EDI Uses
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Electronic Data Interchange (EDI) is the movement of business documents in a structured, machine-retrievable data format. This permits data, particularly documents, to be transferred without rekeying from a business application in one location to a business application in another. Sometimes EDI is used within a single organization; increasingly, EDI is used among several organizations. When EDI is used, paper documents are eliminated from business transactions, enabling transactions to take place faster and with greater accuracy than in the past. Transaction time is decreased because documents do not have to be mailed (or faxed), and there is no need to rekey information into the receiver's computer system. As a result of this, EDI is becoming increasingly popular as a way for businesses to achieve greater productivity and enhance their relationships with customers and vendors alike. This research examines EDI and considers its implementation, and examines the experience of one company, Black & Decker, with EDI.EDI developed as businesses began implementing computers on a wide scale. Initially, companies realized that files could be transferred from one department to another via mainframes; as workstations and personal computers became more popular, the "sneaker net" emerged as workers would trade files on floppy disks. This primitive network gave way to current networked systems in which computers can easily share files and information stored
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w be linked on-line to their suppliers so that the order can be placed without the manual process. Typically, the manual process involves filling out a purchase order, having it approved in writing, mailing it to the company, and waiting for it to be entered into the supplier's system, after which it can be shipped (Manus, 1993, p. 43).
An extension of JIT, which offers advantages to both the buyer and the supplier, is providing an interface between billing and accounts payable systems with inventory systems through EDI. The whole cycle from ordering to paying the bill can be generated electronically. Once the order is received by the supplier, an electronic bill can be generated by the supplier's system. When the order is received by the buyer, the payment can be matched with the supplier's electronic bill, and a payment can be generated. Taking this one step further, an electronic funds transfer can be initiated by the buyer's accounts payable system instead of requiring that a check be issued. In this way, EDI has allowed keying of data to be needed only once in this process from ordering to payment (Partch, 1993, p. 30).
Control Considerations
Changing from a paper system, or a limited management information that does
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Approximate Word count = 2061
Approximate Pages = 8 (250 words per page)
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