Electronic data interchange (EDI): an avenue to better performance and the improvement of trading relationships?

Electronic data interchange (EDI) is a powerful, cost saving and streamlining information technology that has rapidly gained international acceptance over the last few years. This paper aims to facilitate a clearer understanding of the issues involved in formulating and implementing an EDI strategy. In particular the paper analyses the potential benefits to be derived from EDI implementation, while at the same time outlining operational and management difficulties likely to arise as a result of implementation. The paper focuses on the inter– and intra–organisational issues which EDI gives rise to - since it is a service which entails co–operation between trading parties to gain the greatest benefits. Similarly the relationship between EDI and other related strategies, such as quick response and just–in–time, are discussed. The paper also outlines the relationship between EDI and electronic funds transfer (EFT). It argues that EDI–EFT has the potential to have a major impact in re–defining organisational cash management policies and strategies - particularly in relation to the 'float' - as well as the relationship between organisations and their respective financial institutions. The paper provides an overview of relevant work taking place internationally, with an emphasis on North American and European developments.