E-COMMERCE CIT 245 By Mohammed A. Saleh

EDI and Business Organizations that use EDI C Plus Plus 4/14/2017 EDI and Business Organizations that use EDI It has potential applications where the administration processes are computerized. Extensive users of EDI: Bhs UK and European multiple retailer dealing with fashion goods. Deals with about 400 suppliers on a regular basis and all orders are sent by EDI. It uses JIT supply With JIT it determines what the suppliers have in stock and for the supplier to anticipate demand by seeing Bhs sales data. Programming Languages

C Plus Plus 4/14/2017 EDI and Business Uses EDI to confirm supply delivery and communicate bar code information (delivery and packaging) Use of EDI is the back-end to an integrated merchandising, sales and replenishment system. Lucas Rist Car manufacturer using EDI as a facilitator of JIT manufacturing system. Responsible for electrical works on Rover cars. Programming Languages

C Plus Plus 4/14/2017 EDI and Business Rover sends L R a 10-day plan and later a provisional order, both by EDI. L R notifies Rover of when the parts will be dispatched. Rover adjusts it production schedule according. One missing part by Rover causes the production line to stop. TeleOrdering Book trade EDI system Programming Languages

EDI and Business TeleOrdering Book trade EDI system C Plus Plus 4/14/2017 EDI and Business TeleOrdering Book trade EDI system Bookshops view a monthly catalogue; Book in Print, to look up any book in print but not in stock. If a customer (bookshop) wants a book, the book ordering system will format an EDI order Makes it easy for publishers to market and quickly sell their books Programming Languages

EDI Trading Patterns Hubs and Spokes C Plus Plus 4/14/2017 EDI Trading Patterns Hubs and Spokes EDI has been adopted by large retail organizations. They then form extensive e-trading networks with their supplier. This EDI flow forms the hub and spoke pattern, where the major organization is the hub and suppliers are the spokes. Orders sent from the hub to the spokes, who then transmit EDI invoices after the goods have been delivered. Programming Languages

EDI Trading Patterns Spoke order invoice order Hub order Spoke Spoke C Plus Plus 4/14/2017 EDI Trading Patterns Figure 1: Hub and Spoke Trading Patterns Spoke order invoice order Hub order Spoke Spoke invoice invoice order invoice Spoke Programming Languages

C Plus Plus 4/14/2017 EDI Trading Patterns Initially implemented with minimal suppliers then with time the system is extended In this pattern EDI is made a condition of trade Bray (92): “…..If the Hub says ‘ thou shall trade electronically, the supplier have little option …” Tesco: “EDI or DIE Leads to closer user communities The hub chooses the VADS and EDI standards. Programming Languages

C Plus Plus 4/14/2017 EDI Trading Patterns Works well if a supplier serves a single hub, but less satisfactory if the supplier trades with multiple hubs. With multiple hubs the supplier will join at least two VADS and follow a different EDI standard. It’s a complex pattern: Spokes intertwined and hubs are spokes of other hubs. Different EDI standards used. VADS interconnectivity is a ‘nightmare..!’ Programming Languages

EDI Trading Patterns Overlapping User Communities C Plus Plus 4/14/2017 EDI Trading Patterns Overlapping User Communities A spider web to the spoke organization Figure 2: Overlapping Supply Networks Super Food Sava Food Save on Food Nuts Now Best Bread Fresh Fruit Mighty Meat Very Veg Programming Languages

C Plus Plus 4/14/2017 EDI Trading Patterns It shows conflicting requirements by the demanding customers. EDI development seems to result in network expansion and complexity. Differing patterns of EDI More patterns developed They vary in the range of trading links established and type of messaging used. Retailing is a sector involving massive e- trading and a pattern has been developed: Programming Languages

EDI Trading Patterns Major retail chains with EDI links C Plus Plus 4/14/2017 EDI Trading Patterns Major retail chains with EDI links Suppliers with links to several of the major retail chains. Spread of EDI to second tier supplier. Suppliers acting at different layers increase the network complexity. Shown on Figure 3: Programming Languages

EDI Trading Patterns Super Food Sava Food Save on Food Nuts Now C Plus Plus 4/14/2017 EDI Trading Patterns Figure 3: Extended Supply Networks Super Food Sava Food Save on Food Nuts Now Best Bread Fresh Fruit Mighty Meat Very Veg Ready Ralsin Pete’s Pears Fred’s Flour Avril’s Apple Programming Languages

Henry’s Office Supply Wholesale C Plus Plus 4/14/2017 EDI Trading Patterns An alternative is the wholesaler pattern Figure 4: Wholesaler Networks Kent council Instant Insure Benny Bank Andy Agent Sue Shop Henry’s Office Supply Wholesale Penny Pens Pam’s Pencils Pete’s Paper Programming Languages

EDI Trading Patterns Co-operative User Communities C Plus Plus 4/14/2017 EDI Trading Patterns Co-operative User Communities A good example is the TeleOrdering network, all publishers and book retailers, large and small can take part in the network. This is setting up a co-operative community Open User Communities cater for an established trading relationship with EDI evolution Principle barriers to EDI evolution of open EDI trade: Programming Languages

EDI Trading Patterns Networks C Plus Plus 4/14/2017 EDI Trading Patterns Networks Using more than one VADS in e-trading, due to cross sector boundaries. Defining the membership of a VADS is a problem. EDI Standards Standards have been developed on a national basis or industry basis. For open trade a universal standard is required. EDIFACT is trying to encompass the needs for all. Programming Languages

EDI Trading Patterns Product Coding C Plus Plus 4/14/2017 EDI Trading Patterns Product Coding Product codes and quantity they imply. The need to use an acceptable coding system, keeping in mind different sectors exist. E.g. ANA code for food or an ISBN code for a book Programming Languages

EDI Transactions EDI Trade Exchanges C Plus Plus 4/14/2017 EDI Transactions EDI Trade Exchanges Main use of EDI is for the execution and settlement exchanges of the trade cycle. Exchanges take place within an agreed trade relationship and in the context of a formal contract. Basic pattern: Customer sends an order Supplier send goods + delivery note Supplier follows up delivery note with an invoice Customer makes payment against the invoice Programming Languages

Figure 5: EDI Trade Document Exchanges C Plus Plus 4/14/2017 EDI Transactions Figure 5: EDI Trade Document Exchanges Customer Supplier EDI order del. note invoice payment Programming Languages

EDI Transactions Order C Plus Plus 4/14/2017 EDI Transactions Order A contract for one specific consignment of goods Specifies what is wanted, quantity, where to be delivered and who will pay. Order allows amendment by customer. Form of order widely used in commercial transactions is the ‘call-of-order’. Call-of-orders will be large quantities and for an extended period the pros is in using EDI. Call-of-order – specifies what goods are needed but not when and where to be delivered. Programming Languages

EDI Transactions Delivery note C Plus Plus 4/14/2017 EDI Transactions Delivery note A documentation stating where goods are from and why they have been sent. Entered into the computer system and matched with the original order Helps to identify any discrepancies. Invoice Once goods have been delivered an invoice is issued Issued at the end of each order or at end month. Programming Languages

C Plus Plus 4/14/2017 EDI Transactions EDI invoicing ensures reliability and accuracy of the invoice. No issues of lost invoices in the post. Payment Payment sent to the bank by using an EDI payment message Makes the whole process fast and swift. Programming Languages

EDI Adoption and Maturity C Plus Plus 4/14/2017 EDI Adoption and Maturity Business System Evolution Development of computers; mainframes, micro to mini led to the growth of organizations. Merging computers and telecomm has resulted into networking (LANs, MANs, WANs) Networks have been used to integrate organization's business processes like customer file and interfaces to accounting systems. Programming Languages

EDI Adoption and Maturity C Plus Plus 4/14/2017 EDI Adoption and Maturity The integration of systems has been a factor for improving customer services and customer care. However the integration systems stopped at the companies back and front doors. Inside the company the order processing system formulated the replenishment demand, updated the stock file and made a posting to the accounting system but the order was printed on paper. Programming Languages

EDI Adoption and Maturity C Plus Plus 4/14/2017 EDI Adoption and Maturity These difficulties and inefficiencies is the Inter-organizational System (IOS). The prime technology of IOS is EDI. The development of EDI and IOS has changed the inter-organization business practices in much the same way as the evolution of IT and IS has radically changed intra-organizational procedures. These developments of BIS can be represented as three stages: Programming Languages

EDI Adoption and Maturity C Plus Plus 4/14/2017 EDI Adoption and Maturity Business Applications Integrated Business Systems Inter-organizational Systems Internet enabled Systems Programming Languages

EDI Maturity Represented a six stage maturity model: Discovery C Plus Plus 4/14/2017 EDI Maturity Represented a six stage maturity model: Discovery Introductory Integration Operational Strategic Innovative Programming Languages

EDI Maturity Opportunities and implications of each stage are: C Plus Plus 4/14/2017 EDI Maturity Opportunities and implications of each stage are: Discovery An organization choosing to adopt EDI to gain competitive advantage or solve and admin problem Arises from the realization from competitors. Introductory Organizations start with a pilot scheme Initiators of EDI networks choose one or two trading partners with which to pilot a message. Programming Languages

EDI Maturity Requires investment; direct costs include H/W and S/W C Plus Plus 4/14/2017 EDI Maturity Requires investment; direct costs include H/W and S/W Does not result in any cost saving or efficiency gain. Integration Further system development after gaining practical experience. Interfacing the EDI software with business application so the EDI messages can be transferred electronically and automatically between the two systems. Programming Languages

C Plus Plus 4/14/2017 EDI Maturity To establish the EDI service the EDI software can be bought off-the-shelf. It is often an expensive stage. Operational Integration realizes the EDI benefits of saving time and avoiding errors. Real benefits come with significant number of trading partners. The conversion of the major part of the trade cycle, both in volume of trading partners and in numbers of message types is the known as the operational stage. Programming Languages

C Plus Plus 4/14/2017 EDI Maturity This stage speeds up transactions because of converting the trade cycle to operate electronically. Strategic Saving are made by replacing paper documents by their electronic equivalent Real opportunities come from making changes to established business practice. Significant progress made in the operational stage brings out these opportunities. Programming Languages

C Plus Plus 4/14/2017 EDI Maturity The implementations of these changes however has to be strategic. Possible areas of change: Document matching considerable problem in order processing Customers match deliveries to orders and invoices and suppliers payments to invoices. Complexity is brought about by disparate doc types, part deliveries and incorrect codes The use of EDI makes the process easier. Programming Languages

C Plus Plus 4/14/2017 EDI Maturity Time between formulating a replenishment demand to the order being processed by the supplier takes a long time. EDI give dramatic time-saving Eliminated stock holding Development of JIT and quick response supply. Programming Languages

EDI Maturity Innovative C Plus Plus 4/14/2017 EDI Maturity Innovative Establishing an operational EDI infrastructure gives the possibility of changing the nature of the product and provision of new services. Open up new possibilities of competitive advantage. an example, Rover Cars have stopped producing cars for stock and only produce when they have a dealer’s order. EDI has reduced the supply and production time . Programming Languages

Assignment Pick an organization that has implemented EDI. C Plus Plus 4/14/2017 Assignment Pick an organization that has implemented EDI. Try to identify the EDI maturity stages that, that organization has undergone. Briefly explain each stage. Requirements Word-processed – Times New Roman, 12 Should not exceed 2 pages Hand-in date 14th May, 2009 (after the lecture) Programming Languages