Electronic data interchange
Electronic data interchange can enable firms to achieve remarkable increases in speed, even as they simultaneously realize the benefits of improved precision in the transmission of critical information. Nonetheless, if a firm chooses to implement EDI for competitive advantage, the firm should perceive EDI as a standardized infrastructure upon which it can re-engineer its business processes and consequently gain a long-term, strategic advantage. This is because users cannot rely on EDI alone to provide a sustainable competitive advantage. In order for the advantage derived from EDI to last, EDI needs to be integrated with a firm’s organizational structure.
Recent extensive research into electronic data interchange suggests that firms should not look to derive short-term competitive benefits from electronic document exchange but instead focus on systems integration as well as business re-engineering in which EDI offers greater, lasting benefits. Integration will enable electronic data interchange to support a strategic approach to business, providing significant comparative advantages to firms that implement it.
Significant long-term changes in the operations of an organization can only occur when EDI is integrated with internal application systems to allow a flawless connection to organizational functions such as order entry, purchasing and inventory management. A firm can derive long-term strategic benefits from EDI by integrating existing organizational systems and functions with information obtained from external sources, or integrating the existing organizational systems and functions themselves. The later can change the firm’s entire structure.
A firm that links EDI messages with in-house systems is likely to improve its internal operations by minimizing or getting rid of administrative overheads. Consequently, firms can gain the lasting strategic benefit of Electronic data interchange by effectively integrating the technology into their organizations in such a manner that they can constantly add new competences to the system, even as they derive cost savings from increased output and decreased costs as a result of EDI.
References
Schoening, H. M. (2005). Business management of telecommunications (1 ed.). New Jersey: Pearson/Prentice Hall.
Swatman, P. M. (2009). Electronic Data Interchange: Platform for a strategic business focus. Retrieved July 27, 2011, from www.uni-koblenz.de: http://www.uni-koblenz.de/~swatmanp/pdfs/swatman.bled92.pdf
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