TEMPE, AZ October 17, 2001 Buying organizations are increasingly using the Internet as a medium for collaborating with their suppliers, and increasing numbers of companies are buying both indirect and direct materials online, according to the latest e-business survey from the National Association of Purchasing Management (NAPM) and Forrester Research.
The fourth NAPM/Forrester Research Report On eBusiness, based on responses from supply management executives at 418 manufacturing and non-manufacturing companies, showed that the number of buying organizations collaborating online with suppliers rose to 49.5 percent for the third quarter ending September 30, up from 43.6 percent in the second quarter.
The report distinguished between large buyers those at organizations that spend more than $100 million per year where collaboration rose to 63.5 percent, and smaller companies, which saw collaboration fall about 3 percent to 38.1 percent. Manufacturers collaborated online to a greater degree than non-manufacturing companies (52.2 percent versus 46.3 percent).
"The increasing number of companies now collaborating with suppliers indicates an awareness that successful use of the Internet requires a partnership between the buyer and the seller with benefits to both," said Edith Kelly-Green, vice president and chief sourcing officer at FedEx, in commenting on the survey results.
Bruce Temkin, group director at Forrester, added: "e-Procurement represented only the first wave of online activities. We are now seeing the start of the next wave collaboration in which buyers will use the Net to redefine how they interact with suppliers."
NAPM and Forrester do not disclose the timing of the survey because the deadlines for the surveys to be returned vary, according to NAPM spokesperson Kristen Kioa. She did say in an e-mail exchange that the deadline for the current survey was after September 11, but Kioa added that it is believed that the effects of the September terror attacks will be better reflected in future reports.
The survey results for the past three quarters indicate a gradual rise in the number of companies buying indirect and direct materials online. Over the past three quarters, the number of organizations buying at least some indirect materials went from 70.9 percent in the first quarter of 2001, to 72.7 percent in the second quarter, reaching 75.3 percent in the third quarter. The respective figures for direct materials were 45.7 percent, 53.8 percent and 55.8 percent.
At the same time, the latest report indicates declining interest in online auctions and e-marketplaces but increasing use of the Internet as part of a request-for-quote (RFP) process. For the past quarter, 17.4 percent of respondents said they had used online auctions to buy materials, and 22.8 percent had used an online marketplace, versus 20.4 percent and 25.2 percent, respectively, for the previous quarter. But the number of respondents saying the used the Internet in an RFP process inched up from 49.8 percent to 53.5 percent.
Small organizations continued to be less active than large companies in their online purchasing activity. Just 7.3 percent of small companies survey said they used online auctions, for example, versus 29.8 percent for large buying organizations.
Buying organizations' level of satisfaction with the e-business capabilities of their preferred suppliers ticked up just slightly during the third quarter, with 66.5 percent of respondents to the survey rating their suppliers' online capabilities as good to excellent, and increase of half-a-percent over the previous quarter.
The survey also showed that the number of buying organizations using the Internet to identify new suppliers rose from about 80 percent in the previous two quarters to 84.5 percent.
For the report, 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 per year and those that purchase less than $100 million per year.
NAPM and Forrester will release the next e-business report in mid-January 2002.