A report by the Institute for Supply Management and Forrester Research shows that purchasing departments greatly increased their use of the Internet to conduct transactions during the fourth quarter of 2001.

"Companies are acknowledging that e-commerce is here to stay and that there are major benefits to be had even though realization of those benefits may take longer than originally anticipated," said Edith Kelly-Green, vice president and chief sourcing officer for FedEx, who was chairman of the ISM/Forrester report.

The Report on E-Business also revealed that 26 percent of organizations have increased their participation in online marketplaces, up from 23 percent during the previous quarter.

These numbers don't surprise us. Surveys we have conducted in the past year clearly show that the use of the Internet to conduct transactions is on the rise.

It was only a few years ago that many distributors viewed the Internet as a threat. Some well-known industry observers predicted dire consequences from the Internet, saying it would allow manufacturers to bypass their distributors and sell directly to the customer. Some of these people probably predicted the demise of movie theaters when VCRs were introduced a number of years ago.

The reality is that manufacturers always have had the opportunity to go direct — with or without the Internet. Online auctions still are only, at the most, used moderately in some industrial sectors. Many purchasing departments, in fact, still refuse to participate in them. Some of those who did found that the lowest price wasn't the best choice — that it was actually costing them money.

Relationships, knowledge of the customer, and solid communication are the real keys to ensuring that the manufacturer-distributor relationship remains intact.

There still is no better way to move products than through the distribution channel. That was true 100 years ago and it's still true today.