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Online purchasing, outsourcing on the rise say surveys

Manufacturing News, Source : The Manufacturer US
Published : 07 Aug 2002 16:34

Use of online purchasing has increased significantly in the last three months, according to a survey of 331 companies nationwide (both manufacturing and non-manufacturing) by the Institute for Supply Management and Forrester Research.

The percentage of companies that purchased direct materials online rose from 53.5% in the first quarter to 64.6%. More companies also purchased indirect materials online, rising from 78.1% to 84.2%.

This may signify a return to the online adoption trends seen in 2001, according to W. Daniel Garretson, Forrester senior analyst. “Despite the difficult economic environment, we are seeing growth in using the Internet to purchase—particularly among manufactures—picking up where we left off at the end of 2001.

The report also showed more than one-third of buyers bought goods or services using e-marketplaces or private hubs, and almost one-third used an enterprise procurement tool that involves the Internet. In addition, 51.5% reported collaborating with suppliers online, compared with only 48.2% in the prior quarter.

In a separate study by Accenture of 150 senior executives from Fortune 1000 companies in the automotive, consumer goods, retail, industrial equipment, and transportation sectors, 87% said their companies outsource at least one aspect of their business. IT (27%), logistics/distribution (27%), and customer service/technical support (25%) were the main areas outsourced. However, two-thirds of respondents reported no plans to expand their outsourcing to other business areas within the next 18 months.

“There is a distinct gap between how companies use outsourcing now and the strategic possibilities it offers,” said Greg Caster, partner in Accenture’s Products Operating Group. “While executives have long realized that outsourcing basic business activities can enhance operational efficiency, only a select few are ready to use outsourcing as a tool to drive business growth.”

Forty-eight percent of the executives surveyed said the fear of a loss of operational control was the most significant barrier to expanding their use of outsourcing. Other impediments cited included cultural bariers in the organization (19%), costs (14%), long term dependency on an external organization (11%), and dimished vendor relationships and collaboration capabilities (6%).

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