the receiving computer to translate the information is directly dependent on the level of adherence to the standard (Quinn, 1991). Data is transmitted over voice or data lines using a value-added network (VAN) resulting in more accurate transmission at lower costs than traditional methods of business communications. Value-added networks are traditionally maintained by third-parties; these companies typically charge a transaction fee for their use, and restrict access to member companies (Clarke, 2001). Data is translated from format to format, and provides message storage and retrieval functions. EDI became the standard for exchanging business documents because it improved the cost structure of three business fundamentals: order entry, transaction, and payment.
The primary purpose of EDI is to provide a communications standard that promotes the interchange of common business information. The first use of EDI was in the purchasing and order areas, eliminating the use of traditional purchase order documents in order to achieve quicker response time. One of the first companies to integrate EDI in their business procedures was American Hospital Supply Corporation (AHSC) in the early 1960s, which established a purchase/ordering system that linked their customers directly to them. This system was later refined and eventually led to the development of Analytic Systems Automated Purchasing (ASAP). This allowed hospitals to key their own orders directly into AHSC's system, which reduced the hospital's lead time and inventory costs. AHSC gained a competitive edge because the competition did not immediately develop their own systems (Manus, 1993).
The rail and transport industries were also early adopters of EDI, and the standardization of documents within that industry led to the creation of the United States Transportation Data Coordinating Committee (TDCC) in 1968. This committee sought to coordinate the development of transla...