The European e-Business Report The European e ... - empirica

The European E-Business Report 2005
respectively. Despite the complexity and costs of these applications, ERP systems and collaborative
design tools are frequently used by medium-sized companies as well.
Exchange of standardised data is strongly related to firm size: micro and small enterprises seem
hardly using any standards. In contrast, medium-sized and, in particular, large enterprises are the
most frequent users of uniform documents and protocols. This is in line with the findings on the
importance of standards and interoperability for companies in different company size classes.
Procurement and supply-chain integration
From the very beginning of the e-business age, electronic procurement was identified as one of the
most important e-business applications in the automotive industry. Promising significant reduction of
transaction costs and increased transparency of market operations, e-sourcing sparked OEMs’
enthusiasm, on the one hand, and raised concerns to suppliers on the other.
Despite many disappointments, as illustrated by case studies presented in the full sector report,
online procurement together with e-marketplaces have become part of everyday business in the
automotive industry. Electronic procurement belongs to the most frequently adopted e-business
solution in the sector: 60% of employees in the sector work in companies that procure online. Only the
IT services sector exhibits a higher adoption rate. However, online purchases in the automotive
industry are rather limited in terms of transaction volume: Although the share of firms that reported
buying between 5% and 25% of their inputs online is one of the highest among the 10 sectors, the
group of e-purchasers that buy more than 25% of total purchases online is relatively modest in
comparison to other industries studied by e-Business W@tch in 2005.
It still remains ambiguous how e-procurement affects the number of suppliers. On the one hand, it
has been argued that online procurement would lower transaction costs, increase transparency, and
make the search for appropriate business partners more efficient. Since more sourcing options
increase firms’ bargaining power, it would be advantageous for them to increase the number of firms
from which they procure. On the other hand, however, firms implement some ICT applications to
automate and integrate processes with selected suppliers. In order to benefit from transaction
economies of scale, they might tend to reduce the number of their partners. Most companies reported
in the e-Business Survey 2005 that online procurement did not have any effect on the number of their
suppliers. Almost one third of large enterprises, however, saw the number of their suppliers
decreasing as a result of e-sourcing.
A large share of companies surveyed prefers either standard software or company-specific tools
over e-marketplaces. This trend is more pronounced in the automotive industry than in other sectors.
The lack of standards and the delayed emergence of an industry-wide exchange platform increase the
costs of doing business electronically.
Marketing and sales
As already reported in previous reports on e-business in the transport equipment sector in 2003 and
2004 77 , online sales are not a common practice in the automotive industry. Carmakers use their
internet presence mainly for marketing purposes and are rather reluctant to replace the traditional
exclusive dealer networks with other forms of car sales. In addition, complex modules and subsystems
produced by large automotive suppliers are not suitable for online presentation and sales.
As a result, the adoption rates of online sales in the automotive industry are clearly below the average
for the 10 sectors surveyed in 2005. Currently, only 6% of this sector’s employees work in companies
that use the internet for selling their products. Interestingly, this sales channel has been reported more
frequently by small and medium-sized enterprises than large ones. Transaction volumes of online
sales by SMEs seem to have been higher than those of large firms as well: 24% of micro enterprises
said that they sell more than 25% of goods online, compared to only 11% of large firms which did so.
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see www.ebusiness-watch.org ('resources')
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