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The advantages and disadvantages of EDI

Asked by Stephie | Nov 5, 2003 | AS Level > Information Technology > Coursework
Stephie asks:

This is for the AVCE ICT course, Unit two, I just need some help and some pointers on advanages on the advantages and disadvantages to those who send it and recieve it. many thanks. help would really be appreciated

etutor answers:
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Advantages of EDI

Save Money

The cost of paper and paper processing is incredibly high compared to a properly implemented EDI program. RJR Nabisco estimates that processing a paper purchase order costs the company $70. Processing an EDI purchase order reduces the cost to a mere 93 cents.

End Repetition

If your trading partner wants a copy of a document, instead of calling you they simply check their mailbox. This results in a great time savings from not having to copy and fax/mail copies of business documents.

Save Time

EDI also saves time over paper processing since the transfer of information from computer to computer is automatic. There is no need to rekey information with EDI. And the chance for error drops to near zero, with no data entry.

Improve Customer Service

The quick transfer of business documents and marked decrease in errors allow you to do business faster and more efficient. KMart is an example of a retailer that implements a Vendor Stock Replenishment (VSR) program. With VSR, the KMart warehouse sends stock as their EDI system reports it and automatically bills the client. It can cut weeks from the order fulfillment cycle and ensures that product is always on the shelf.

Expand Your Customer Base

Thus with improved customer service, you can ultimately expand your customer base. Many large manufacturers and retailers are ordering their suppliers to institute an EDI program. So, when evaluating a new product to carry or a new supplier to use, the ability to do EDI is a big plus.

Disadvantges of EDI

Too Many Standards

There are too many standards bodies developing standard documents formats for EDI. For example your company may be following the X12 standard format, while your trading partner follows the EDIFACT standard format.

Changing Standards

Each year, most standards bodies publish revisions to the standards. This poses a problem to EDI users. You may be using one version of the standard while your trading partners are still using older versions.

EDI is Too Expensive

Some companies are only doing business with others who use EDI. If a company wants to do business with these organizations, they have to implement an EDI program. This expense may be very costly for small companies.

Limit Your Trading Partners

Some large companies tend to stop doing business with companies who don't comply with EDI. For example Wal Mart is only doing business with other companies that use EDI. The result of this is a limited group of people you can do business with.

15 student responses
thank you so much for this help you have provided.
responded Nov 26, 2003 4:54:34 PM GMT
Thank you so much for your help
responded Nov 26, 2003 4:55:38 PM GMT
miss jack
miss jack
why bank extra charges for different methods of payment
responded Feb 28, 2004 5:00:44 PM GMT
Keith B
Keith B
Thanx alot for the help provided hopefully i might pass now
responded Mar 2, 2004 8:11:19 PM GMT
james dawson
james dawson
I am writing to you to see whether you can help me with a college assignment. I am ivestigating the advantages and disadvantages of EDI. I found your web site very useful, however, I have a problem with finding the disadvantages of EDI for a supplier. Please could you reply to me at my hotmail address with some slight information to help me. Thankyou.
responded Mar 26, 2004 1:15:46 PM GMT
This has been a great help thank you all! :D
responded May 3, 2004 11:28:17 PM BST
thnx for all those infos! they were very useful ;)
responded May 9, 2004 10:28:41 PM BST
I was just about to give up on the disadvantages of using EDI until i found this website. Thanx alot it has really helped me
responded May 11, 2004 12:54:54 PM BST
Macmillan College
Macmillan College
Hia. im doing tht unit also, could you please let me kno if you found any disadvantages of EDI for the supplier please xXx
responded May 13, 2004 12:57:43 PM BST
i need help with unit 23 in ict avce task 2
responded May 17, 2004 10:04:10 AM BST
Giles Colman
Giles Colman
it has been so good to find info on everything i wanted
responded May 20, 2004 12:51:21 PM BST
whatare theattributes forpre releasesystems analysis task 1
responded Nov 16, 2004 11:57:05 AM GMT
aww kl ..this realli helps ..thnx!! xXx
responded Dec 2, 2004 5:27:35 PM GMT
Thnx, this info really helped, unit 2 is deadly!!!!
responded Jan 7, 2005 5:48:03 PM GMT

thank you for letting me join this email address plz dont write back to this address thank you

responded May 3, 2006 12:34:06 PM BST
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