The Institute for Supply Management™ (ISM) and Forrester Research, Inc. (Nasdaq: FORR) announce the release of the fifth 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 large-volume-buying organizations that reported cost savings from using the Internet grew from 28% last quarter to 45% for the quarter ending in December 2001.
During the fourth quarter of 2001, purchasers increased their use of the Internet. Respondents reported purchasing 9.5% of their indirect materials and 6.2% of their direct materials over the Internet — an increase from last quarter’s levels of 7.1% and 5.3%, respectively. The Report also revealed that 53% of the large-volume-buying organizations view the Internet as either very important or critical to their plans over the next 12 months.
“The Report shows increased awareness and usage of Internet procurement,” said Edith Kelly-Green, vice president and chief sourcing officer, FedEx. “In fact, the trend is positive in all aspects of online sourcing. Companies are acknowledging that eCommerce buying is here to stay and that there are major benefits to be had even though realization of those benefits may take longer than initially anticipated.”
“The Internet has become a necessity for large purchasers,” said Bruce D. Temkin, group director at Forrester. “The discussion has moved away from if the Internet should be used to where and how it can save money.”
The Report On eBusiness also revealed that organizations have increased their participation in online marketplaces. 26% of organizations bought goods or services via online marketplaces — an increase from 23% in the previous quarter. In addition, the Report showed that organizations have also increased their use of online auctions to 23% from last quarter’s 17%. The increase was most dramatic for manufacturers whose use of auctions increased from 21% to 29%.
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 and 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 NAPM 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.