Organizations are re-examining the ways that products and information flow along the supply chain. For the effective management of the supply chain, the company needs to implement solutions such as inter-enterprise logistic management, tools such as bar-coding, electronic catalogs, EDI, e-procurement solutions, B2B exchanges and the like. Electronic Data Interchange (EDI) is defined as the inter-process (computer application to computer application) communication of business documents in a standardized electronic format. EDI is a subset of Electronic Commerce that recognizes the need for interpersonal (human to human) communications, monetary transfer, and the sharing of common databases. Therefore electronic commerce is broader in scope than EDI.

EDI essentially unifies the format in which information is exchanged. This helps a business by providing a single-view about customers and transactions eliminating possibilities of error. Thus the barriers to entering an electronic marketplace are greatly eased. A prospective supplier only needs to go to a single electronic marketplace. To communicate with each other, the various participants in electronic commerce need to harmonize their procedures and processes. Examples include common trading partner registration and the adoption of standard implementation conventions for EDI messages.

EDI can be used in any organization that transacts business with outside partners like suppliers and delivery chain partners.

The typical members of the chain that EDI cuts across include manufacturers, retailers, banks, transporters, customs, ports and so on. Specifically, EDI is very helpful in international trade, as a large number of agencies are involved and high speed transmission of information is required for efficient, easy and low-cost processing of the voluminous paperwork involved. EDI reduces administrative delays and procedural complexities and reduces the transaction time taken in clearances.

There are two ways of implementing EDI depending on the budget and the scale of usage that one plans. The quickest way to implement EDI is to use a "service bureau" like NIC or VSNL, in India. A service bureau is an outside company that receives your information via fax or other means then converts it to EDI for transmission to your trading partner. When a purchase order or information is received via EDI from a trading partner, the service bureau converts it into a paper document and faxes it to you.

The other alternative is to implement one’s own EDI system. This involves purchasing EDI software, installing it on your system, integrating EDI with your core business applications, synchronizing formats and other information with your trading partner, and perhaps training someone to handle EDI activities. It also requires signing up with a third-party network service provider to handle EDI traffic.

The other impact of EDI is cultural. EDI transactions and the documents therein cannot be tampered. One record of the transaction travels through the entire chain. Therefore, EDI cannot survive in an environment that seeks to manipulate the transaction in any manner. This is the reason that though EDI got introduced in India as early as 1992, it never got mainstream and widespread in its application and usage. There were heavy opposition from employees of various government agencies to the introduction of EDI because it meant a loss of ‘freedom’ to handle the transaction.

The commerce ministry has selected regulatory and facilitatory organizations for coordinated EDI implementation. These are the customs, the Directorate-General of Foreign Trade, regional licensing authorities, the Airports Authority of India, scheduled banks, airlines, the Reserve Bank of India, the Directorate-General of Commercial Intelligence & Statistics, Chambers of Commerce, inspection agencies, export promotion organizations, Port Trusts, the Container Corporation of India, and insurance companies.

The dotcom meltdown and the tech crash have brought home an old truth—technology is not a solution, it is what you do with it that counts. Similarly, e-procurement by itself is irrelevant. It is how well ones applies it that makes all the difference.

TEAM DQ
(Compiled from various Web sources)

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