Monday, July 16, 2001

Latest Report On eBusiness

The National Association of Purchasing Management (NAPM) and Forrester Research, Inc. announce the release of the third NAPM/Forrester Research Report On eBusiness, a first-of-its-kind report that tracks online activity for both manufacturing and non-manufacturing organizations. The report found that nearly 73% of organizations use the Internet for indirect purchases -- an increase from the 71% reported last quarter. During the past quarter, 54% of buyers reported using the Internet to purchase direct materials -- an increase from last quarter's level of 46%. These online buyers reported sending 9.8% of their total direct materials order over the Internet.

"The full impact of economic conditions is seen in the mixed progress of many of our responding companies. While the general trend is positive, I believe there is now more of a tendency to wait and see before making major strides. This does not mean that the goal is being reassessed, but that the timing may not be as quick as initially planned," says Edith Kelly-Green, vice president, sourcing and procurement, FEDEX.

"The Internet continues to expand as a buying channel but it's no longer a panacea. Buyers realize that eProcurement takes more than surfing on supplier Web sites," said Bruce D. Temkin, group director at Forrester. "That's why we're seeing a growing number of organizations changing their procurement practices -- and running into the difficulties of integrating their purchasing systems."

The Report On eBusiness also revealed that the use of online auctions significantly expanded -- more than 20% of organizations bought products or services via an online auction, up from 15% last quarter. The number of large-volume-buying organizations reporting online collaboration with suppliers dropped to 46% from last quarter's 56%. At the same time, small-volume buyers increased their online collaboration activity to 41% from nearly 35% last quarter.

For the Report On eBusiness, NAPM and Forrester Research received survey replies from supply-management executives from both manufacturing and non-manufacturing organizations. To understand the difference in online behaviors of these organizations, the report analyzes three areas: the results of all organizations; the comparison of manufacturing and non-manufacturing organizations; and the comparison of organizations that procure more than $100 million on direct and indirect materials per year and those that purchase less than $100 million per year. To track the adoption of different activities over time, NAPM and Forrester created the eBusiness Adoption Momentum index (eBAM).

The NAPM/Forrester Research Report On eBusiness, developed in fall 2000, measures the adoption of Internet-based procurement. NAPM and Forrester Research developed the survey jointly and will issue the report every three months in a manner similar to the monthly NAPM Report On Business.