1. E-COMMERCE
CIT 245
By Mohammed A. Saleh

2. EDI and Business Organizations that use EDI
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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.
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3. C Plus Plus
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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.
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4. C Plus Plus
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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
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5. EDI and Business TeleOrdering Book trade EDI system
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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
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6. EDI Trading Patterns Hubs and Spokes
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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.
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7. EDI Trading Patterns Spoke order invoice order Hub order Spoke Spoke
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EDI Trading Patterns
Figure 1: Hub and Spoke Trading Patterns
Spoke
order
invoice
order
Hub
order
Spoke
Spoke
invoice
invoice
order
invoice
Spoke
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8. 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.
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9. C Plus Plus
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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..!’
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10. EDI Trading Patterns Overlapping User Communities
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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
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11. C Plus Plus
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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:
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12. EDI Trading Patterns Major retail chains with EDI links
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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:
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13. EDI Trading Patterns Super Food Sava Food Save on Food Nuts Now
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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
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14. Henry’s Office Supply Wholesale
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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
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15. EDI Trading Patterns Co-operative User Communities
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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:
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16. EDI Trading Patterns Networks
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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.
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17. EDI Trading Patterns Product Coding
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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
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18. EDI Transactions EDI Trade Exchanges
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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
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19. Figure 5: EDI Trade Document Exchanges
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EDI Transactions
Figure 5: EDI Trade Document Exchanges
Customer
Supplier
EDI
order
del. note
invoice
payment
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20. EDI Transactions Order
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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.
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21. EDI Transactions Delivery note
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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.
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22. C Plus Plus
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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.
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23. EDI Adoption and Maturity
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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.
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24. EDI Adoption and Maturity
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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.
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25. EDI Adoption and Maturity
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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:
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26. EDI Adoption and Maturity
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EDI Adoption and Maturity
Business
Applications
Integrated Business
Systems
Inter-organizational
Systems
Internet enabled
Systems
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27. EDI Maturity Represented a six stage maturity model: Discovery
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EDI Maturity
Represented a six stage maturity model:
Discovery
Introductory
Integration
Operational
Strategic
Innovative
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28. EDI Maturity Opportunities and implications of each stage are:
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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.
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29. EDI Maturity Requires investment; direct costs include H/W and S/W
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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.
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30. C Plus Plus
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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.
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31. C Plus Plus
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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.
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32. C Plus Plus
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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.
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33. C Plus Plus
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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.
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34. EDI Maturity Innovative
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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 .
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35. Assignment Pick an organization that has implemented EDI.
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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)
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