Many obstacles must be overcome to implement
EDI within any company. Some of the obstacles can be external and
others can be internal. Described below are three obstacles
presenting roadblocks to implementing EDI for competitive
• Executive-Level Commitment — This
is the most difficult obstacle to overcome when implementing
EDI. Unless EDI is viewed as a business issue and addressed as
part of your overall business strategy, it will not receive the
attention or resources required to help your company achieve a
competitive advantage in the marketplace. The key to selling
EDI at the executive level is not based on the technology, but
as a project directed at solving a business problem such as
improved customer service.
• Level of Automation — This can be a
problem if the sophistication of your customers and suppliers is
not at the level needed for you to move toward an EC
environment. Many companies have incurred "hidden
costs" to increase the EDI capabilities of their trading
partners. These costs can include conducting training to educate
suppliers, identifying turnkey solutions that suppliers can
purchase or funding a portion of the investment. The key to
overcoming this obstacle is to identify the type of help
suppliers need and working with them to resolve the issues.
• Compatibility of Technology — This
is generally not an issue if the services of a value-added
network (VAN) are utilized since they can handle almost any
hardware and communications interface required. It also
eliminates other issues related to the timing of transmissions,
security and control reporting. However, this obstacle will
become more important as companies move to event-driven EDI
versus the current batch-oriented processes. The key is to
evaluate the value of maintaining in-house expertise versus
utilizing a third-party service to support these trading partner
In summary, there are many benefits to be
obtained through the strategic use of EDI. The most important is
the opportunity to earn greater profits and increase market share.
However, many companies only document the reduced costs associated
with eliminating the processing of paper-based documents.
Significant benefits can be obtained from the competitive use of
the inter-enterprise information. As indicated previously,
reducing time to replenishment for existing products and time to
market for new products are becoming critical issues for many
companies. If companies are able to apply IBS technologies such as
EDI to not only reduce cycle times and eliminate non-value-added
activities, but share sales, marketing and engineering data the
result will be a true competitive advantage.
The benefits obtained from using EDI are also directly
proportional to the measurements used to evaluate its success.
Traditionally, the success of EDI has been measured by number of
trading partners and transaction sets that have been implemented.
These measurements tended to promote the idea of EDI as simply a
technical issue. Recently, some companies have changed to
measuring the success of EDI based on more operational measures
such as inventory levels, delivery time and open account
receivable days. This has helped to increase the awareness of the
business benefits available from the use of EDI. However, to
realize the true strategic benefits of EDI, companies must develop
new measures of EDI success such as the velocity at which products
move through the distribution channels and the increase in cash
flow or working capital. This will help to create the awareness of
EDI as an offensive weapon to win the business war.
Assessing Your Potential
The assessment of EDI's potential for
competitive advantage may be driven by many factors. If you are
being required to implement EDI with your customers or suppliers,
an assessment of your potential may help to establish a future
direction. If you are already using EDI, an assessment may help
evaluate your efforts with the long-term potential for EDI.
Regardless of your situation, the benefit of assessing your EDI
potential is the opportunity to examine, from a business
perspective, the use of EDI as an enabler of process innovation
and increased competitive advantage.
The approach to assessing your EDI potential
must be one that allows people to step back from their day-to-day
activities and begin to formulate a new way of doing business.
This is not the time to follow your standard systems development
approach. What is required is a process that generates a climate
of open, creative and innovative thinking that results in not just
incremental changes of 10-20 percent, but order-of-magnitude
changes of 100-200 percent. The assessment, if executed properly,
should significantly change a company's thinking about the
potential for EDI and result in initiatives to realize this
The first step to assessing your EDI potential
involves compiling the information required to formulate an
accurate vision. It should involve an examination of the your
current business strategies and direction. This examination should
focus on understanding the drivers of the business (e.g., time,
cost, quality), market opportunities and the demands of your
customers. It should be an executive-level effort focused on
analyzing your key business processes at a strategic level. The
result should be not only a consensus on your key business goals
and objectives, but identification of the business processes
offering the greatest opportunity for developing tighter linkages
with your customers and suppliers.
The second step involves conducting a series of
sessions to develop a vision of how your business processes should
be done differently using EDI. In Process Innovation:
Reengineering Work through Information Technology, Davenport
describes a visioning process that provides this focus consisting
of five steps:
1. Develop an initial vision statement
describing the overall process and how it will work.
2. Develop a list of key process
characteristics such as flow, output, performance, organization
and technology to describe how well it will need to work.
3. Identify performance measures and
objectives such as cost, quality, cycle time and speed to
describe what must go right for the process to be successful.
4. Identify critical success factors such as
people and technology that could cause the process not to be
5. Determine potential barriers to implementation such as
resources, organizational culture, technology and market factors
that could prevent a successful effort. The result should be a
realistic vision of the EDI potential in your organization from a
business perspective. It will also provide a high-level
understanding of the challenges that must be addressed before EDI
can be used for competitive advantage.
This paper has attempted to create an awareness of the
competitive advantages available from the use of EDI. It has
stressed the need to view EDI as part of a business strategy and
not simply a technical issue. It has emphasized the need for
companies to understand their business environment in order to
take full advantage of EDI's potential. Finally, it has summarized
the obstacles, benefits and an approach to utilizing EDI for
competitive advantage. The challenge is to take this new
perspective and make EDI your company's gateway to competitive
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