Internet Transactions
by
Gregory Grant
PRTM's Performance Measurement Group (PMG), a pioneer in providing web-enabled benchmarking of core business processes, has released results of the second survey in its online Supply-Chain Management Benchmarking Series. Covering the delivery of products through a company's supply chain, the survey tracks order fulfillment and web usage performance of participating organizations across several manufacturing sectors (chemical, pharmaceutical, consumer packaged goods, computers, electronic equipment, telecommunications equipment, semiconductors, aerospace and defense, industrial, and automotive) in North America, Europe, and Asia.
The survey is based on "Level 1" metrics from the industry standard framework SCOR (Supply-Chain Operations Reference-model), developed by management consultancy PRTM in collaboration with the Supply-Chain Council. The participant pool includes blue-chip companies such as 3Com, Amgen, Colgate-Palmolive, Compaq, Ericsson, Hewlett-Packard, IBM, Johnson & Johnson, Merck, Nokia, Siemens AG, Toshiba, and winners of the Malcolm Baldrige National Quality Award.
"The Internet continues to create unprecedented B2B opportunities for companies, apparent in global trade exchanges burgeoning in many industries we surveyed. Companies are blending practices and technology to transform the supply chain from a serial chain of chains to a web of chains," says Steve Geary, chief analyst for PMG's Supply-Chain Management Benchmarking Series. "With the web, communication occurs more frequently, contains more detail, involves more people--from the operator to the CEO--and penetrates more deeply than has been possible before."
PMG's survey shows that while the web is having a dramatic impact on inbound order processes, over three quarters of current web activity is associated with activities other than booked orders: Most of the B2B activities taking place are data exchanges and inquiries. Survey results indicate that today's customer relationships require a great deal of data transfer between companies. Findings show that the web is being used for customers requesting shipment-status notifications and inventory status updates, and that customers and suppliers are exchanging product sales activity data as well as planning and forecasting data over the web. "The web is facilitating collaborative activities," says Geary.
According to PMG's survey, During 2000 and 20010, the value of orders placed over the web in the high-tech industry segments is expected to increase sixfold. By the end of 2000, companies anticipate booking 12% of orders via the web, up from 2% in 1998 for most industry segments. Electronic inflows of orders are expected to grow to 47% of orders placed in 2000, up from 27% in 1998?an increase of 50%. As eBusiness orders replace traditional methods (face-to-face sales calls, phone, fax, mail), the percentage of orders using traditional methods is expected to drop from 65% to 50%. PMG anticipates that this drop of one quarter will have continued dramatic impact on the reduction of order- management staffing and costs.
"PMG's survey results show that eBusiness is an increasingly significant business channel within a total supply chain portfolio," says Geary. "Companies are investing heavily in the development of electronic order-receipt mechanisms with far-reaching implications for the entire administrative front-end of the order fulfillment process. Although automation is growing at a rapid rate, PMG's survey indicates that half of all orders placed still arrive in a manner that requires manual order entry. Companies must simplify their order- management processes, properly apply information technology, and continue to meet the customer's needs."
The survey finds that best-in-class performance in perfect order fulfillment has improved 5% since the mid-1990s. Geary observes, "The industry is moving to an understanding beyond simple delivery reliability to a holistic view of complete, on-time, and accurate order fulfillment."
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