The Institute for Supply Management™: (ISM) and Forrester Research, Inc. (Nasdaq: FORR) announce the release of the seventh 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 a significant increase in online purchasing over the past three months. The fraction of companies that purchased direct materials online surged to 64.6 percent in the second quarter, from 53.3 percent in the first quarter. More companies purchased indirect materials online, as well, rising to 84.2 percent of respondents this quarter from 78.1 percent last quarter.
Although most companies are still in the early stages of online purchasing, more non-manufacturers reported significant adoption of the Internet in purchasing activities than manufacturing companies.
“This quarter’s survey showed encouraging movement,” said Edith Kelly-Green, spokesperson for ISM and vice president and chief sourcing officer, FedEx. “Organizations are buying significantly more direct and indirect materials online. Although not considered a trend, it does indicate that there may be a rise in demand, that companies see the value of online purchasing and, as also indicated by the results, suppliers are improving their online offerings to their customers.”
“This quarter revealed a return to the adoption trend seen in surveys conducted throughout 2001,” said W. Daniel Garretson, senior analyst at Forrester. “Despite the difficult economic environment, we are seeing growth in using the Internet to purchase — particularly among manufacturers — picking up where we left off at the end of 2001.”
The Report On eBusiness also revealed that more than one-third of large buyers bought goods or services via eMarketplaces or private hubs. Almost one-third of buyers used an enterprisewide procurement tool that incorporates the Internet. For the first time, more than half of responding companies (51.5 percent) reported collaborating with suppliers online — compared with only 48.2 percent in the prior quarter — and buyers also reported higher levels of satisfaction with their suppliers’ online capabilities.
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 eBusiness®.
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. ISM has provided a rich history of economic data for over 67 years on the U.S. economy with its Manufacturing ISM Report On eBusiness® and the PMI. Since June 1997, ISM has also been publishing the Non-Manufacturing ISM Report On eBusiness®. Both surveys can be found at www.ism.ws.