UK manufacturers slow to adopt e-commerce

More UK manufacturers are using the Internet for purchasing goods and services, but they’re not gaining anything like the full potential from e-commerce. That’s the verdict from Cap Gemini and the Chartered Institute of Purchasing and Supply (CIPS), following publication of their latest UK manufacturing e-commerce survey of 294 manufacturing companies. The good news is that for the first time in the survey’s four-year history, the number of manufacturers using the internet either ‘a little’, or ‘a lot’ for the purchasing has risen above the 50% mark. 73% of online expenditure was on indirect goods, with 20% on direct production materials. Services, such as travel and buying IT goods, were the most common web purchases. Almost 90% of all respondents claimed to use the Internet to source suppliers and, surprisingly, over 50% say they’re now collaborating with suppliers online. Interestingly, CIPS finds a clear link between business size and cost savings from the introduction of e-commerce, with 39% of larger manufacturers (500-plus employees) reporting costs down due to Internet buying, but only 11.7% of smaller manufacturers (below 100 staff) seeing the same. But CIPS also says that “a significant number” of respondents don’t currently use the internet and don’t expect to over the coming year. There’s “a perceived lack of business benefits and a preference to deal with customers and suppliers more directly over the phone or face-to-face.” Also “a significant proportion believed that the Internet was not suitable for their businesses.” Lack of customer demand and establishing cost benefits were the main reasons for slower adoption. Roy Ayliffe, CIPS director of Professional Practice at CIPS, says: “Many manufacturers still need to understand the actual business benefits that 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.”