You might have heard of EDI in commerce and not really had any idea of what people were talking about. While it has been around for quite a long time, there continue to be businesses that are not yet fully integrated with e-commerce and its benefits. Essentially, e-commerce is the method in which information on money, services, and goods is exchanged using at least two computers. For instance, receiving an electronic paycheck, tracking a package delivery, or paying a bill is all part of e-commerce.
How EDI in Commerce Works
If you are a business, you may have to conduct thousands of transactions everyday, many of which are exactly the same. This is where edi becomes important. Essentially, it is a message standard that everybody has agreed on, through which information is exchanged between computers with minimal human intervention. Today, 95% of every element of e-commerce users EDI for their information exchange. How this is done varies, and includes proprietary software, internet communication, email, and customized connections. The system allows businesses to submit invoices and purchase goods, find out what there inventory levels are at both customers’ and suppliers’ warehouses, send electronic funds, receive an order status, get a notification of payment, and so on.
While all of this may sound high tech, it is actually nothing new. This type of technology is in fact so old that you may be quite surprised by it. However comma there are a lot of industries that don’t yet understand Udi and how it can benefit them. Not just that, government organizations, particularly the health industry in this country, did not want to venture into it before it was federally mandated.
Where Is EDI Used?
There are lots of different businesses and organizations that use EDI. It is found in about 90% of all fortune 1000 companies, including BMW, American Airlines, Dunkin’ Donuts, Coca-Cola, Federal Express, Eastman Kodak, Heinz, JCPenney, Infocus, Nike, Macys, Texaco, Verizon, and so on. It is particularly popular in the textile, health care, government, retail, insurance, banking, food processing, metals, petrochemical, construction, pharmaceutical, utilities, warehouse, shipping, and manufacturing industry. Basically, if a company purchases or sells services or goods, they could benefit from EDI. This is due to the fact that system support the full supply chain cycle, thereby also streamlining the various relationships within the cycle, including suppliers, distributors, and customers. It is believed that over the next 6 years or so, there will be a 400% increase in the number of companies that use EDI systems.
One of the greatest benefits of EDI is that it automate repetitive and common communications and transactions. By automating these, it significantly reduces the chance of human error. This in turn ensures that businesses become more productive and efficient and that their bottom line is protected. When productivity and efficiency increase, so does the profit margin. In a sense, therefore, EDI is a way for businesses to grow organically and achieve sustainable growth across the board.
