Suppliers Bemoan Portal Proliferation

Support for e-commerce strong, but lack of easy connectivity with customers troubling, survey finds

San Diego — April 24, 2003 — While many manufacturing suppliers prefer to receive purchasing documents electronically rather than by phone, mail or fax, a majority said that having to log onto multiple customer Web portals makes doing business difficult at their companies, according to a new survey.

The survey, conducted for ESIS, a provider of Web-based connectivity for manufacturers, found that half of the questioned suppliers preferred to receive purchase orders electronically. However, 64 percent reported that having to log onto too many Web sites to receive the purchasing documents was a problem for them.

In addition to the problem of numerous customer portals, suppliers also cited issues with the inconsistency, response time and basic design of the systems they are forced to use. "Each customer's e-commerce implementation requires unique programming to handle that customer's electronic commerce standard," one supplier explained.

As a result, suppliers have been adopting electronic connectivity somewhat reluctantly. In fact, the ESIS survey showed that 70 percent of the suppliers reported that customer requirements were the primary reason they were exchanging documents electronically.

"The problem of multiple Web sites will become more pervasive if manufacturers continue to create their own supplier portals without giving their suppliers other options for receiving their data," said Derek Baggerly, ESIS' CEO. "It's not unusual now for us to hear from suppliers who are being forced to log onto 20, 30 or 40 different sites in order to get orders from their customers. This trend is adding considerable costs to the supply chain."

In addition, when asked about industry-wide requirements for standards such as XML, 75 percent of the suppliers indicated that it did not matter what format they received their data in, and only 10 percent indicated that they were in favor of such standards.

John Bermudez, an analyst with technology consultancy AMR Research, writing in a recent research alert, noted that some companies have avoided adopting the supplier connectivity solutions offered by ESIS and other vendors — such as Acsis, webplan, Apriso and Trancentric — that are using the Internet for as a means of collecting and transmitting information for low-cost collaboration.

Manufacturers essentially want to move to electronic communications with their supply base, but they are loath to give up the kind of control that electronic data interchange (EDI) has afforded them. "For some very practical manufacturers, the answer has been to deploy EDI over the Web or push purchase order information to a supplier portal," Bermudez wrote.

"Many manufacturers seem to shy away from hosted applications, fearing loss of control of data, but what ESIS offers is no less secure than EDI value-added networks (VANs), which have supported trillions of dollars of e-commerce the past 30 years," the analyst continued, adding, "Manufacturers putting off online communication with suppliers until more sophisticated private trading exchanges are completed may want to consider ESIS as an interim step."

For another look at supplier connectivity issues in e-procurement, see the article "Boarding Call..." in the February 2001 issue of iSource Business.