Commentary

Teach 'em or Reach 'em

  • by March 16, 2001
Teach 'em or Reach 'em

For those targeting corporate procurement managers, here's a "heads-up" from a new study by Jupiter Research/Media Metrix. The report indicates that nearly half of those surveyed expected to do less than 20% of their procurement online for at least the next two years, and "see so little advantage in moving online."

Even those who were once bullish on the new economy expected businesses to hesitate in moving their corporate purchasing operations online, regardless of the promises of cost savings. Jupiter reports that the some of the reasons for the hesitation are:

- most companies' existing suppliers are not yet on the Web, so purchasing agents see little reason to go there themselves.
- purchasing managers are reluctant to learn how to use the various intranet and Internet sites.
- they do not trust those sites to deliver critically important goods on time and at the right quality.
- corporate buyers "are generally older, and old ways die hard."
- "For the purchasing agents, it's all about relationships, consistency, quality and reliability," said John- Gabriel Henry, a Jupiter analyst.

Some executives do not agree with the contention of Mr. Henry at Jupiter Research that procurement agents are simply not interested in scouring the Web for new suppliers. "Maybe that's true in some industries, but not the majority," said Robert L. Kassel, chief executive of U.S. Home and Garden. As industries consolidate and as profit margins are squeezed, "you need to pass those reductions down the line to your suppliers," Mr. Kassel said. "When that happens, all that traditional stuff about supplier relationships goes out the window," he added.

Tim Chapman, McKinsey & Company, says, "The most frequently asked question we hear is, `How do I exploit all of these e-tools, including the marketplaces?' " As purchasing managers' jobs have grown more complex in recent years, their skills have not necessarily kept pace, Mr. Chapman suggests.

Some suppliers say they are not online simply because the buyers have no interest in their being there. "Nobody's asked for it yet," said Kevin Machan, sales and marketing manager for Tailored Label Products. Nonetheless, he said, "if they did want us to transact online, we'd have to." In the meantime, Mr. Machan is taking a "wait-and-see attitude."

But, considering the glass is at least 20% full, the oncovering of the concerns of the buyers who are online can be of significant assistance in planning the message and selecting the vehicle!

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