In case you missed it, according to the second-quarter Report on eBusiness released by the Institute for Supply Management (ISM) and Forrester Research, Inc., companies purchased more direct materials using the Internet than indirect materials in Q2. This is the first time purchases of direct materials have surpassed indirect materials since the Report on eBusiness was initially developed in fall 2000.
The report, which tracks online purchasing activity for both manufacturing and nonmanufacturing organizations, revealed that, in the second quarter, survey respondents spent an average of 11.7 percent of their total direct materials spend using the Internet, an increase of 1.7 percent over the first quarter of this year. Spending for indirect materials remained unchanged at 11 percent.
The findings of the second-quarter survey reflect the overall growth in Internet-based procurement reported for the previous two quarters. All companies participating in the second-quarter survey agreed that the Internet is continuing to grow in importance. More than 42 percent of large-volume purchasers said the Internet was very important in their purchasing strategy in the second quarter, an increase of 10.7 percent from the first quarter. This same group of purchasers made significant changes to their procurement processes, an increase of 6.3 percent from the previous quarter.
Other key findings of the report include:
- The use of online auctions is up. Large companies that purchase more than $100 million annually increased their use of online auctions during the second quarter.
- Large companies are using more e-procurement tools. In the second quarter, 41.9 percent of companies used an enterprisewide procurement tool, an increase of 1.8 percent over the first quarter. In addition, 12.5 percent of large companies used the tool significantly more during the second quarter.
- Use of online RFPs is up. Although the percentage of companies using the Internet for RFPs dropped slightly in the second quarter, more companies reported increasing their usage of Internet-based RFPs.
- More buyers are collaborating with suppliers on line. The percentage of companies collaborating with suppliers via the Internet increased 1.5 percent in the second quarter. The majority of companies (93 percent) had increased or maintained their level of collaboration over the last three months.
- More non-manufacturers are purchasing through marketplaces. The number of non-manufacturing companies using online marketplaces increased by 4.4 percent during the second quarter. More than 15 percent of these companies increased their use of marketplaces, while only 1.5 percent decreased their use.
Pantellos has seen similar trends among its utility customers, with increased activity in all major lines of business, including e-procurement. “Utilities are indeed adopting a variety of e-commerce tools and technologies for lower costs, greater efficiency and bottom-line value when purchasing goods and services. We’re seeing continued growth in our customers’ use of the Pantellos Marketplace, Pantellos Buyer, electronic auctions and our RFx Management tool,” said Jim Neikirk, President and CEO of Pantellos. “We’re also seeing the scope of their activities grow as they achieve real results.”
For more information about quarterly releases of the ISM/Forrester Research Report on eBusiness, visit the Web site by clicking here. The report measures adoption of Internet-based procurement by surveying supply management executives from both manufacturing and nonmanufacturing organizations. The report analyzes results of all organizations, compares manufacturing and nonmanufacturing organizations, and compares large-volume (more than $100 million annual spend) versus small-volume (less than $100 million annual spend) purchasers.
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