stopped attempting to implement an enterprisewide e-procurement solution at this time because the ROI is not there for us.'" The average percentage of indirect materials purchased online rose from 9% to 10.5% in the fourth quarter among all organizations, the report indicated. However, among manufacturers the average amount of indirect goods purchased online was just 8.8% compared with 12% for non-manufacturers. The same disparity arose for purchases of direct goods. While an average of 9.4% of direct goods were purchased online by all organizations, that percentage dropped to 7.3% for manufacturers and rose to 11.4% for non-manufacturers. Manufacturers were more likely than their non-manufacturing counterparts to purchase goods or services via an online auction in the fourth quarter, 31.3% vs. 23.4%. However, in every other facet of online purchasing, non-manufacturing organizations reported higher usage than manufacturing organizations. Some 294 organizations participated in the fourth-quarter survey; 139 were manufacturers. The Report on eBusiness was developed in fall 2000 by ISM and Forrester, Cambridge, Mass.