Manufacturing edges closer to e-commerce

At last month's all-embracing Manufacturing Week trade show at Birmingham's NEC, former minister for industry, energy and science, John Battle, urged manufacturers to make more use of the Internet. Wearing his new hat as foreign and commonwealth minister, Battle was extolling the virtues of TradeUK, an export service that is accessed via the website of the government's export promotion body British Trade International.

As one of the government's few self-confessed `netties', Battle said that once firms were used to the Internet, the possibilities for e-commerce would become more obvious. But he accepted that a generation of management remained wary about its use - a view confirmed by the results of a survey of manufacturers unveiled at the adjoining Computers in Manufacture exhibition.

Sponsored by 12 leading business IT vendors and conducted by Benchmark research, the 1999 CIM survey canvassed the views of over a thousand `IT decision makers' across all sectors of UK manufacturing. Somewhat surprisingly, the results suggested that `IT decisions' were not solely in the hands of IT departments. Only 16 per cent of respondents thought Internet/intranet investment decisions were driven by IT staff. This was still three per cent more than those who thought their companies' board of directors had the final say - but well over half (57 per cent) pointed to sales and marketing departments as the main drivers behind e-investment.

And engineering departments? Nowhere to be seen, apparently. The key to their absence in this particular survey can perhaps be found in the answers to some of the general questions asked by Benchmark. As shown in Fig 1, the most significant problems in UK manufacturing are not down to engineering (only 8 per cent thought machine breakdowns significant), but sales-related issues such as accuracy of forecasting and late changes to schedules.

That alone should make sales departments want to push for the immediacy offered by web-based systems, but the reality behind the importance of the sales and marketing function in Internet investment - as Benchmark agreed - is simply more likely to be those departments' wider exposure to the technology.

Again, the survey responses bear this out. One of the main barriers to implementing Internet/intranet technologies (see Fig 2) - after the fairly obvious ones of security and cost - is perceived to be the limited knowledge of users, closely followed by the limited uptake of the technologies by companies' customers. Corporate web sites may well be on the `hit lists' of engineers, but it is sales and marketing that is behind their development.

As to that development, the Benchmark survey shows that this is one area of e-business that UK manufacturers have already switched on to. Some 70 per cent of companies now have their own website, with this figure expected to rise to 88 per cent next year. But, despite 91 per cent of firms having Internet access (with a `significant minority' of these having over 10 per cent of their workforce on-line), the use of other aspects of e-commerce remains on the low side.

At the moment, for example, only 35 per cent of companies are exchanging sales and purchase orders by e-mail - although that figure is nearly double last year's response and is expected to rise to 58 per cent next year.

And for anyone wanting to place orders over the Internet, only 14 per cent of UK manufacturers have web-based catalogues - expected to rise next year to 35 per cent.

According to Les Mara, manufacturing segment director at Cap Gemini, one of the Benchmark survey sponsors, `the key driver behind investment in e-business is the realisation that customers in a real-time society have higher expectations about choice, greater flexibility and price, while also increasingly demanding quick access to finished goods and services. The Internet-enabled supply chain is allowing manufacturers to deliver this. New technology is rapidly penetrating the market, and in three months' time awareness of the benefits of e-business will be even higher.'