This survey of over 700 UK manufacturing companies concludes that e-business is having a major influence on the way UK manufacturing companies do business. But whilst the progress made recently by UK manufacturers has been significant, their focus has been on the more basic and less imaginative aspects of e-business technology - they are driven by factors such as keeping up with new technology and exploiting news sales opportunities (see Figure 1).
The use of e-business to support closer supply chain relationships and enable the development of the mythical 'virtual supply chain' is still a long way off.
The survey highlights a number of barriers to achieving e-business enabled supply chain integration. These include inadequate internal systems, lack of supply chain skills, poor customer and supplier relationships, and even a poor understanding of the objectives of supply chain management.
For many UK manufacturing companies, internal functional silos are alive and well. The overall and compelling conclusion of the survey is that UK manufacturing companies will start to gain the true benefits of e-business only when they address a single key issue: board-level recognition that the company must develop the necessary vision and strategy - across the organisation as a whole - to support the fast-developing e-business environment.
Functional drive
Despite the fact that the main benefits of developing e-business are corporate, the evidence from the survey is that the initial, and in most cases continuing, drive for e-business has come from the sales and marketing function, with a relatively low instance of board-level influence.
The influence of the procurement function is growing, but the general drive remains at the functional rather than board level (see Figure 2).
The danger of this functional drive is the potential for conflicting and unco-ordinated departmental initiatives driving, or indeed being viewed as, corporate strategy. This initial functional drive may lead to a later and inevitably expensive process of business and systems integration and possible redesign. It may also lead to organisations falling off the pace of e-business development and being left behind.
The internet is seen first and foremost as a marketing tool, with less than 10% of organisations actually trading on the internet to any significant extent.
The survey suggests this is set to grow considerably in the near future - but that may be an expression of hope rather than deliverable intent without the strategic, top-level impetus behind it.
Barriers
So what is holding back the exploitation of corporate-wide e-business opportunities?
A key issue is the lack of integration between e-business systems and existing ERP and legacy systems (see Figure 3).
It is essential for these systems to be fully integrated in order to exploit the real-time e-business opportunities and to enable improved supply chain efficiency to be realised.
For example, for a relatively low number of orders, manual entry into the ERP system may be no great barrier. However, in an e-business environment generating large numbers of orders, these need to move seamlessly into the ERP environment and along the supply chain.
There is a danger, however, that organisations will perceive this integration as costly and complex, and will hide behind the problem rather than address it - especially if they have recently been involved in ERP systems implementation.
It is the case that many ERP implementations have been less than successful and this has undoubtedly contributed to the problem of integration.
In addition to the lack of integration with e-business systems, 75% of organisations believe ERP systems require significant changes in order to fully exploit e-business benefits.
The lack of success achieved by ERP systems mentioned above makes the prospect of further ERP 'pain' unpopular.
Manufacturers face people problems too, encompassing a lack of internal resource to handle the requirements of e-business, and problems of exchanging information, the latter even where technology is not a constraint.
As part of a strategic view of what is required to fully exploit e-business, people issues will be a major consideration. This will include not only the lack of numbers but also the lack of skills required by existing staff.
There may also be a requirement to reorganise, possibly more along supply chain lines rather than that traditional 'silo' approach still evident in most organisations.
Security is essentially seen as a technical issue, although there is a common view that the problems posed by security are more perceived than actual.
Conclusions
The clear message to come from the survey is that organisations must develop their e-business strategies across the whole business, rather than from a functional viewpoint.
This development of an e-business strategy for the whole organisation must address the problems of systems, processes and people, or risk generating an increase in administrative problems to an unacceptable level which may hinder further development.
Unfortunately, the overriding issue is that whilst most organisations freely use the terminology of supply chain management, very few organisations have actually implemented the theory.
This means that as long as functional silos remain, functionally driven e-business strategies will predominate and the big, bold, imaginative supply chain opportunities will be lost.
