Are Manufacturers Getting with
the e-Business Program?

The answer is yes. A recently released survey report by the National Association of Manufacturers and E&Y says that despite the economic downturn, e-business in the manufacturing sector is growing.

What is the major barrier to e-business applications in manufacturing? According to the report, the lack of customer e-business readiness, caused partly by the complexity of change and a lack of integration standards, was cited as the top barrier to developing and implementing e-commerce initiatives by nearly half (47%) of the survey respondents.

Other major findings of the report include:

1. The number of manufacturers selling 6 percent or more of their goods to consumers or other companies via Internet transactions quadrupled in the past year, to nearly one fourth of all respondents.

2. Overall investment in e-business initiatives continues to rise. In their current fiscal year, 33 percent of companies increased their spending, versus 10 percent that decreased it, with the remainder holding steady from the previous year. Part of that increase is likely due to a rebound from the post-Y2K drop in information technology costs, but at the same time a modest number of manufacturers are investing heavily: 6 percent reported increasing IT budgets by more than 15 percent this year.

3. Short-term drivers for investment are typically productivity increases and cost savings, within the sales/service chain as well as elsewhere in production systems.

4. Nearly 40 percent of manufacturers reported connecting with at least 16 percent of their industrial customers or individual consumers over the web. Nearly 40 percent are now able to provide Web-enabled customer order status.

5. The most impressive process improvements in e-business have been in the customer service arena; 36 percent of respondents said that the effectiveness of their order management process has increased.

Is this good or bad news for economic development? Good news if you look at the Internet and e-commerce as sources of innovation and productivity for manufacturers. This also suggests that having enough bandwidth and high-speed Internet access will be greater concerns in manufacturing business location decisions.

To get the report, click here.