EDI ELECTRONIC DATA INTERCHANGE EFFECT ON BUSINESS OPERATION

2007-05-02 10:04:19

( Computers )



What is EDI Electronic Data Interchange?

EDI or electronic data interchange is the process of transferring information from one company to another using the internet. Transfer of information related to buying and selling across companies becomes easier with the increasing number of companies having internet connection.

Companies use structured information for electronic exchange. Purchase orders are one form of standard information structured under EDI electronic data interchange to facilitate automation of purchase transactions among businesses.

E-mail Transmission of EDI Information

EDI electronic data interchange standard is originally independent of any form of technology related to communication or software. However, the increasing number of companies connecting to the internet resulted to a design of electronic mailing of electronic data interchange documents.

Advantage of EDI

Using EDI electronic data interchange helps businesses reduce operational expenses related to human resources and print materials requirements. Documents transmitted electronically help reduce costs on printing of paper documents as well as reduce the cost of manual delivery. It also helps avoid unnecessary meetings that require huge amount of traveling time and communication.

EDI electronic data interchange allows for electronic storage and manipulation of data minimizing expenses related to manual encoding or document scanning. Thus, it helps reduce handling cost as well as handling time resulting to fast distribution of data within and across businesses.

Disadvantage of EDI

Adapting EDI electronic data interchange entails changes in operational processes of businesses particularly for those businesses that rely heavily on printed papers in its operations. These businesses require huge change in its operations when adapting EDI standard documentation. Also, the initial set-up of EDI standard operation requires huge amount of resources in terms of time and money. However, businesses will reap the long term benefits of EDI standardization in terms of cost and time when the initial set-up is over.


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