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Manufacturers don't make enough of the internet

THE INTERNET is changing the face of the retailing business, writes Roger Trapp. One only needs to look at how the presence of Amazon is helping to revolutionise the book trade. But the influence of the net could extend beyond the service sector, with manufacturers capable of benefiting.

Lugton Brewery, a Scottish co-operative, has introduced an online shop to sell specialist beers. Customers can order straight from the website. It has propelled the company into the global marketplace, producing higher sales than it achieves through advertising.

The experience of Lugton Brewery demonstrates the assertion that one of the key benefits of the internet is that it "levels the playing field" between large companies and smaller ones - they can achieve an equal presence on the web.

However, a report published last week by the Institute of Manufacturing, IBM and the Department of Trade and Industry suggests that British manufacturers have a long way to go. In particular, the study, based on a survey of 200 UK companies, confirms the view that the UK is behind the US and - in Europe - Germany and Norway.

It also points out that while electronic business presents enormous opportunities for cutting costs and improving efficiency, these are not seen as the prime benefits.

The main reason cited for using the internet is making customers aware of companies' activities and increasing businesses' own awareness of other companies as rivals, suppliers or customers.

"Cost reduction comes ninth out of 10 options, although case study evidence indicates that cost savings are integral to the adoption of internet technologies," says the report.

More than 90 per cent of companies had access to the internet and used e-mail, with three-quarters having their own websites.

But there was less sign of companies operating business processes on the net. A third of companies said they used it to sell products or services, just over a quarter to purchase products or services, but less than a tenth for receiving payments.