Purchasing Managers Still Not Tuned To E-Commerce

While the number of corporate purchasing managers turning to the Internet for their decision makers continues to climb slowly, the advantages of electronic commerce seem to elude them, according to a recent study released today.

The survey, commissioned by maintenance, repair and operating (MRO) supplies distributor W.W. Grainger, Inc., found that almost half were unable to name any advantages to ordering supplies online.

Of the 600 purchasing decision makers from US companies of all sizes and industries participating in the study, some 25 percent of the respondents said they plan to initiate or increase use of the Internet for purchase of MRO supplies during the next one to two years. When asked, however, to identify any advantages of ordering over the Internet, 47 percent were unable to name any, while 15 percent believed there are no advantages.

"The Internet has great potential to lower costs, speed order placement, and simplify the entire purchasing process," Barbara Chilson, Grainger’s vice president and general manager of Internet commerce said. "Purchasers can search quickly among tens of thousands of products, find detailed information in a format that makes products easy to compare and select, and place orders without leaving their desk or using a single sheet of paper."

According to Chilson, 12 percent of the survey respondents said they recognize the convenience of 24-hour-a-day, seven-day-a-week access to Internet commerce, but the overall savings opportunities are not yet recognized by most purchasers.

On average, Chilson said, the study found that a company’s MRO purchases represent only 20 percent of total purchases, but account for almost 80 percent of administrative time and paperwork, making MRO a prime opportunity for cost savings through simplified purchasing processes rather than through product costs.

"Significant cost savings can be achieved primarily through consolidation of suppliers to those offering a secure, full-service Internet site with the right product offerings, and a reduction in administrative time through simplified processes and one-stop product search, selection and ordering," Chilson said.

The study also found that while more than half of the respondents could not recognize any advantages of Internet commerce, 53 percent also did not mention any disadvantages. Among the few disadvantages cited, the study found, was a lack of familiarity or comfort with computers or the Internet, mentioned by 11 percent of respondents.

In order to increase awareness of Internet purchasing, Chilson suggested that companies include icons on their Internet home pages to directly link purchasers to approved suppliers’ Web sites, or use bookmarks that make it easy for purchasers to access a supplier’s site.

Purchasers also should seek sites that provide easy search and selection capabilities beyond that offered by a print catalog, provide customer-specific services such as volume and contract pricing; and a sense of personal service and community through such things as Internet "chat rooms" and answers to frequently asked questions, she said.

"If a supplier merely reproduces its print catalog or brochure on the Web, the advantages are not going to be there," Chilson said. "Use of Internet technology should focus on improving service and responsiveness for customers."

(Contact: Michael Perlman, Porter Novelli, 312-856-8827)