Electronic Data Interchange

Electronic Data Interchange

1. ?

   • What it is
     • Electronic Data Interchange (EDI) is an inter-organizational system that involves the relatively fast delivery movement of business documents electronically between trading partners with little or without human intervention
   • How It's Done
     • utilises a set of electronic transaction rules and standards that allow different companies to exchange business documents electronically over a secure network (called a Value-Added Network or VAN). efficient electronic alternative to using email, phone, or fax to transmit and exchange paper documents and is an important area of larger scale e-commerce operations.
   • Outcome
     • In so doing, organizational boundaries are lowered (Ciborra, 1995), the organization’s interior is somewhat exposed to business partners (Webster, 1995), and thereby creating a high degree of organizational interdependence between participating parties

2. EDI Research Points

3. Benefits

   • Indirect
     • Avoiding errors  Faster payments/improved cashflow  Avoiding production stoppages resulting from lack of raw material  Reducing the purchasing/sales cycle (ordering, delivery and invoice)  Reducing stock levels  Reducing inventory breaks 
   • Direct
     • Paper savings   Avoiding filing costs and maintenance   Avoiding repetitive administrative procedures  Less paperwork enables reduction in administrative personnel
   • Strategic
     • Increasing business relationships with companies using EDI  Improving customer loyalty  Improving the quality and quantity of information  Faster response and access to information ) Gaining new business contacts using EDI  Reducing the number of business contacts by concentrating on those that use EDI (CONTRED)

4. EDI Implementation

   • Develop the organizational structure for managing the EDI system Deploy
   • Undertake a strategic review of the business
   • Develop an EDI solution to meet the needs of the business
   • Integrate with other business systems across the company
   • Analyse internal business processes
   • Establish a pilot project with selected trading partners
   • Deploy
   • 1. Develop Organizational Structure
     • Identify project champion to manage the implementation process and liase with outside providers of EDI solutions Obtain Organisational Support
   • 2. Undertake Strategic Review
     • project champion performs a strategic review of the business to see which areas of the business will benefit from implementing the EDI solution first.  project champion to undertake an EDI Survey or Cost / Benefit Analysis
   • 3. Develop the EDI
     • Select process within the business that requires automation Purchase orders Invoice Advance ship notice or ASN Functional acknowledgement Identify and select an EDI network provider and associated software needs for implementation Consider Legal & Audit Requirements
   • 4. Integrate With other Businesses
     • Identify information that interacts or uses and requires information from the automated business process Integrate such systems with automated process to provide significant downstream cost and efficiency benefits.
   • 5. Undertake Data Analysis of Internal Business Processes
     • Link all internal documents with trading partners and internal systems to ensure the smooth flow of information. by linking them, allows the information to be transmitted efficiently across a network.
   • 6. Establishing a pilot project with select partners
     • Implement trial project and Test with a small number of partners.
   • 7. Deployment of EDI
     • Deploy the project to trading partners

5. Challenges

   • Telecommunications
     • advanced and reliable telecommunication infrastructure
   • Initial Investment
     • heavy initial investment in software and training
   • Skills
     • considerable skills and know-how to implement and operate (Webster, 1995) which developing countries still struggle with and unfortunately when not in place can seriously slow down the diffusion rate