Confusion Mounts Over E-Business

Manufacturers and distributors are facing strained relationships as e-business makes its way into marketing channels and supply chains, charges a new National Association of Wholesaler-Di stributors report.

The report shows manufacturers are still unsure whether the Internet can replace distributors as a way to provide product information to customers.

In contrast, a majority of distributors are convinced the Internet will not replace their sales and communication functions.

The report's author, Adam J. Fein, Pembroke Consulting, believes this disparity of views "will slow the adoption of e-business solutions because both groups are approaching technology investments with divergent perspectives."

Among manufacturers, 567o expect online exchanges to generate loyal customers by 2006, while 6OVo of distributors expressed serious doubt that online exchanges will attract customers. And, 617o of manufacturers felt distributors will stock less inventory and rely on other supply chain partners to drop-ship to customers for them by 2006, while 47Vo of distributors believe they will outsource logistics by 2006.

The report also found that distributors are uncertain about whether their manufacturers will be investing in traditional channels during the next five years.

Fein suggested that the findings indicate manufacturers must carefully evaluate the business needs of their channel partners before implementing new technologies.

He also noted that current suPPlY chain participants are unsure which channel will dominate, because manufacturers have expanding choices of intermediaries.

The information was based on 1,600 responses from manufacturers, distributors, and customers in 50 different industries. The report also included 75 interviews with leading supply chain and channel experts.