Introduction
Over the past few years, the business environment has experienced a rampant transformation due to changes within the external environment. Changes within the technological environment have played a major role in the transformation of the business environment. This has resulted from an increment in the rate of technological innovation. One of the technological innovations which have resulted in business transformation is the emergence of different forms of Information Communication Technology (ICT) such as electronic commerce commonly referred to as e-commerce. These technologies are revolutionalizing the work environment and the functioning of firms in different economic sectors. Sigh (n.d.p.2) asserts that these information communication technologies have become an integral part of the operation of business enterprises. Sigh (n.d, p.3) defines e-commerce as the process through which transactions in relation to products and services are conducted through diverse computer networks and other electronic systems for example the internet. Over the past few years, there has been increased integration of internet technology with e-commerce in the operation of different business entities. ONE of the industries which have experienced increased integration of internet technology is the manufacturing industry. The resultant effect has been a high growth rate in these businesses. This is due to the fact that the proper functioning of electronic commerce requires to be supported by internet technology. In addition, the growth of internet technology has resulted in an increment in the rate at which business firms are being integrated.
One of the electronic commerce technologies which have been integrated with the internet is transaction processing. Transaction processing is defined as the process through which business information is acted upon as the requests are made (that is one at a time) rather than grouping them to undertake batch processing. Alternatively, transaction processing can be defined as a computerized process through which transition data is processed immediately. This is achieved through the incorporation of Electronic Data Interchange (EDI). Considering that I am working in a computer manufacturing firm, diverse business transactions are undertaken. Incorporation of electronic commerce and specifically EDI will definitely have an effect on my work. My duties entail executing online sales through stock availability management, planning scheduling and executing merchandising content through the website. My job description also entails establishing and managing processes to identify key products and shopping trends from our own websites, consumer behavior and market trends. In addition, my duties also entail taking ownership of all aspects of product presentation, imaging, product descriptions, layout and refining them in an effort to maximize profit level. The discussion of this paper is aimed at providing an in-depth analysis of how this concept of electronic commerce will affect our business/work in the next few years. More focus is paid to Electronic Data Interchange.
Electronic Data Interchange (EDI)
EDI is defined as a structured process through which data is electronically transmitted between organizations. EDI ensures effectiveness and efficiency in the process of exchanging electronic documents between computer systems of the trading partners. This means that EDI is specifically configured to link the business partners. To attain this, the trading partners must have adopted a common set of message standards. This means that there should be a well laid specification of the message between the parties. Transmission of data through EDI is purely conducted through electronic means. However human intervention is required to ensure proper formatting of the data, eliminate possible errors and to improve the quality of the data.
The business partners are free to use any method in the process of transmitting data between the trading partners. Some of these methods include the use of Value Added Networks (VAN). Sigh (n.d.p.2) defines VANs as private network provider which is contracted by a firm to enhance electronic data interchange between business enterprises. The contracted firm receives transaction information from the sender and channels it to the final intended recipient.
With the emergence of internet technology, a large number of companies have integrated it within their EDI systems. Sigh (n.d.p.2) asserts that in order for the EDI to be effectively integrated within the internet system a set of communication protocol have to be ensured. As a result, the security of the data to be transmitted is enhanced. Some of the most important protocols in relation to EDI include the Hyper Text Transport Protocol Secure (HTTPS), File Transfer Protocol Secure (FTPS) and AS2. Other important standards which enhance transmission of data include ANSI X12, TRADACOMS, UN/EDIFACT, XML and ODETTE.
In addition, well configured business to business (B2B) gateway software is paramount to facilitate operation of these standards. As a result, it will be possible for the message transmitted through EDI to be translated and interpreted.
Stock availability management
By integrating the EDI with the internet, the firms operations will be greatly enhanced. One of the ways through which the firm will benefit through the EDI is an improvement of its supply chain. This is due to the fact that it will be possible for the firm to connect with a large number of suppliers within the global market. In addition, integrating the firm’s EDI with the internet will be cost effective for the firm. This is due to the fact that the firm will not be required to install complex EDI infrastructure to in order to link with its suppliers. In addition, a large number of firms have already incorporated the internet in their operation culminating into an increment in the rate of business collaboration. Through increased collaboration between the firm and its suppliers, the firm’s time to market performance will be improved. This means that simplified order fulfillment will be integrated within the firm.
According to supply chain EDI (2010, para.4), integration of EDI into the firm will culminate into an improvement in the process of the firm conducting stock availability management. This means that the firm will be able to attain a high efficiency in the process of controlling stock levels. This is due to the fact the firm will be able to transmit real time information to its suppliers in relation to stock availability and vice versa (Supply chain EDI, 2010, para. 4). For instance, the firm’s suppliers may not have the stock required by the firm when the order is placed. Through the EDI, the suppliers will be able to communicate with their clients on the issue. As a result, the firm will be able to make alternative decision to source the supplies from other suppliers.
According to Phani and Kumar (2003, p.6), EDI technology will result into an increment in the firm’s ordering process. This is due to the fact that the vendor will be able to receive the necessary data through the EDI. One of the ways through which the firm will attain efficiency in its ordering process is by incorporating EDI-852. Upon receiving the data, the supplier determines the re-order point (ROP) for every item on the basis of the data movement. The supplier then calculates the reorder quantity and compares it with the available quantity to the supplier. The supplier electronically transmits the created order to the firm through a document referred to as the EDI-850. However, some of the partners use EDI 855 document also referred to as the purchase order acknowledgement document which is sent electronically. According to Phani and Kumar (2003, p.6), the EDI 856 document is sent prior to shipment of the goods. In addition, the suppliers will be able to supply the firm with the required stock in time thus reducing the order cycle time. The firm will also benefit from a reduction in the cost involved in ordering.
Cost reduction in executing merchandising activities from integration of EDI will also result from reduction in the amount of paper work involved in the ordering an payment process. This results from the fact that the entire ordering and payment process will be done electronically. One of the ways through which cost reduction will be attained is by integration of Financial EDI (FEDI) or Electronic Fund Transfer (EFT). Phani and Kumar (2003, p.6) asserts that FEDI can result into reduction in invoice payment cost with a margin of more than 90%. In addition the EFT or FEDI technologies can result into a reduction in payment processing costs. For example, the $5 cost of processing paper checks can be reduced to approximately 50 cents for every transaction. If the firm was processing approximately 1000 checks every day, its average daily fixed cost is $ 5,000. Through the FEDI, this cost can be reduced to $500 per day. The annualized cost saving will average $ 1,000,000.
The probability of making errors in the ordering process will also be minimized. This is attained through integration of supply chain with the EDI thus simplifying the ordering process. For example, during the entire ordering process, minimal human interaction will be involved. By reducing the probability of error occurring, the firm’s purchasing cycle will be enhanced. One of the ways through which this will be attained includes increasing the rate at which purchasing orders are processed. Reducing errors will minimize chances of the suppliers rejecting the order. In addition, reducing the errors will also result into an increment in the level of the accuracy with which the firm’s suppliers undertake shipment of the required materials. Through the EDI technology, the firm’s stock availability will be improved by reducing probability of the firm experiencing stock-outs. In addition, handling inventory will also be attained by minimizing hassles related to return processing.
Improvement of online sales process
Accuracy in sales forecasting is a key element in the success of a firm since it enables a firm to predict what and when to sell. Effectiveness in conducting sales forecast enables a firm to maintain the correct stock level by eliminating stock outs. Maintaining the correct amount of stock contributes towards an improvement in customer service. This is due to the fact that the customers will be able to obtain the products that they demand at the right time. As a result, the firm will benefit from an increment in sales revenue. This will arise from an increment in customer satisfaction and hence the level of loyalty. Through sales forecasting, the firm will be able to determine the amount of products it will produce so as to meet the future market demand. The resultant effect of EDI innovations will be to improve its online sale process. This is due to the fact that the EDI will enable the firm to forecast sales level through its replenishment system. This will be attained through utilization of historical sales data. Through EDI innovations, there is a high probability of the entire sales forecasting process being automated. This will increase the ease with which the firm conducts its daily, weekly or monthly sales forecast. As a result, the firm will be able to track sales information effectively. The ultimate effect is that the firm’s will be able to make an effective forecast of the orders. EDI facilitates in buyers placing their orders online. This guarantees the accuracy of information stored by suppliers with respect to the number of orders made. Unlike in the past where orders were made manually, EDI will help in storing order information for organizations. As a result it would be possible for suppliers to track their sales volume at different periods of time.
Currently, a large proportion of customers are incorporating e-commerce in conducting their transactions. One of e-commerce technologies that will improve customer service in the firm is the IQMS. This technology enables the firm to satisfy customer demands by processing their transactions through e-commerce technologies (IQMS, 2003, p.3).
EDI will accelerate the rate at which information flows between the firm and the customer. IQ EDI will increase the flexibility with which the firm satisfies strict customer product requirements. EDI enhances exchange of electronic documents between the customer and suppliers. By integrating IQ EDI, it will be possible for the firm to minimize manual data entry (IQMS, 2003, p.3).
Other electronic commerce technologies which have resulted into increased growth of EDI technology include credit cards and debit cards. Through these technologies, a large number of consumers are incorporating on-line purchases in their operation. This is culminating into an improvement in the firm’s profitability level. Most of the firms are willing to deal with consumers who have credit cards and debit cards as the system is not limited to geographical location. This is increasing the sales volume of different organizations hence improving their profitability.
Improvement of supply visibility
Supply chain flexibility is a key element in the success of every firm. This is due to the fact that it results into an increment in the process of the firm attaining a high responsiveness. In order to attain this, it is paramount for the firm to replace point-to-point system of supply chain integration with a more effective network. This will enable the firm to communicate with its partners on real time terms (Fujitsu, 2005, p.2). By integrating EDI in its operation, the firm’s supply chain visibility will be improved. This is due to the fact that multiple and real-time processes will be enhanced. Visibility refers to the ability of a firm to attain a clear view of all the information which affects it operation. According to Phani and Kumar (2003, p.7), a large number of organizations have realized the importance of improving their visibility in their operation. In addition Phani and Kumar (2003, p.7) assert that supply chain visibility enables a firm to appreciate its various segments such as the distribution channel.
By linking the EDI with the internet, the suppliers will be able to gain information related to the suppliers demand requirements by downloading them in various formats such as EDI, XML, PDF and CSV through the web. According to supply chain EDI (2010, Para. 5) the firm will be able to improve on its collaboration with its supplier if both of them have integrated EDI systems. By integrating EDI in its operation, suppliers will be able to enter online Advance Shipment Notices (ASNs) containing buyer’s order information which the firm will have preloaded on the internet. Upon the supplier posting the shipment, EDI enables immediate updating of the information according to the customers requirements. This reduces the chances of shipping the products twice. In addition, when buyer accepts to undertake the shipment either wholly or partially, the EDI network will enable the firm to conduct continuous updating of the order. The ultimate effect is that the firm’s order fulfillment process will be simplified (Supply chain EDI, 2010, para.3).
Integration of EDI into the firm’s supply chain will culminate into an improvement of various forms of supply chain visibility. Some of these visibilities are illustrated below.
Process visibility
In the operation a firm, process visibility is paramount in an effort to attain a high competitive advantage. Process visibility can only be attained through effective sharing of real time information between business partners (Carmichael, 2007, p.2). Through EDI innovation, there is a high probability of the firm attaining efficiency in its process visibility both within and without the organization. The EDI will result into an improvement in the process of the firm conducting diverse organization activities. Some of these activities relate to planning operations such as designing the supply chain, planning the production process, forecasting customer demand and maintenance planning. In addition, EDI will also result into an improvement in the firm’s manufacturing operations such as production efficiency, tracking work in progress and production scheduling. Through EDI organizations can be able to streamline their ordering and shipping process. The ordering company will be able to identify the various products it requires hence placing and order in advance. This is through using online forms provided by EDI which shows buyer’s order information. Once the supplier releases the goods, he or she can be able to update his or her system thus eliminating chances of product shipment being repeated. Once the products reach the buyer, he can update the supplier thus saving time used in communicating during the ordinary ways of transferring goods between the suppliers to the buyer. EDI also simplify product shipment process. During product shipment, it requires the supplier to print shipment labels and other documents. These labels and documents are readily available in EDI. As a result, the supplier is saved time he or she could use in designing and printing the labels. Consequently, the shipment process is made more efficient.
Product visibility
By integrating diverse EDI innovations within the firm, the process of identifying shopping trends from the firm’s website will be improved. Phani and Kumar (2003, p.4) asserts that product visibility in the firm’s supply chain provides information in relation to a variety of goods that firms within the same industry are dealing with.
One of the ways through which EDI will result into an improvement in the process of the firm identifying shopping trend is by integrating Inventory Viewer. This is a web-based tracking system which enables the firm to view its product status in its entire supply chain. This is attained through integration of EDI. The Inventory Viewer will result into an increment in the efficiency with which a firm attains real time visibility in relation to its products. In addition, knowledge of the customers shopping trends will be improved through tracking the firm’s sales level, received orders and pending orders within the firm’s distribution centers. Phani and Kumar (2003, p.5) asserts that with the absence of EDI, the firm may not know how the customers will place their order. This will culminate into inefficiency in the process of the firm satiffying the customers’ demands. To cope with this situation, the firm will be forced to maintain large quantities of safety stock. Through the EDI technology, the firm will be able sent point of sale (POS) data to the supplier thus improving product visibility and hence forecasting.
Partner visibility
The EDI will enable the firm to gain a better understanding of its customer’s value proposition. As a result, the firm will transfer the information gained to the suppliers so that they can supply high quality raw materials which result into manufacturing of high quality products. The ultimate effect is that there will be an increment in the level of customer satisfaction. For example, the suppliers will supply raw materials which are in accordance with the firms target margin. By setting these targets, it will be possible for the management to determine its profitability level. According to Panorama (2005, p.5) the 21st century has witnessed an increment in the number of firms which are utilizing EDI technology in an effort to increase their profitability. Panaroma (2005, p.6) asserts that increment in partner visibility plays a significant role in enhancing a firm’s profitability. By attaining a high level of partner visibility, it will be possible for the firm to determine the effect of its supplier’s activities on its profitability. EDI provides information about all stakeholders within an organization. Through the technology, business operators will be able to identify various firms that deal with their products. Consequently, he or she will be able to identify those partners that will help him in enhancing the performance of his business.
Today every business is striving to expand its services to all parts of the world. Suppliers for these businesses range from small to huge international corporations with branches in different parts of the world. The effectiveness of these firms in running global business depends on their ability to effectively coordinate with their different trading partners and customers. The only way these businesses can effectively coordinate with their trading partners is through ensuring that they have effective communication with each partner. EDI technology is one of the options that business operators are now shifting to. With business automating their operations, they are now being able to monitor performance of every trading partner. This is helping them in identifying trading partners who contribute to profitability of their business. For partners who are not effective on enhancing the performance of their businesses, operators identify the factors that lead to them not performing effectively. Through EDI business operators can communicate with these partners streamlining their relationships.
Profit visibility
By integrating EDI in its operation, there is a high probability of the firm attaining its profit maximization objective. This will be attained through an increment in the number of transactions that the firm conducts. In addition, increment in the firm’s level of profit will result from the good relationship developed between the firm and its customers, suppliers and business partners. EDI will result into an improvement of relationship between the firm and its trading partners. Considering the fact that the firm operates in an international scale, different time zones are involved. In addition, the trading partners such as the customers and suppliers have adopted diverse business practices. For example, these firms do not observe similar holidays. Despite these differences, real time information exchange is a must. For instance, the firm must adhere to the transaction agreement. The firm must ensure that transaction acknowledgements are sent within the set time limit. This will enable the firm to eliminate charge backs or order cancellation. For the firm to attain efficiency in its transaction processes there should be an efficient 24 hour monitoring system. EDI will enable the firm to respond to issues related to ordering process on real time basis (Stalling, 2010, p. 4). EDI will facilitate in business organizations being able to expand their market share. Ability of customers to place their orders online and receive their deliveries on time has eliminated geographical barriers to business using this technology. This implies that the business have been able to access wide range of consumers. In return, their sales volume has increased significantly thus adding to their profit.
Most of organization’s expenses are associated with employee salary as well as time taken in conducting business transactions. For businesses to effectively conduct their operations, they required to employee more staffs where some will be responsible of processing consumer orders while others do business promotion. EDI is eliminating most of these staffs with order processing as well as business promotion being conducted automatically. Money initially used in paying these employees is now adding to the profit of the business.
Improvement in security
In addition EDI will also result into an increment in security in the process of transmitting data across business partners. Security in the process of transmitting data across business partners will be ensured through incorporation of the concept of encryption. Over the past few years, there have been increased cases of data interception in the process of its transmission. This has resulted into increased losses for firms. With an increment in the level of technological innovation, security in conducting business transaction will be improved. Stalling (2010, p.67) defines encryption as the process through which information is transformed from its plaintext to an algorithm commonly referred to as a cipher. This transformation enables the data to be unreadable while in its transformation phase. Readability of the data is only possible amongst the authorized parties possessing special knowledge or the key.
Other technological innovations in relation to EDI which will result into increment in security in the process of transmitting the data across business partners include the digital certificate. Stalling (2010, p.87) defines digital certificate as an attachment to a Web page embedded data or an e-mail. Digital certificate ensures that there is identity verification between the sender and recipient.
Currently, management teams of firms in different economic sectors are realizing that efficiency with which they manage their supply chain has an effect on their market share. Reliance on faxes, emails and phone calls is no longer convenient due to the difficulty associated with their management. The high level of inefficiency associated with these information exchange mechanisms can result into disruption of business activities. Considering the high level of competition within the business environment, the efficiency with which a firm satisfies the customers’ demands plays a significant role in the course of the firm attaining competitive advantage.
According to Jordan, Suchard, Schmalz and Winkelbedrijven (1996, p.3), EDI is an integral part of the firm attaining a high level of efficiency in customer response. This is attained through timely replenishment of the products that the firm deals with. Jordan et al (1996, p.3) asserts that for a firm to succeed, it is paramount that there be a well implemented supply chain management. This will culminate into increased efficiency in the process of the consumers satisfying the choice of the goods that they require. In addition, the customers demand to satisfy their product and services needs in the most cost effective way. For the firm to attain this level of efficiency in meeting the market demand, accurate and fast flow of information is paramount. This means that a supply chain which is highly responsive is necessary. This form of communication can only be attained through integration of EDI.
In the process of conducting supply chain activities between different business partners, different computer networks are involved. This may limit the effectiveness with which business relationship is enhanced. This is due to the fact that EDI cannot thrive where there are differences in computer networks. Integration of EDI is the only way that the firm can be able to eliminate these bottlenecks. This means that integration of the firm’s EDI will result into an improvement in the firm’s communication process (Lean manufacturing Japan, 2010, para.4).
Integration of EDI in the operation of the firm will also culminate into integration of Quick Response (QR) in the operation of the firm. According to Lean manufacturing Japan (2009, para.3), EDI is a fundamental technology in the process of conducting order placement, receipt data and transmission of payment data between business partners.
Improvement in job scheduling
Development of EDI will also culminate into an improvement in process of undertaking job scheduling. Job scheduling.org (2010, Para. 3) defines job scheduler as a program which enables a firm to schedule, monitor units of tasks undertaken through the computer system. The job scheduler program has a capacity of initiating and managing various jobs automatically. This is attained by utilizing a well programmed job control language which requires human operator from time to time. The current rate of technological innovation is resulting into an improvement in the rate of job scheduler development. One of the ways through which job scheduling will be improved entails integration of Graphical User Interface (GUI). In addition, job scheduling tasks will be improved by having only one point of control for the entire work. Centralizing of job scheduling process within an organization will facilitate in coordinating operations within the business. Business operators will be able to identify some of the processes that hamper their performance and look for ways of improving them. There are some of the processes within business operations that are neglected. Centralizing process scheduling in the organization will ensure that all processes are allocated enough time. This will be achieved by integrating the job scheduler program with the computer networks such as EDI.
One of the current innovations related to EDI technology includes the Integrated Supply Chain (iSC) Web Scheduler which is enhancing transformation of data through computer networks. The iSC will result into simplification of communication between the firm and its trading partner. For there to be efficiency and effectiveness in conducting this communication, it is paramount for the trading partners to have well implemented computer network. Integration of the iSC Web Scheduler with the EDI system will enable the firm to improve on the process through which various jobs are scheduled and transmitted. As a result, it will be possible for the job to be executed immediately or at a later date. Through automated scheduling, the firm will be able to prepare printed job reports (Supply chain EDI, 2010, para. 3). In addition EDI will culminate towards the firm attaining a high level of efficiency in scheduling its shipment.
Efficiency in executing merchandising activities
In the operation of the firm, a number of activities are undertaken. Some of these activities relate to inventory management. Over the past few years, there has been increased integration of Vendor Managed Inventory (VMI) by both retail and manufacturing companies. According to Phani and Kumar (2003, p.2), the core objective of integrating VMI in the firm’s operation is attaining supply chain optimization. In an effort to attain a high level of efficiency in its operation, the firm’s management team has integrated the concept of Vendor Managed Inventory (VMI). VMI consists of a number of business models which are utilized by the buyer in the process of conducting a variety of merchandising activities. Considering the fact that the firm supplies a wide range of computer accessories to its customers, VMI enables the firm to provide its supplier with a wide range of product information. The supplier is required to ensure that the firm has the right amount of inventory such as the raw materials. Through effective VMI, the probability of the firm running out of raw materials is minimized or completely eliminated. This helps the business in ensuring that all its processes are never delayed due to scarcity of resources. VMI helps organizations in ensuring that they receive the right resources from their suppliers. Business organizations inform their suppliers of the required raw materials in advance hence making them receive the required amount of resources.
Phani and Kumar (2003, p.4) asserts that Vendor Managed Inventory entails the supplier managing the customers inventory level. This means that the supplier creates and fulfills the clients demand. This makes it to be considered as backward replenishment model. Currently, a large number of firms are configuring their VMI processes with various EDI methodologies. By implementing this strategy, the firm will attain a high level of efficiency in broadcasting their current inventory levels. This results from the fact that the firm will be able to update its inventory levels automatically by utilizing the Web Scheduler. In addition, it will be possible for the firm to update its inventory data on real-time basis. Phani and Kumar (2003, para.5) asserts that VMI is specifically designed to improve transfer of information between the firm, its retail customers and suppliers. Through the EDI, the suppliers have a chance of seeing the firm’s inventory levels through the internet. Color coded alerts can be integrated in the system to enable the supplier identify the potential overages or shortages. By integrating the firm’s VMI module with the EDI, the firm will be able to improve its relationship with its suppliers thus attaining a high level of efficiency in managing its inventories.
One of the factors that lead to organization not improving their profit is inability to ensure that they always have enough inventories. High lead time of orders made by organizations makes them stop operating at times due to shortage of products in their inventories. EDI has helped suppliers to monitor inventory level of businesses thus replenishing them on time. This has ensure that business operate throughout. EDI is enhancing business efficiency consequently leading to consumer loyalty.
VMI fulfillment process
According to Phani and Kumar (2003, p.4), activities related to order fulfillment process such as demand forecasting and preparation of purchase orders are conducted by the vendor. In executing these roles, EDI plays a significant role in ensuring that the firm attains a high level of efficiency in data communication. Through the EDI, it will be possible for the firm to attain a high level of efficiency in its VMI. This is due to the fact that the EDI is an essential element of the VMI process. Through the EDI, the vendors’ performance will be improved since it will be possible for the supplier to establish fill rates and inventory levels. In addition, VMI concept will result into an improvement of the firm’s supply visibility through improved production process, stock availability and improved inventory turnover. Phani and Kumar (2003, p.3) asserts that when a firm has a high efficiency in relation to information transmission, it will be possible for the firm to be customer centric. This is due to the fact that the firm can be able to be effective in its production process thus producing goods which meets the customers demand.
In its VMI process, Phani and Kumar (2003, p.5) asserts that a firm is obliged to create the orders and to conduct effective forecasting. On the other hand, it is the suppliers’ role to generate a stock plan for the firm. In addition, the supplier is required to send the shipment notices to the clients before actual shipment is undertaken. After sending the ordered goods, the vendor sends the respective invoice to the firm. In addition, the firm to cross checks the goods sent with the invoice. Through EDI, the firm can be able to conduct electronic payment to its suppliers (Phani & Kumar, 2003, p.4).
Conclusion
Development of e-commerce technology has culminated into improvement of business perfornance in different economic sectors. This has resulted from innovation of different electronic commerce technologies such as the EDI. A large number of firms have integrated this technology in their operation. EDI has enhanced the process with which firms exchange information amongst themselves. This is due to the fact that EDI enables firm to exchange information electronically through computer networks. As a result, firms are able to exchange business information amongst them on real time basis. For EDI to thrive between a firm and its trading partners; there are certain EDI standards that must be incorporated.
Considering the increased rate of technological innovation, there is a high probability of the EDI technology witnessing rampant growth. This will culminate into an improvement in performance of firms in different economic sectors. By integrating EDI in the course of its operation, execution of various tasks will become more efficient. In addition, business processes will also be enhanced. EDI technology will result into an improvement in the process of the firm conducting stock availability management conducting stock availability management. Through the EDI, the ordering process will be more efficient. This will be attained by integrating EDI with firm’s VMI. Effectiveness in the ordering process will minimize the chances of the firm experiencing stock outs. This is due to the fact that it is the supplier who will manage the firm’s inventory level. The effect is that the supplier will always have sufficient amount of raw materials. This means that the firm will be able to undertake its manufacturing process more efficiently. By minimizing stock outs, there is a high probability of the firm increasing its profit levels. This is due to the fact that the consumers will become loyal to the firm upon obtaining the products that they require. This means that the firm will increase its sales revenue.Incorporating EDI in its operation will culminate into cost reduction in the firm’s ordering process. This will be attained through reduction of paper work.
Incorporating EDI in its operation will culminate into an improvement in the firm’s supply visibility. This will be attained by enhancing the firm’s entire supply chain. The various types of supply visibility that will be improved include product, process, and partner and profit visibility. Businesses will be able to effectively place their orders and update the suppliers upon receiving the deliveries.
Through EDI technology, the firm will benefit through an improvement in security of the business in the process of transmitting data across business partners. This will minimize the probability of the firm experiencing loss in its operation. One of the ways through which security will be ensured is by integrating data encryption concept. This will ensure that information in transit is not intercepted till it reaches its destination. EDI will also result into an improvement in the process of undertaking scheduling and planning. Effectiveness in job scheduling will make the shipment process to be more effective. Another benefit accrued from EDI by business organizations is improvement in their profitability. Businesses are able to effectively communicate with their trading partners hence ensuring that they always have adequate products for sale. Improvement in business efficiency helps businesses retain and attract more customers. Ability of EDI to eliminate geographical barriers helps business organizations in expanding their market share. In return, sales volume of businesses increases adding to their profit. Generally, integrating electronic data interchange technology within business operations has helped in streamlining operations. Business operators have been able to forecast their sales hence liaising with suppliers to ensue that they have adequate inventory.
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