Electronic trading is rapidly replacing human trading all over the world. Many large organizations such as high tech, automotive and retail companies already recognize the significance of Electronic Data Interchange (EDI) in their supply chain process. By replacing manual processes, they are able to manufacture high volumes of products without increasing labor costs.
What should drive businesses from investing in EDI and achieving better B2B integration? There are various reasons on why businesses need to invest in EDI. The most pressure comes from customers. Other reasons include regulatory compliance, pressure from competitors, suppliers and 3PL. Although large businesses require electronic trading with its suppliers, consumers and partners, the meaning and benefits of EDI is not clear to them. The need for higher ROI only comes second.
So, how does EDI adoption impact the ROI? By automating trade with EDI, businesses can minimize manual work and reduce labor costs. Suppliers can increase the speed of order to cash process and reduce errors in order handling. Buyers can also benefit from less money tied to stock. There are also indirect benefits noted from the use of EDI, such as faster delivery times, more secure trading relationship, and more sales when used with a specific customer.
Despite the many direct and indirect benefits of EDI to companies, only a small percentage of businesses are trading with their consumers and suppliers electronically. They fail to recognize the important implications of electronic trading, including reduced cost of transactions, greater liquidity, greater competition, and increased transparency. Aside from decreased transactions costs, the ease and convenience