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Buyers beef up supplier base

Staff -- Industrial Distribution, 4/1/2003

NEW YORK — It should surprise few distribution professionals that buyers are using the Internet to locate new suppliers, according to a survey from Thomas Register. What could be surprising is that a third of buyers surveyed are finding alternate suppliers due to concerns about supply disruption. Possible war and terror attacks weigh heavily on plans to find backups, according to results.

Thirty-four percent of buyers increased their supplier base and 17 percent buy more from local suppliers than previously, according to the survey. Respondents include buyers from manufacturing, engineering, wholesale distribution and government entities.

In the same survey, 65 percent said their primary search vehicle for new suppliers is the Internet.

The net result is an increase in suppliers, contrary to the trend to reduce supplier bases. But is it a temporary phenomenon?

"Yes. In the long run, most industrial buyers will be reducing their supplier base again," said Leila Bryner of Thomas Register.

The nervousness about supply lines being cut dates to Sept.11, 2001, Bryner says. That anxiety is exacerbated by a possible war that could disrupt supplies. Eventually, economic realities will put buyers back on the track to reduce vendors, she said.

Thomas Regional, the branch of the company dealing with distributors, found in a recent poll that distributors consider the search for backup suppliers to be temporary, she said.

Vendors and buyers alike are becoming more comfortable doing business on the Internet, Bryner said. Those transactions also cut costs significantly, a good reason to accelerate online use.

"The industrial sector is certainly more comfortable doing business online than in recent years, especially for standard products," she said. "There is an increase in electronic RFQs for custom products, but are they fulfilled online? We're not sure about that yet."

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