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

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

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.

More information about individual service lines, offices and research is available

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