Manufacturers Face Wholesale Change

FRAMINGHAM (03/10/2000) - The Internet is driving manufacturing companies to fundamentally reassess the way they operate, but most are at least a year away from buying and selling supplies and goods over the Web, according to industry representatives.

As manufacturers gather for the National Manufacturing Week trade show in Chicago next week, a majority are still trying to figure out how to take advantage of Internet technologies, said Jerry J. Jasinowski, president of the National Association of Manufacturers (NAM), a co-sponsor of the show.

Washington-based NAM represents more than 14,000 U.S. manufacturing companies.

"There is a great desire on the part of manufacturers to put themselves in the middle of electronic commerce," Jasinowski said. But first they need to figure out what kind of business process changes are needed and how to integrate manufacturing systems with applications that let firms conduct e-commerce, Jasinowski said.

"It's going to be a steep learning curve for most manufacturers" for these reasons, said Neal Maclean, a director of e-commerce at CE Franklin Ltd., a Calgary, Alberta-based distributor of pipes, valves and fittings to the oil industry.

Cost Concerns

A recent NAM survey of 250 companies showed that seven out of 10 companies weren't yet conducting e-commerce transactions because of cost concerns. And while 80% claimed to have a Web site, only 1% had any transactional links to back-end systems.

But those numbers are likely to change quickly, as companies gear up for Internet competition, said Ron Anderson, president of AmericanManufacturers.com in Cocoa, Fla., a new online marketplace for manufacturers. The Internet is changing what was an insular industry, where "everybody had their nice little groups of suppliers and customers and everybody felt happy and secure," he said. "It's becoming much easier to shop price, location and availability over the Web, [and] manufacturers are realizing they need to get more competitive," he said.

Already, several large manufacturers have launched multifaceted initiatives aimed at extending their business to the Web while generating new revenue from separate Internet ventures. Examples include Eastman Chemical Co. in Kingsport, Tenn., and Du Pont Co. in Wilmington, Del., both of which are partnering with dot-com start-ups to set up online trading exchanges.

The Internet promises better efficiencies and lower costs across almost every aspect of the manufacturing process, from design engineering and plant maintenance, factory floor automation and manufacturing processes to supply chains and distribution, said Norman "Chip" Drapeau, president of MRO.com Inc., a Bedford, Mass.-based business-to-business portal for manufacturing companies.

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