Electronic Data Interchange

Electronic Data Interchange My goal in writing this paper is to explore more deeply the topic of Electronic Data Interchange, which was discussed briefly in our text in Chapter 8. In short, EDI is a broad term that can be summed up as the paperless business transactions in a standard format called ANSI X-12. (2) EDI has become an essential piece of the e-commerce puzzle for businesses in the information age. Having a more thorough knowledge of the working of EDI is important for knowledge workers and managers alike. In the rest of this paper I will try to expand upon the topic of EDI and highlight some examples of how it is being used in industry. The benefits of EDI are many. EDI cuts the costs involved in processing for instance a purchase order from a supplier to a manufacturer. A typical purchase order can produce up to 15 pages of paper and cost the company as much as $125 if you include all of the costs involved with creating and transmitting the document; labor, postage, faxing. Etc. Using automated EDI transactions, the cost can be cut to as low as 30 cents with no paper used at all. (Marks, 15.) Another benefit of EDI is that once the data is keyed in to the information system it does not have to be re-keyed, cutting down on errors in the data. EDI also drastically shortens the time from when an order is placed to when it is shipped and when it is paid for. EDI can be found in almost every industry imaginable. For example if you are shipping a package from UPS, it can be scanned at various points during delivery and that information can be automatically transmitted to the merchant's website where the item was purchased. EDI is also vital in "Just in Time" inventory management. It allows for real- time data to be exchanged between manufacturer and supplier to reduce costs incurred from maintaining inventories. The case of the partnership between the retailer Wal-Mart and its supplier Proctor and Gamble is an excellent example. One recent