UK Manufacturers Slow to Adopt E-Commerce

| Press release

The number of UK manufacturers using the Internet for purchasing goods and services is on an upward trend, according to the latest UK Manufacturing e-commerce survey carried out by Capgemini and the Chartered Institute of Purchasing and Supply (CIPS). However, manufacturers are still not necessarily gaining the full potential from e-commerce.

For the first time in the survey’s four-year history, the number of manufacturers that use the internet either ‘a little’, or ‘a lot’ for the purchasing of goods and services rose to over 50%. The latest data showed that 73% of online expenditure was on indirect goods, against just 20% on direct goods. Services, such as travel and the procurement of IT goods, were the most commonly made online purchases. Almost 90% of all respondents claimed to use the Internet to source suppliers and over 50% collaborate with suppliers online.

A link between business size and cost savings from the introduction of e-commerce was noticed in the survey, with 39% of larger manufacturers - those with over 500 employees - reported that their costs had decreased, due to buying through the Internet, but only 11.7% of smaller manufacturers (less than 100 employees) had benefited from lower costs.

Of the 294 companies surveyed, a significant number reported they did not currently use the internet and that they did not expect to over the coming year, with a perceived lack of business benefits and the preference to deal with customers and suppliers more directly over the phone or face-to-face. A significant proportion believed that the Internet was not suitable for their businesses, a lack of customer demand and establishing cost benefits were the most widely given reasons for slower-than-planned adoption.

Paul Sloman, Management Consultant for Capgemini said: “Although the use of e-commerce for the procurement of goods and services has risen steadily over the past four years, the use of online auctions and marketplaces has remained low. This is particularly surprising, as this is an area that continues to realise significant benefits for many clients. In addition, we are seeing a change in the types of good procured through these technologies, with greater emphasis on direct spend and high value services.”

Roy Ayliffe, Director of Professional Practice at The Chartered Institute of Purchasing and Supply said: “The latest research has highlighted that manufacturers are still showing signs of concern about the way in which they use e-commerce. The fact that significant numbers of participants are not expecting to make any use of online purchasing facilities in the future attributed to low customer demand and a lack of supplier compliance. This means that many manufacturers still need to understand the actual business benefits that true e-commerce can offer and decide if the barriers to adoption are still realistic or are preventing them from making actual long-term cost savings.”



 Note to editors:
The UK Manufacturing E-commerce Survey is produced for Capgemini and CIPS by NTC Research, drawing on original data derived from a questionnaire survey of purchasing executives in manufacturing companies. The panel of companies is the same as used for the calculation of the highly regarded Chartered Institute of Purchasing and Supply (CIPS)/Reuters Purchasing Managers’ Index services, which are also produced by NTC Research.

About the Capgemini Group
Capgemini, one of the world’s foremost providers of Consulting, Technology and Outsourcing services, has a unique way of working with its clients, which it calls the Collaborative Business Experience. Through commitment to mutual success and the achievement of tangible value, the company helps businesses implement growth strategies, leverage technology, and thrive through the power of collaboration. Capgemini employs approximately 48,000 people worldwide (55,000 including Transiciel) and reported 2003 global revenues of 5.754 billion euros.
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The Chartered Institute of Purchasing & Supply (CIPS)
The Chartered Institute of Purchasing & Supply (CIPS) is an international organisation, based in the UK, serving the purchasing and supply profession. Dedicated to promoting best practice, CIPS provides a wide range of services for the benefit of its 35,000 members and the wider business community.

CIPS provides a programme of continuous improvement in professional standards and raises awareness of the contribution that purchasing and supply makes to corporate, national and international prosperity. In 1992, CIPS was awarded a Royal Charter in recognition of this leading role.

Capgemini CIPS
Emma Giles Liz Cullen
Tel: 0870 904 5814 Tel : 01780 761575