The Impact of EDI on Competitiveness in Retail Supply Chains

  June 14, 2012       By Ray Atia
For many years, developments in the information technology have caused many companies to establish such technology within their offices and to extend the same as they interact with other corporate in their various business transactions. This is an initiative put in place to ensure easy and expeditious flow of information and other material along the supply chain. In this article, we shall concentrate on the findings of a pilot project on the electronic data interchange (EDI) carried out in the republic of Ireland under the retail sector. The interaction process between buyers and sellers determine the need for data exchange. Under normal business transaction, such data includes stock information, delivery notes, sales invoices, Purchase order forms and many more trading documents. Given the accruing rate of business interaction, many companies are moving away from use of paper and adopting electronic transactions. There is a confusion in the definition of EDI in the context of inter organizational systems. This has been documented by the EDI professionals. One kind of confusion is the interpretation of EDI as a communication between one computer and another. Definitely, this is an incomplete definition as it does not clearly open up the meaning of EDI. Due to the dissatisfaction of the initial definition, some people have come up with a definition which classifies EDI transaction under the heading of electronic trading. Out of this argument, three kinds of systems crop up: They include computer to computer; person to person and computer to person transaction. According to them, there are many ways of exchanging data electronically. For example, from a magnetic sent courier to permanent linking line systems. Under the circumstance where a company needs to link up with many suppliers, a company cannot solely depend on a situation where only computers communicate with various customers on fixed lines. There must be persons involved. Such scenarios are common in the retail sector where the firms are linked to many suppliers. In order to transfer data to a remote location, there is need to convert the document into EDI syntax (grammar) and relayed in a way that it is free from error and cannot be repudiated. The conversion process takes place at the premises where the document originated from. The example of this is the United Nations EDIFACT standard. After the conversion, the resulting data is then submitted to the intended destination through the value added network (VAN) provider. Apart from acting as a mail box, the service provider carries out a number of duties. One is that the service stores messages for a long period of time hence enables users to access information that has been lost with ease. Secondly, it has a no repudiation feature for audit purposes in that it records all transactions and relays data to communicating parties. This is important as it helps avert chaos in case of failure of the destination system for it has a 24hour basis system which takes in data and holds it until the intended reception is ready to access it. Once the data reaches the recipient, it then downloaded to the system that converts it from the syntax format to a normal format that can be comprehended. Here, EDI can be described as the interchange of trading documents within internationally agreed formats and standards using value added services. This is the outcome of a pilot project carried out in the republic of Ireland. It is basically about the findings of electronic data interchange. The article tells us more about the mode of work of EDI in terms of supplier retailer information exchange.