Role of EDI (Electronic Data Interchange) in Global Supply Chain Management*

By tracking component parts, ICT enables a firm to optimize its production scheduling based on when the components are expected to arrive. This allows the firm to accelerate production when needed. Such accelerateion is possibel by pulling key components out of the regular supply chain and having them flown to the manufacturing plant.

At preset, EDI (Electronic Data Interchange) is used by firms to coordinate the flow of materials into manufacturing, through manufacturing and to customers.

In EDI, electronic links are used to

  • place orders with suppliers
  • register parts leaving a supplier
  • track the orders
  • register the arrival of orders

As a result of EDI, suppliers, shippers and the purchasing firm can communicate with each other in no time delay. This increases the flexibility and responsiveness of the global supply system.

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Also, EDI eliminates paperwork. Good EDI systems can help to decentralize materials management decisions to the plant level by giving corporate level managers the information they need for coordinating and controlling decentralized materials management groups.

Talking about history, before the internet became a mjor source of communication, firms and their suppliers had ti purchase expensive proprietary software to implement EDI. But, less expensive web based EDI has managed to dominate the market now.

Thus, web based EDI has transformed the management of globally dispersed supply chains. This allows even small firms to achieve a better balance between demand and supply. Today, not using a web based EDI can mean a competitive disadvantage.

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