Merits and Demerits of Electronic data interchange (EDI)

Electronic data interchange (EDI) is the electronic exchange of business information—purchase orders, invoices, accounts of lading, inventory facts and figures and various kinds of confirmations—between organizations or trading partners in normalized formats. EDI also is utilised inside one-by-one associations to transfer data between distinct partitions or agencies, including finance, buying and shipping. When the focus of EDI hubs on payments, particularly between banks and companies, the period financial EDI (FEDI) is sometimes utilised. Along with digital currency, electrical devices catalogs, intranets and extranets, EDI is a foremost foundation of e-commerce overall.

Merits of Electronic data interchange (EDI) :

Save Money:
The cost of paper and paper processing is incredibly high contrasted to a correctly applied EDI program. RJR Nabisco estimates that processing a paper purchase alignment costs the business $70. Processing an EDI purchase alignment decreases the cost to 93 cents.

End Repetition:
If your selling partner likes a exact replicate of a document, instead of calling you they easily ascertain their mailbox. This outcomes in a great time savings from not having to exact replicate and fax/mail copies of business articles.

Save Time:
EDI furthermore saves time over paper processing since the transfer of data from computer to computer is self-acting. There is no need to re key information with EDI. And the possibility for error drops to near none, with no data application.

Improve clientele Service:
The fast transfer of enterprise documents and assessed decline in mistakes allow you to do business faster and more efficient. KMart is an demonstration of a retailer that applies a Vendor Stock Replenishment (VSR) program. With VSR, the KMart warehouse sends supply as their EDI system accounts it and automatically bills the client. It can cut weeks from the alignment fulfillment cycle and ensures that product is habitually on the ledge.

Elaborate Your Customer Base:
Therefore with improved clientele service, you can finally elaborate your clientele base. Many large manufacturers and retailers are ordering their suppliers to institute an EDI program. So, when assessing a new product to carry or a new supplier to use, the ability to do EDI is a large-scale in addition to.

Demerits of Electronic data interchange (EDI):

Too Many measures:

There are too numerous measures bodies developing standard documents formats for EDI. For example your company may be following the X12 benchmark format, while your selling colleague pursues the EDIFACT benchmark format.

Changing Standards:

Each year, most measures bodies publish modifications to the measures. This impersonates a difficulty to EDI users. You may be utilising one type of the benchmark while your trading partners are still utilising older versions.

EDI is Too Expensive:

Some companies are only doing enterprise with others who use EDI. If a business likes to do enterprise with these associations, they have to apply an EDI program. This expense may be very exorbitant for little companies.

Limit Your selling Partners:

Some large companies are inclined to halt doing enterprise with enterprises who don't comply with EDI. For example Wal Mart is only doing business with other companies that use EDI. The outcome of this is a limited group of persons you can do business with.