After installing an electronic data interchange, carmella's gift shop was able to reduce the amount of time between the recognition that an order needs to be placed and the arrival of the needed merchandise.

After installing an electronic data exchange, the Carmella souvenir shop can reduce time, costs and errors.

Further Explanation

Understanding EDI (Electronic Data Interchange) is one method of business exchange that refers to a highly commercial business field by using a standard format that has been determined and mutually agreed upon by most existing organizations.

The purpose of EDI is to be able to help business people to process documents with other parties accurately, quickly and efficiently in their completion. If the process is carried out as well as possible, then there will be very good communication between fellow business people both internally and externally.

The degree of EDI application.

Three different levels of usage, namely:

1. First-level users, only one or two sets of transactions are transmitted to a limited number of trading partners.

2. Second-level users, many sets of transactions are transmitted to several trading partners, transcending industry lines.

3. Third-level users, not just many sets of transactions that are transmitted to many trading partners, but the company's computer applications are tailored to the EDI approach.

Level one and two objectives are to turn paper documents into electronics.

Effects of EDI Application:

- Competitor Pressure

- Power exercised

- Internal needs

- Top management support

Advantages in using EDI

Time savings. EDI replaces paper-based transactions into electronic-based transactions. This has saved the time that was previously allocated for writing, printing, and shipping through postal services. Cost savings. Costs for equipment, stamps, postal services, employees and officers can be reduced because the EDI system has simplified all of this in a systematic and automatic order. Error minimization. Errors that often occur in manual work are common because work using paper is done by humans, while the EDI system is a computer-based system so that errors in the process of exchanging information can be reduced by computer calculations. Fast response. The traditional paper ordering method takes days for transaction documents to reach their delivery destination. This waiting time has significant value for business people. EDI systems that use electronic forms in the delivery process can instantly send transaction documents to business people so they have more time to determine business maneuvers. Cash flow. Trading cycles become faster as the order and delivery process speeds up which also affects the speed of payment. The rapid increase in payments will have an impact on increasing cash flow. Opportunities in business. The number of customers is increasing and they will usually only do business with suppliers who use EDI. The competition also increases in starting a new business because of the use of EDI. The supermarket industry and vehicle assemblers are examples of businesses that use EDI a lot in their partnerships.

Learn more

definition of EDI (Electronic Data Interchange)

The purpose of EDI

The degree of EDI Application

Advantages in using EDI

Details

Grade: High School

Subject: Business

keywords: EDI (Electronic Data Interchange)

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