Internet offers ITG flexibility
Jan 1, 2004 12:00 PM
A recent market study from Venture Development Corp (VDC) investigates use of the Internet within the inventory tank gauging (ITG) and process level measurement industries. ITG is the use of level measurement for inventory storage and custody transfer, rather than in process control applications. Three uses of the Internet were investigated in a survey of purchasers:
- Management of commodities
- Use as a data source
- Online buying
Purchasers of inventory tank gauging systems were asked whether these are used for commodities they purchase and/or sell, and to what degree in this application use is made of the Internet or telemetry to track and manage inventory levels.
Below summarizes the findings relative to usage by their suppliers to track commodities:
Usage of firms' ITG systems by their commodity suppliers to track and manage inventory levels (percent of user respondents)
Share with and without applications
No applications: 37%
Have applications: 63%
Portion with applications who have suppliers that track and manage these commodities using the Internet or telemetry
Suppliers using Internet/telemetry: 40%
Suppliers not using Internet/telemetry: 60%
Sixty-three percent indicated usage for this purpose, and among these 40% indicated their suppliers use the Internet or telemetry to track and manage inventories.
Below summarizes the findings relative to their usage to track inventories of their customers:
Usage of firms' ITG systems to track and manage customer inventory levels (percent of user respondents)
Share with and without applications
No applications: 62%
Have applications: 38%
Portion with applications who track and manage these commodities using the Internet or telemetry
Using Internet/telemetry: 44%
Not using Internet/telemetry: 56%
Thirty-eight percent said they have such applications, and of these 44% indicated they use the Internet or telemetry to track and manage inventories of their customers.
In both cases, some respondents with no usage of the Internet or telemetry indicated this would likely be initiated in a year or two. Most, however, indicated they had no idea when such usage might be adopted. For security reasons, some said they hope adoption would never happen. Also, regarding monitoring of customer inventories this way, some saw this as a disadvantage in that it reduces direct person-to-person contacts with customers.
Internet as a data source
Following shows how use of the Internet has grown in popularity as a source of information on ITG and process level measurement products, and vendors of these. The declining share between 2000 and 2002 may be a temporary glitch, or an anomaly in the data. However, it could represent a peaking out in the utility of the Internet as a data source.
Internet use to gather information on ITG systems and process level measurement devices
In 2002: 53%
In 2000: 58%
In 1998: 28%
In 1995: 0
Most used are search engines to locate vendor web sites. Also used are on-site directories such as the Thomas Registry and online sites of trade periodicals.
Although online purchasing is growing in popularity, it is not growing at a rate previously expected. VDC asked purchasers who were not buying over the Internet in 2000 whether they expected to be purchasing these products on-line within two years. About 27% indicated they did. In the current study they were asked if they expect to be making near-term purchases online, and only 7% said they do.
One factor in this slower pace is that vendors and distributors have not created online ordering web sites to the degree expected. Also, technical support is a principal vendor selection criterion among purchasers, and many view this as being best obtained in person-to-person dealings. The purchases also often involve services beyond hardware, and have to be handled on a contract basis. Spare part orders are more likely to be ordered online.
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