No Disputing It

Survey: Most companies are ill-prepared for online supply chain disputes

New York  May 17, 2001  A majority of Fortune 1000 companies are moving at least part of their supply chains online. However, only a minority of those firms have a plan in place to deal with the B2B disputes they expect to arise as they increase their e-business involvement, according to a new survey.

The survey of 100 senior executives at Fortune 1000 companies, conducted by Clark, Martire & Bartolomeo for the American Arbitration Association (AAA), revealed that more than 70 percent of those surveyed have already moved part of their supply chain online. Additionally, almost 70 percent of respondents expect their B2B e-commerce supply chain to be completed within the next two years.

When asked about their company's B2B e-commerce initiatives, 95 percent of respondents said they expect their involvement to increase, with more than a third saying the increase will be significant.

"It is clear from the survey findings that, while the initial hype about e-commerce ventures may have fallen short, the reality is catching up with companies racing to prepare their supply chains," said William Slate II, president and CEO of the AAA, a 75-year-old nonprofit organization that offers arbitration and mediation, among other services.

Slate also warned that, "As they join this growing marketplace, companies must learn to manage online relationships in order to uphold the continuity of business."

The survey showed, for example, that two-thirds of respondents are concerned about a B2B e-commerce dispute with a major supplier, and nearly half said that such a dispute would impact their business. At the same time, 64 percent said their company does not yet have a plan in place to deal with such disputes.

Further, while almost 70 percent agreed that additional guidelines are necessary for managing e-commerce disputes, approximately one in four said that either nothing is currently being done at their company to ensure that supply chains run without disputes, or that they are not yet familiar with any plans made.

"We were surprised to learn that many companies do not yet have a plan in place to resolve B2B e-commerce disputes," said Debi Miller-Moore, vice president of AAA's e-commerce services. "However, they are recognizing the potential pitfalls as they call for guidelines. It is clear that reducing B2B e-commerce disputes  and providing an electronic mechanism for resolving them if they do occur  is crucial to the success of the medium."

Miller-Moore said that the AAA is developing services to address these types of disputes.

Other findings in the survey were that 78 percent of respondents said they are familiar with e-marketplaces, with six out of 10 agreeing that B2B e-commerce in their industry will move in this direction. The majority of respondents (58 percent) are currently involved in online exchanges, and almost half of them created or helped create an exchange.

When asked about the most important challenges to effective B2B e-commerce, more than 90 percent of respondents cited integrity/security. Respondents also pointed to technology (86 percent) and cost (79 percent) as likely obstacles, and one out of four listed supply chain disputes.