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Paper Abstract: An examination of the history of electronic data interchange (EDI), the effect of the internet on EDI, and the outlook for EDI. EDI as a critical part of large business operations. Includes abstract. Paper Introduction: Electronic Data Interchange Analysis Abstract Electronic Data Interchange EDI is a critical part of large businessoperations yet it remains a mystery to those outside its immediate users EDI came about in the late s and early s as transportationorganizations sought a way to communicate more effectively with vendors andcustomers Eventually standards were developed which made it possible forcompanies to send common business documents purchase orders and invoices primarily from one company to another using computer systems The adventof the Internet has changed Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. EDI and the Internet As the Internet increased in popularity and in the number of users,some analysts predicted that EDI would slowly be abandoned. 25. Smaller companies oftenpay a third party to host their Web site; such hosting services requiremonthly or annual maintenance fees and decrease the amount of control thatthe company has over the site. Inaddition, the Internet greatly decreases the amount of time and resourcesnecessary to connect new suppliers to an EDI network, with the result thatlarge companies can be more responsive and flexible in their supply chainmanagement. This also means that smaller companies can participate in EDIsince they do not need to rely on expensive IT departments to provideconnections to EDI VANs (Harreld, Krill & Schwartz, 2 2). ReferencesClarke, R. The Internet has introduced change to the EDI world, but is not likelyto supplant EDI entirely in the near future. 37-41.MCRC survey reveals paradigm shift as use of e-billing expands. The rail and transport industries were also early adopters of EDI, andthe standardization of documents within that industry led to the creationof the United States Transportation Data Coordinating Committee (TDCC) in1968. It is the shortening of the purchasing cycle, the improved efficiencyof the payment cycle, and the reduction of human error that drove thedevelopment of EDI. This committee sought to coordinate the development of translationrules among four then-current sets of industry-specific standards. VAN: Value added network; VANs are used in EDI to facilitate thebusiness-to-business transfer of information, and are often owned by third-parties that charge a transaction fee back to users. New standards that recognize the role of the Internet in EDI shouldalso be investigated in order to determine which of the several standardsin use today are likely to survive over the long-term. According tothese analysts, the Internet provided a cost-free method of communicatingup and down the supply chain, compared to the transaction-based feesassociated with EDI. Historically, EDI users have been large companies and their immediatecustomers and suppliers. EDI has gonelargely unnoticed by the retail consumer, but it is an integral part ofAmerican--and international--business at the largest companies. Or, even if the originaldocument is legible, data entry operators may simply mistype theinformation. Those who forecast the demise of EDI because of the Internet failed totake into account the costs associated with the Internet. Instead, the Internet makesit possible for small and medium sized companies to realize the samebenefit that formerly accrued only to the largest companies, and thesesmaller organizations can now participate as suppliers to these largecompanies through Internet portals. This research examines the development and benefit of EDI,considers the impact of the Internet on EDI, and examines the outlook forEDI in the future. The whole cycle from orderingto paying the bill can be generated electronically. The reduction in paperwork means that fewer employees are needed toprepare, route and manage the paperwork. Introduction Electronic Data Interchange (EDI) is one of the few technologies thathas survived largely intact from the 197 s to the present. Despite the potential of the Internet to transform EDI, there remainsconsiderable work that needs to be done before that transformation iscomplete. At this point, the greatestlimitations to the Internet becoming a more integrated part of EDI is thereliability of the Internet, its security, and throughput. EDI became the standard for exchanging businessdocuments because it improved the cost structure of three businessfundamentals: order entry, transaction, and payment. Smaller organizations had difficultyjustifying the costs (including the transaction costs) associated with EDI,and thus tended to continue to use manual processes of one kind or another. InternetWeek, p. Industry Week, 252, pp. In 2 2, the value of Edi transactions was estimated at between $1.8trillion and $3.2 trillion worldwide. Although thereare typically not transaction costs associated with sending and receivinginformation across the Internet, companies must gain access to the WorldWide Web and there are costs associated with that. As an example, the hard-wired connections provided by VANsprovides a robustness that Internet services have yet to achieve. (2 2, July 22). By integratingInternet technology and protocols into EDI, smaller companies are able toparticipate in EDI with large organizations. Electronic Data Interchange Analysis Abstract Electronic Data Interchange (EDI) is a critical part of large businessoperations, yet it remains a mystery to those outside its immediate users.EDI came about in the late 196 s and early 197 s as transportationorganizations sought a way to communicate more effectively with vendors andcustomers. An extension of JIT, which offers advantages to both the buyer and thesupplier, is providing an interface between billing and accounts payablesystems with inventory systems through EDI. The primary purpose of EDI is to provide a communications standardthat promotes the interchange of common business information. The Growth of the Internet means business needs more EDI, Not less. JIT: Just-in-time inventory processing; JIT seeks to minimize theinventory levels maintained by companies in order to reduce carrying costsand control cash flow. EDI and the market-driven distribution system. 31- 35.EDI offers bridge to XML, eCommerce. AHSC gained acompetitive edge because the competition did not immediately develop theirown systems (Manus, 1993). The firstuse of EDI was in the purchasing and order areas, eliminating the use oftraditional purchase order documents in order to achieve quicker responsetime. Wheninformation from these degraded sources is rekeyed into a computer system,there is an increased likelihood that the data entry operator will misreadthe information and enter the wrong data. Taking this one step further, an electronic funds transfer canbe initiated by the buyer's accounts payable system instead of requiringthat a check be issued. Just-In-Time (JIT) inventory management is based on the concept thatas little time and money should be spent on non-value adding activities.EDI has made possible the JIT goal of zero inventory to reduce storage costand lead times for companies. As a result, they are not likelyto be willing to abandon EDI infrastructure for Internet-onlycommunications until they are convinced that such a move will havefinancial benefit in the long-run. (2 3, March). Implement and Tractor, 118, pp. I-S Analyzer, 41, pp. Data istransmitted over voice or data lines using a value-added network (VAN)resulting in more accurate transmission at lower costs than traditionalmethods of business communications. (2 1, October). When all of these factors can be enhanced through asingle operation, the desirability of that operation is high. (2 3, April). Supermarket Business, pp. This provides greaterflexibility to the market as a whole and increases the potential of EDI(Vollmer, 2 1). EDI makesit possible for companies to communicate directly with each other'scomputer systems and send documents such as purchase orders and invoicesfrom one company to another without human interaction. Contract Management, 4 , pp. Traditional EDI business isexpected to grow at an average annual rate of 8.4 percent through 2 6,while Internet-based EDI is expected to grow at an average annual rate of52.1 percent during the same period. Instead of EDI being replaced by the Internet, is more likely that EDIwill be integrated into the Internet. The adventof the Internet has changed EDI as companies have begun to take advantageof additional capabilities that the Internet offers. In addition, value added networksuppliers recognize that the Internet increases the value that they canoffer to their customers, and most have embraced the Internet as a way toimprove their customer service. If there is a problem with atransaction, the VAN can trace at what point in the system the processbroke down, and determine how to resolve the problem. This system was later refined and eventuallyled to the development of Analytic Systems Automated Purchasing (ASAP).This allowed hospitals to key their own orders directly into AHSC's system,which reduced the hospital's lead time and inventory costs. Traffic Management, pp. In another case, a VAN supplier ismaking it possible for customers to perform credit checks using Web-basedservices and integrating those services with the EDI service already inplace (Harreld, Krill & Schwartz, 2 2). EDI users are increasingly interested in integratingpartners of all sizes into their EDI networks, not just large companieswhich have traditionally been the primary users of EDI. J. In addition, there are costsassociated with the various pieces of hardware and software required to setup and maintain Internet access, and security issues become much moreproblematic when Internet access is brought in-house (Drickhamer, 2 3). 43-45.McKendrick, J. Background EDI is the exchange of information in a standardized format from onecomputer to another. Large companies that process thousands of documents in thecourse of their business operations realized millions of dollars inbenefits by moving to EDI, and they have invested heavily in theinfrastructure that supports EDI. EDI: Simple, but not easy. In addition, the Internet did not require specializedequipment, or dependence on a third-party to perform transactions. The standardization is critical since the ability ofthe receiving computer to translate the information is directly dependenton the level of adherence to the standard (Quinn, 1991). Benefits of EDI There are several key benefits to EDI: paperwork is minimized, sotransactions proceed faster; since documents are not rekeyed at subsequentsteps of the process, the opportunities for errors being introduced intothe system are reduced; because invoices and purchase orders travelelectronically, the purchasing cycle is shortened, which enhances theability of organizations to introduce techniques such as just-in-timeinventory management (JIT) and similar processes to reduce costs. Standards were developed early on in this processbecause large companies such as General Electric and Ford drove thosestandards. Data flow is enhanced sincepaperwork does not have to physically travel from one location to another--either within the organization, or from one organization to another. EDI: The Future is now. (2 3, Jan-Feb). In addition, the explosion andsubsequent collapse of the dot-com industry beginning in the late 199 s hascaused some large EDI users to view the Internet with distrust as analternative for EDI (Vollmer, 2 1). (1991, July). (1993, January). (2 1, April 9). ANSI: American National Standards Institute (ANSI); ANSI developedthe X12 standards which replaced earlier standards used in EDI. Long live EDI. InfoWorld, 24, p. (2 , November). For example, hardwired connections to supplierscan cost $1 , per month using traditional EDI, but supplier access canbe obtained for far less using the capabilities of the Internet. 45-48.Van Voorhis, B. Once the order isreceived by the supplier, an electronic bill can be generated by thesupplier's system. 4-5.Vollmer, K. 3 -33.Quinn, F. Healthcare Financial Management, pp. Typically, the manual process involvesfilling out a purchase order, having it approved in writing, mailing it tothe company, and waiting for it to be entered into the supplier's system,after which it can be shipped (Partch, 1993). Larger companies may bring the Web servicein-house, but this requires an investment in human resources who have Webdesign experience as well as individuals who are able to set up andmaintain the technical side of the Web site. Will the Internet engulf EDI? Whentasks that can be automated are indeed automated, the opportunity for humanerror is decreased and, again, companies improve their likelihood forsuccess in the market. VANs also have the ability to track individual transactions far betterthan the Internet, at this point. TheAmerican National Standards Institute (ANSI) eventually developed its X12standards which gradually extended and replaced those of the TDCC (Clarke,2 1). Eliminating human interfaces not only reduces the likelihood oferrors, but also increases the speed and efficiency with which transactionsare processed. As the Internet gained acceptance, it was often small and medium-sizedcompanies that started using e-mail to send invoices and purchase orders toother companies and thus begin the drive to establish the Internet as aviable alternative to EDI (Drickhamer, 2 3). Business Credit, 1 3, pp. VANS shift EDI layer. (1993, January). Similarly, theless time it takes for a company to ship goods and receive payment forthose goods, the more likely that it is to succeed in the market. In addition, smalland medium sized companies have access to the Internet where they typicallydid not participate in EDI. There have beensignificant cost savings realized as a result of EDI being integrated intothe market, although these savings have largely been limited to largecompanies. 32.Manus, P. This is a level of servicethat is not yet available on the Internet. Theses are advantages to the buying company,which can now be linked on-line to their suppliers so that the order can beplaced without the manual process. As high-speedconnections become more common for gaining access to the Internet, and assecurity capabilities increase, it is likely that EDI vendors willincorporate additional Internet capabilities into their offerings(McKendrick, 2 ). Value-added networks are traditionallymaintained by third-parties; these companies typically charge a transactionfee for their use, and restrict access to member companies (Clarke, 2 1).Data is translated from format to format, and provides message storage andretrieval functions. Similarly, VANoperators can trace transactions from one trading partner to another andprovide verification of receipt to all parties. The result is lesspaperwork, fewer errors, and decreased purchasing cycles. Future Research Additional research should be conducted to learn how companies areusing the Internet and EDI in integrated applications since at this point,such applications are in the earliest stages of development. 3-4.Partch, K. These are the organizations that have the most togain from eliminating paperwork and taking advantage of streamlinedoperations and JIT processes. This is particularly true when documentprocessing involves the degradation of quality associated with thedocument, such as with facsimiles or photocopied documents. 1, 13-14.Harreld, H., Krill, P., & Schwartz, E. By setting up reorder quantities, reorder points andsimilar triggers based on seasonal demand and other parameters determinedby the company's purchasing manager, a company can greatly automate thepurchasing process so that very little human interaction is necessary.This has the advantage of reducing the number of people needed to performthe data entry aspects of the purchasing function, and allows buyers tofocus on obtaining the best pricing and delivery terms. When the order is received by the buyer, the paymentcan be matched with the supplier's electronic bill, and a payment can begenerated. When multiplecompanies in a supply chain take similar steps, it is possible to greatlyincrease the speed and efficiency with which goods move through the supplychain while decreasing the number of individuals associated with theprocess ("EDI Offers," 2 2). Managing Credit, pp. Eventually, standards were developed which made it possible forcompanies to send common business documents--purchase orders and invoices,primarily--from one company to another using computer systems. While someexpected that the Internet would supplant VANs and EDI, VANs havethemselves found ways to integrate the Internet into their EDI offerings.As an example, VANs are using Web-based services to provide inventoryquantity checks so that customers can search from several acceptedsuppliers to determine which has the requisite amount of inventory beforean order is placed by the EDI system. (2 2, June). 23-24.Drickhamer, D. The Internet also makes it possible for small and medium sizedcompanies to participate in EDI where costs often prohibited suchparticipation in the past. Justas FedEx introduced the concept of "when it positively absolutely has to bethere overnight," and the fax machine made it possible to send paperdocuments from one location to another within minutes, EDI made it possiblefor the information contained in documents to be sent from one company toanother instantly (Van Voorhis, 2 3). Why you should know about EDI. One of the first companies to integrate EDI in their businessprocedures was American Hospital Supply Corporation (AHSC) in the early196 s, which established a purchase/ordering system that linked theircustomers directly to them. Conclusion The less time it takes for a company to place and receive an order,the more likely that company is to succeed in the market. Security issues are one reason forthis; the questioned viability of the Internet as a long-term replacementfor EDI is another. By eliminating the opportunity for rekeying, EDI eliminatesthat portal for data errors (Vollmer, 2 1). EDI relies on computersystem-to-computer system transfer. Traditional value added network (VAN) suppliers have recognized thepotential of the Internet to enhance their EDI services. In thishighly idealized view of electronic business, the Internet was a fast-growing solution to business-to-business communication that would renderEDI obsolete (Drickhamer, 2 3). Electronic Data Interchange (EDI). TDCC: The US Transportation Data Coordinating Committee; thiscommittee was responsible for developing early EDI standards in the 196 s. Outlook for EDI Although the Internet holds considerable promise for improved business-to-business communication, companies that already participate in EDI areeager to leverage their EDI investment. Additional research should also be conducted to learn how wirelesstechnology may impact the growth of EDI since wireless devices open up newlocations that can be integrated into EDI systems. The lower figure is based solely onEDI's traditional transactions of purchase orders and invoices, while thelarger figure takes other types of data exchange--such as deliveryschedules and shipping notices--into account. In this way, EDI has required the keying of dataonly once in this process from ordering to payment ("MCRC Survey," 2 3). TheInternet has also proved remarkably vulnerable to cyber attacks, andcompanies are wary of putting their and their customers' data at risk.Until the Internet is more secure and robust, it is not likely to provide astandalone alternative to traditional EDI applications (McKendrick, 2 ). Glossary of Terms EDI: Electronic Data Interchange; the transfer of documents from onelocation to another without human interaction. Thus it is likely that the outlookfor EDI is strong, although the technology for delivering EDI is likely toundergo significant change in coming years (Drickhamer, 2 3). When documents such as paper invoices and purchase orders are used toconduct business, there is a strong likelihood that errors will beintroduced into the system. It is unlikely that EDI will be supplanted bythe Internet, and far more likely that EDI companies will integrate theInternet into the services that they offer. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.

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