Electronic Data Interchange has become integral to logistic companies in the past decades. Organizations engaging in numerous practices of logistic value chain often employ EDI to exchange data and documents digitally at the expense of conventional cumbersome paper-based processes. The advancement of technology has only upgraded systems and models used by logistics companies to ensure efficient data transfer is possible. In logistics, EDI refers to a standardized data format protocol that enhances communication efficiency between organizations and thus seeks to prevent human errors and mistakes in processes. Before the advent of EDI, companies spent much time physically extracting data from one system, recording information on a spreadsheet, and sending it to the required recipient (Kopczewski et al., 2020). The manual process consumed a lot of time and was also prone to human mistakes hence the need for EDI. Not only does EDI impact logistical processes positively, but it also affects the daily functioning of a system support service in a company. Notably, a company’s system support responsibilities include performing technical configurations, solving system applications and network problems, and improving system infrastructure and tools. Finally, support systems perform regular maintenance and perform diagnostic tests on various computer software to ensure maximum performance.
Companies exchanging data electronically are trading partners, with each entity sending information electronically instead of paper. Since the 1960s, businesses in the global supply chain have employed EDI models and tools. For instance, global logistic giants such as FedEx and UPS all use EDI to hasten document transfers and business-to-business communications. Most common business transactions exchanged using EDI include invoices and purchase orders, as the practice replaces emails and phone calls. Consequently, EDI has huge implications for logistics and system support in companies. These impacts include better supply chain operations, improved communication with trading partners, fostering secure transactions, lowering operational costs, and better utilization of human resources.
Firstly, EDI applications in the supply chain continue to be pivotal for the success of most logistic companies and support frameworks. EDI practice in the supply chain standardizes supplier transactions, thus reducing the risk associated with human errors, lack of communication, and inappropriate shipments. Notably, huge retailers and logistic companies dealing with various suppliers in their supply chain often employ EDI services to provide efficient communication and streamlined services (Krupkevich, 2020). The adoption of EDI in these companies also enhances communications and transactions between businesses that employ the systems internally. EDI also assists logistics companies in communicating with their trading partners on time instead of depending on traditional phone calls and faxes which might be time-consuming or expensive. Therefore, EDI is a commercial tool that brings together every participant in the supply chain, assisting businesses to provide better and more transparent services and products to their consumers. Companies dealing with supply chains are more likely to encounter EDI in some forms, even those that rely on non-EDI data transfer. In the current digital world, with the competition among companies to provide efficient and satisfactory customer care services, EDI has become one of the main components used to streamline processes. EDI, therefore, improves a supply chain company’s performance by transforming its digital and e-commerce platforms through streamlining and automating processes involved in making orders, shipments, and invoicing of the shipped items. Given this information, EDI enhances service delivery by minimizing errors associated with humans and paperwork, improves efficiency, and upgrades communication, positively improving supply chain systems in logistics.
Secondly, EDI application in logistic services lowers operating costs significantly. EDI application contains various benefits for logistic companies and processes. Research shows that businesses can save as much as 70% of their document processing expenses by integrating EDI solutions into their practice (Brooke, 2022). Further, experts estimate that EDI can improve customer delivery time efficiently by large margins than the traditional methods, which translates into improved consumer satisfaction and increased market share for the firm. This technology, therefore, bolsters the capabilities of logistic companies to save money and resources by lowering data management activities related to paperwork. Additionally, instead of depending on clerks and the ever-increasing postal service costs, EDI eliminates their need by transferring data virtually through electronic technologies. Due to such advantages, EDI has gained massive inroads into logistic practice, becoming an essential tool for modern-day logistics companies. A streamlined document protocol ensures that logistic firms comply with EDI service frameworks, thus preventing fines due to SLA violations and disruptions. Also, eliminating human handling of data and other sections such as mail-room sorting and circulation and human error related to data entry lowers labor costs and materials. EDI lowers the company’s operating expenses by eliminating resources and time spent on printing, storage, reproduction posting, and document retrievals due to its ability to store and retrieve information electronically. Consequently, this practice reduces administrative and maintenance budgets, thus saving logistic companies money. From now on, companies engaging in logistics management practice should embrace efficient forms of EDI to reduce expenses incurred on paperwork.
Additionally, EDI significantly impacts logistic companies and support systems by improving their customer service capabilities. Since most logistics companies work with consumers from around the globe, they might experience difficulties satisfying them due to various beliefs, attitudes, and backgrounds (Sumah et al., 2020). For instance, the way of communicating with clients might differ from one ethnicity or race to another. On the other hand, EDI gives a faster, relatively accurate, and less costly method of interacting with clients compared to conventional methods such as telephone and personal delivery systems. Studies indicate that companies with an integrated EDI system increase customer care capacities while improving service provision efficiency. The use of EDI in the logistics industry affects various stakeholders in the value chain, from the producer to the consumer. For instance, when the company shares a document using this technology, the EDI solution changes it into a message and shares it with other trading partners. This action leads to faster and more efficient communication practices within and outside the company. Therefore customer inquiries, orders, and emails can be transformed quickly to ensure efficient services. Compared to traditional methods, customers ordering through an EDI process will experience efficient processes due to automated solutions compared to the previously used fax and mail systems. The traditional mail and fax systems would increase the processing time to days rather than minutes under the EDI system.
Importantly, EDI helps logistic companies to utilize their resources better and improve transaction security. EDI assists logistic firms in improving productivity by freeing up employee time for document processing. Using this system means that all information is stored and can be retrieved electronically. Instead of assigning workers to practice repetitive processes and activities such as preparing orders and invoices, EDI allows logistic companies to automate such activities. As a result, the staff is more focused on other value-adding impacts due to EDI performing simple repetitive tasks.
Regarding data security, EDI facilitates logistic firms to protect their data by preventing unauthorized access to the company’s data since it utilizes computer applications on the Internet. EDI is a more secure alternative than contemporary e-commerce transactions that need credit cards, system logins, and password input. EDI affords the company the luxury of data transfer through secure and efficient digital channels away from human tampering. For instance, the details of customer purchase orders cannot be accessed by unauthorized people, hence maintaining the confidentiality and privacy of the consumer. When exchanging documents, EDI processes are applied in transactions through manufacturing, transportation, and wholesale industries (Klapita, 2021). Trading partners exchange EDI documents that comprise orders, invoices, payments, and tracking reports of the items. Further, every EDI document contains minimal information that would render it useless without it. Therefore, EDI processes and tools ensure secure transactions between companies and reduce the time spent on repetitive tasks by the employees of a logistics company.
EDI has a massive effect on logistics by simplifying supply chain communications; hence, companies have been awarded better visibility and control. These actions result in higher profit generation and sustainable growth due to the integration of many efficient and straightforward processes. Like all technologies, EDI does not provide one-size-fits-all procedures; thus, companies must decode deploying and upgrading EDI infrastructure regularly to fit the industry’s demands. Generally, the EDI structure must give the firm an integrated approach, thus offering more visibility into activities and improving customer service and satisfaction. EDI affords logistic real-time freight management updates and tracking, thus assuring the customers of their orders while in the supply chain. Big companies benefit from EDI’s ability to process many files simultaneously without a system breakdown.
Conclusively, the advancement of technology has had a huge implication on logistics. Many companies globally have integrated EDI tools to run processes and systems efficiently. The effect of EDI on supply chain processes must be considered. The technology enables faster and more efficient supply chain processes such as payments, invoices, and orders which would otherwise consume time when done manually. EDI reduces human errors encountered in paperwork, streamlines communication between trading partners, utilizes human resources better, and secures transactions between partners. Finally, this technology improves customer care and satisfaction as they can track their orders at different points. However, companies must be ready to incur considerable costs when installing the systems in their respective departments. Connecting and incorporating EDU transfer data across various value chain points has proven effective for logistic companies.
Klapita, V. (2021). Implementation of electronic data interchange as a method of communication between customers and transport company. Transportation Research Procedia, 53, 174-179. https://doi.org/10.1016/j.trpro.2021.02.023
Kopczewski, M., Grobelny, Z., & Płucienniczak, M. (2020). Telematics–electronic data interchange/EDI/in port transport logistics. Journal of Decision Systems, 29(sup1), 301-311. https://doi.org/10.1080/12460125.2020.1868654
Krupkevich, N. N. (2023). Electronic data interchange for a logistics company.https://rep.bntu.by/bitstream/handle/data/129016/106-107.pdf?sequence=1
Lester, B. (2022, September 16). How is EDI used in Logistics?.Remedi. https://www.remedi.com/blog/how-is-edi-used-in-logistics
Sumah, B., Masudin, I., Zulfikarijah, F., & Restuputri, D. P. (2020). Logistics management and electronic data interchange effects on logistics service providers’ competitive advantage. Journal of Business and Economic Analysis, 3(02), 171-194. https://doi.org/10.36924/sbe.2020.3205
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