The Institute for Supply Management™ (ISM) and Forrester Research, Inc. (Nasdaq: FORR) announce the release of the sixth ISM/Forrester Research Report On eBusiness, a first-of-its-kind report that tracks online activity for both manufacturing and non-manufacturing organizations. The primary finding in the latest Report is that the number of purchasing organizations reporting use of the Internet for buying indirect goods and services remained roughly constant at 78.1 percent, while the number of organizations using the Internet for purchasing direct goods and services fell slightly from 57.2 percent last quarter to 53.3 percent this quarter.
Respondents reported purchasing 8.3 percent of their indirect materials and 5.7 percent of their direct materials over the Internet — a slight decrease from last quarter’s levels of 9.5 percent and 6.2 percent, respectively. But the Report also revealed a significant increase by large-volume-buying organizations in the use of the Internet as part of an RFP process to 72.2 percent from 65 percent during the prior quarter.
“Although the numbers are somewhat mixed, there is still a lot of optimism,” said Edith Kelly-Green, spokesperson for ISM and vice president and chief sourcing officer, FedEx. “Companies are using the Internet wherever they see value to their organizations — in the most current survey, value was shown to be in the RFPprocess. In the end, value will drive the speed of adoption and the level of results.”
“The Internet remains extremely important for large-volume buyers,” said W. Daniel Garretson, senior analyst at Forrester. “But with a difficult economy and limited resources, these buyers have focused on activities, such as online RFPs, that provide immediate, tangible benefits.”The Report On eBusiness also revealed that organizations have reduced their participation in online auctions and marketplaces. Only 20.3 percent of organizations bought goods or services via online auctions — a decrease from 23.1 percent in the previous quarter — and only 22.2 percent bought via an online marketplace, versus 26.4 percent the prior quarter. The online marketplace decrease was the most dramatic for manufacturers, going from 26.7 percent to 18.2 percent.
For the Report On eBusiness, ISM 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 on direct and indirect materials per year with those that purchase less than $100 million per year. To track the adoption of different activities over time, ISM and Forrester created the eBusiness Adoption Momentum (eBAM) index.
The ISM/Forrester Research Report On eBusiness, developed in fall 2000, measures the adoption of Internet-based procurement. ISM and Forrester Research developed the survey jointly and will issue the Report every three months in a manner similar to the monthly ISM Report On Business®.
The Institute for Supply Management™, established in 1915, is the world’s leading educator of supply management professionals and is a valuable resource for decision makers in major markets, companies, and government. In May 2001 the membership of ISM voted to change the association¿s name from the National Association of Purchasing Management to the Institute for Supply Management™ to reflect the increasing strategic and global significance of supply management. For further information, see the ISM Web site at www.ism.ws.
ISM has provided a rich history of economic data for over 67 years on the U.S. economy with its Manufacturing ISM Report On Business® and the PMI. Since June 1997, ISM has also been publishing the Non-Manufacturing ISM Report On Business®. Both surveys can be found at www.ism.ws.