Businesses still wary of e-procurement

Although many companies report being in the early stages of adopting web-based buying, some 50.9 per cent also reported dissatisfaction with their suppliers' online capabilities, according to a recent study.

The study, conducted by the National Association of Purchasing Management and Forrester Research, canvassed more than 400 businesses, and found that online procurement was slowed by the economic downturn, the difficulties of internal and external integration of computer systems, and a lack of data standards.

In its quarterly report, available at www.napm.org, 88 per cent of the surveyed firms said that the web is an important part of their purchasing plans for next year, yet a mere 6.3 per cent said that it had significantly altered their procurement procedures.

Companies overwhelmingly agreed that they have just begun integrating the internet into their purchasing activities, with 50.9 per cent saying that they are less than five per cent of the way toward full adoption.

A total of 36 per cent of those surveyed said that their suppliers' capabilities are 'very bad' or 'poor'. Manufacturers were the least satisfied group, with 43.7 per cent assigning a very bad or poor rating to their suppliers. And less than half the firms surveyed, 45.7 per cent, said they have purchased some direct materials online.

Only 26.1 per cent of the respondents felt that their online purchasing activities had lowered the cost of ownership of their products, while 8.1 per cent said that their online purchasing had actually increased the cost of ownership.

Electronic marketplaces have also struggled, according to the report. Only 23 per cent of the respondents said that they bought goods or services through online marketplaces.

Roughly 80 per cent said that they continue to use the internet to identify new suppliers, and 42.8 per cent said they used it to collaborate with suppliers.