Barriers to Canadian SME Adoption of Internet Solutions for Procurement and Supply Chain Interactions

Working Paper Authors Publish Date
5 Norm Archer
Shan Wang
Claire Kang
Aug. 2003

Historically, sophisticated online supply chain management solutions have been implemented pri-marily by large companies. Small and medium sized companies (SMEs, with fewer than 500 em-ployees) have been slow to innovate in this area, because of costs, lower transaction volumes, and the need to integrate information systems internally and with their business partners. This began to change as the Internet was adopted more widely by business however there is a perception that the rate of adoption of more advanced solutions by SMEs is lagging more than it should due to a variety of barriers, many of which relate to the need to synchronize such innovations with their business partners.

This paper reports on a telephone survey of barriers to adoption of Internet solutions for business-to-business (B2B) procurement and sales by 173 Canadian independent SMEs, stratified by size and by manufacturing, distribution, and retailing. A summary of findings includes: 78% of these companies are linked to digital networks for business purposes. 5.3% of B2B purchasing and 4.6% of B2B sales (lower bound) is carried out online. The Internet is used for some form of in-formation gathering and communication by 75% of medium sized companies and 55% of small companies. At least some purchasing is done online by 56% of medium sized companies and 37% of small companies. At least some B2B sales are done online by 25% of medium and 15% of small manufacturing and distribution companies. We also report on a statistical analysis of perceived barriers to adoption of online solutions, and some of these relate to the difficulty of procuring and selling products online, not knowing the right kind of online solution, employees preferring the old ways of doing business, cost/benefit requirements, lack of knowledge of bene-fits from such solutions, and security and technology barriers. At the same time, some SME bus-iness perceptions are that there is little competitive pressure to use online B2B applications, cus-tomers are not particularly interested in these types of interactions, most businesses don’t use on-line solutions, suppliers don’t promote using them, the company is seen as too small to benefit, the nature of the industry doesn’t lend itself to online solutions, and some SMEs interested only in local business don’t see the value of Internet solutions.

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