What does Electronic Data Interchange (EDI) conjure up in one’s mind when you hear it, or read about it or personally get involved with EDI? How or why is EDI still relevant almost 50 years after its inception? How will EDI evolve and remain relevant as time goes on? Over the course of the next 4 posts, we will be taking a very close look at something very close to our hearts, here at QLogitek, Electronic Data Interchange, or EDI. With an aim towards developing a better understanding of where EDI has been, how it has evolved and the impact it has (and continues to have) on the business landscape, we’ll be discussing the following:
- An Historical Perspective on EDI
- EDI in the 21st Century – Today and the Foreseeable Future
- A Comparative Analysis of EDI Costs
- The Impact of EDI on Business
An Historical Perspective
Reaction to EDI can range from utter disgust to pure joy, and there can be many feelings that get aroused anywhere in between. There really is no common response. Why is that?
The start of the 21st century was considered by many to be the dawn of mystical innovations that would make traditional EDI obsolete. Businesses, we thought, would find new ways to trade and communicate with their respective stakeholders and their supply chain trading partners and trading communities.
EDI, a very robust technology for trade, was developed in the 1960s, but it didn’t gain traction until the 70s. It became well received and utilized by the Retail and Finance sectors for their Purchase Orders, Invoicing and Payment Transactions. Gradually, the efficiencies achieved by these early adopters started to convince a broader commerce base to also adopt EDI for their business operations. By the 1980s EDI was becoming mainstream.
The last 50 years have produced hundreds if not thousands of EDI and EDI related industries, regulatory bodies, profit and not-for profit organizations that offer Standards, Technologies, Tools, Methodologies, Education & Training and a plethora of EDI resources. These EDI resources support the needs of businesses to use EDI as a core technology to provide Improvements and Productivity for their Supply and Demand Chain operations.
EDI has evolved in the last 50 years as a key enabling technology and a business best practice, as EDI provides a great competitive advantage and as an overall productivity improvement in any business operation, be it supply chain or otherwise.
As the adoption of EDI and its use required, in almost all cases, extensive capital outlay as well as a large ongoing operational expenditure, EDI could only be utilized by large organizations and in some cases by mid-size organizations.
Its use was also required, and in many cases, enforced by the larger organizations, for their smaller and mid-size trading communities to implement and use, if they wished to trade with the larger organization.
It could be argued that 80% of businesses were not capable of using EDI or an alternate form of communication, thus causing difficulties for companies to grow. The businesses that were smart and capable enough to raise capital for growth had lesser challenges whilst many others suffered growth and competitive challenges.
Due in large part to its continued use, widespread adoption, and realized benefits that span 50 years, EDI can be considered as a primary business enabler. Simply put, its proper implementation typically results in benefits that can be felt across the entire organization.
Today, many successful industries and leading organizations have solid implementations of EDI and supporting processes & procedures that have become their secret to success, growth and productivity. But how is it continuing to be relevant in the 21st century?
In our next post, we’ll explore EDI as it entered the new millennium, and what we might be able to expect from EDI in the near future.
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