Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) is the electronic interchange of business information using a standardized
format; a process which allows one company to send information to another company electronically rather than
with paper. Business entities conducting business electronically are called trading partners.

Many business documents can be exchanged using EDI, but the two most common are purchase orders and
invoices. At a minimum, EDI replaces the mail preparation and handling associated with traditional business
communication. However, the real power of EDI is that it standardizes the information communicated in
business documents, which makes possible a "paperless" exchange.

The traditional invoice illustrates what this can mean. Most companies create invoices using a computer system,
print a paper copy of the invoice and mail it to the customer. Upon receipt, the customer frequently marks up
the invoice and enters it into its own computer system. The entire process is nothing more than the transfer of
information from the seller's computer to the customer's computer. EDI makes it possible to minimize or even
eliminate the manual steps involved in this transfer.

The Need for EDI

For companies of any size, implementing EDI is necessary for maximum competitiveness and growth. It
reduces costs and improves operational performance across your organization. From the start, EDI accelerates
data exchange and sharpens accuracy. Your company and your customers benefit from streamlined
administration, improved information flow, more accurate accounting, better inventory management, and lower
costs. Because electronic transactions are so efficient, customers that use EDI prefer to work with vendors that
have EDI systems in place.
From financial, operational, and technical perspectives, the right EDI solution makes irrefutable business sense.

Advantages of EDI :

Cost Savings
 Expenses associated with paper, printing, reproduction, storage, filing, postage and document retrieval are
all reduced or eliminated when you switch to EDI transactions, lowering your transaction costs by at least
35%
 A major electronics manufacturer calculates the cost of processing an order manually at $38 compared to
just $1.35 for an order processed using EDI
 Errors due to illegible faxes, lost orders or incorrectly taken phone orders are eliminated, saving your staff
valuable time from handling data disputes

The major benefits of EDI are often stated as speed and accuracy:
 EDI can speed up your business cycles by 61%. Exchange transactions in minutes instead of the days or
weeks of wait time from the postal service
 Improves data quality, delivering at least a 30—40% reduction in transactions with errors—eliminating
errors from illegible handwriting, lost faxes/mail and keying and re-keying errors
 Using EDI can reduce the order-to-cash cycle time by more than 20%, improving business partner
transactions and relationships

However, the increase in business efficiency is also a major factor:

 Automating paper-based tasks allows your staff to concentrate on higher-value tasks and provides them
with the tools to be more productive
 Quick processing of accurate business documents leads to less re-working of orders, fewer stock outs and
fewer cancelled orders
 Automating the exchange of data between applications across a supply chain can ensure that business-
critical data is sent on time and can be tracked in real time. Sellers benefit from improved cash flow and
reduced order-to-cash cycles
 Shortening the order processing and delivery times means that organizations can reduce their inventory
levels

In many cases, the greatest EDI benefits come at the strategic business level:
 Enables real-time visibility into transaction status. This in turn enables faster decision-making and
improved responsiveness to changing customer and market demands, and allows businesses to adopt a
demand-driven business model rather than a supply-driven one
 Shortens the lead times for product enhancements and new product delivery
 Streamlines your ability to enter new territories and markets. EDI provides a common business language
that facilitates business partner onboarding anywhere in the world
 Promotes corporate social responsibility and sustainability by replacing paper-based processes with
electronic alternatives. This will both save you money and reduce your CO2 emissions

EDI Standards
To exchange documents with trading partners, you must convert the data to and from EDI Standard formats.
EDI standards are the requirements for the format and content of EDI business documents. EDI standards
determine the correct order and location of the units of data in an EDI document. All EDI transactions are
defined by EDI standards.
EDI standards developers design and publish EDI Standard formats for various kinds of documents, such as
purchase orders or invoices, that you might exchange with your trading partners.
All EDI standards include the following components:

The smallest component in an EDI Standard.

Element

Groups of elements.
Segments

Also called messages, transaction sets are groups of segments.

Transaction sets
EDI Standard format is comparable to the language that you speak. For instance, an element of the EDI
Standard can be compared to a word. A segment in the EDI Standard is comparable to a sentence. A
transaction set in the EDI Standard is comparable to a paragraph or a document. In the EDI Standard, just as in
the language that you speak, elements (or words) are combined to form a segment (or a sentence). Segments
(or sentences) are combined to create a Transaction set (or paragraph or document).
Two commonly used EDI standards are:
 EDI for Administration, Commerce, and Transport (EDIFACT) - generic international.
 American National Standards Institute/Accredited Standards Committee X12 (ANSI ASC X12) -
generic.
Both ANSI ASC X12 and EDIFACT also contain subgroups, including:
 Automotive Industry Action Group (AIAG).
 Chemical Industry Data Exchange (CIDX).
 Electronics Industry Data Exchange (EIDX).
 Voluntary Interindustry Communications Standards (VICS).
 Textile/Apparel Manufacturing Communications (TAMCS).
 Sundries and Apparel Findings Linkage Council (SAFLINC).
 U.S. government.
 Business Process Reengineering

Business Process Reengineering or BPR for short, is a methodology and technique with which organizations
radically change their business processes with the aim of becoming more efficient and more modern. The far-
reaching measures that are taken after the decision to restructure a process not only concern formal procedures
or other existing processes, but can also bring about radical changes in management style and corporate culture.

The founder of the Business Process Reengineering concept is Michael Hammer. Michael Hammer published
the article ‘Reengineering Work: Do not Automate, Obliterate‘ in 1990. With this title, Hammer was saying that
just automating processes is not enough. Hammer developed the BPR concept further with James Champy, after
which they published their famous book, ‘Reengineering the company, a manifesto for business revolutions’, in
1993. In the most extreme form, BPR means the complete overhaul and rebuilding of processes. Only then can
the organisation’s full potential be achieved, and only then will the organisation benefit from the changes.

The essence of BPR is to encourage process thinking: shifting from task focus to process focus to then
removing all processes that do not create value for the customer. In this way, improvements are achieved that
are only for the betterment of the performance criteria such as costs, efficiency, quality and service.
Organizations that take part in Business Process Reengineering are the first to examine the organisation and its
environment. Objectives play a leading role in shaping new processes or changing existing processes. Business
Process Reengineering, invented by IT expert Michael Hammer, is mainly applied in information technology,
but is a standardised model that can be used to optimise many processes or organisations. Benefits of using BPR
are:

Shorten lead times

In information technology, in particular, there is a lot of potential that is not yet being used. Outdated processes,
such as the manual execution of administrative matters, can be fully automated with an investment. The
investments are recouped by the lower wage costs.
Increase productivity
The goal of BPR is to modernise outdated processes and that often yields time-saving results. For example, after
performing BPR, the organisation can discover that a certain process can be carried out by two employees
instead of four. It’s important that the employees themselves provide input and come up with suggestions; after
all, they know better than anyone else how the business processes work.
Improve quality and customer focus
By changing task orientation to process orientation, the focus is put on the customer. This has the advantage that
all irrelevant processes quickly come to the foreground, after which they can easily be removed or modified.
Improve competitive position
Normally, changes that an organisation makes are only gradually noticed. In order to keep up with the
competition, and to satisfy customer needs, however, we must act appropriately. BPR is ideally suited for this
because the radical changes are implemented in a relatively short period.
Implement new technology
For example, an online webshop can choose to implement an extensive help centre with an interactive Q&A.
The visitor can ask his or her question with the help of keywords and use the computer to look for a
standardised answer. This way, the customer service employee won’t be occupied and can keep themselves
busy with something else.

A downside to adjusting business processes as quickly as possible in order to be able to work more efficiently,
is that some employees need more time to adjust than others. If an employee on Monday morning hears that
their entire job description has been changed, this can seem overwhelming. Which is why it’s very important
that the changes that are implemented are well communicated to the employee, and that guidance is provided if
necessary.
 Management of Change (MOC)

Management of change (MOC) is a systematic approach to organizational changes with the aim of ensuring the
continued safety of the workforce throughout the process. These systematic processes ensures that the change is
dealt with in a proactive fashion.
Major organizational changes can come as the result of internal decisions, such as a corporate shakeup or
downsizing, the replacement of retiring senior executives, or a merger with or acquisition from another
company. They can also come as a result of external factors, such as new government regulations or updated
industry standards.

Regardless of the reasons behind them, organizational changes can be very disruptive to the organization's
normal operations. Since these operations include processes, procedures, and policies aimed at protecting
workers from injury, dealing with the change haphazardly or without forethought can leave workers unsafe and
unprotected.

Management of change involves keeping workers safe by implementing a kind of temporary safety program and
ensuring that no worker is put at undue risk while the changes are underway.

Mobile commerce
Mobile commerce, also called m-commerce or m-commerce, includes any monetary transaction completed
using a mobile device.

It is an advancement of ecommerce, enabling people to buy and sell goods or services from almost anywhere,
simply using a mobile phone or tablet device.

For me this implies that mobile commerce is a trend, a passing fad that will soon be forgotten, or superseded by
something else.

Why does mobile commerce matter?

Mobile ecommerce sales account for 34.5% of total ecommerce sales in 2017, and that number is growing.

By 2021, mobile ecommerce sales are expected to account for 54% of total ecommerce sales.

By now your website – and online store – should already be accessible on mobile devices, but that doesn’t
automatically mean your business is ready for mobile commerce.

It has also served as a trigger for new industries and services, or helped existing ones grow, including:

 Mobile money transfers.

 Electronic tickets and boarding passes.
 Digital content purchases and delivery.
 Mobile banking.
 Contactless payments and in-app payments.
 Location-based services.
 Mobile marketing, coupons, and loyalty cards.

While m-commerce covers a wide variety of transactions, they can all be categorized as one of three types:
1. Mobile shopping.
Mostly similar to ecommerce, but accessible via a mobile device. Mobile shopping is now possible through
mobile optimized websites, dedicated apps, and even social media platforms.
2. Mobile banking.
Not too different to online banking, though you may find some transaction types are limited or restricted on
mobile devices. Mobile banking usually involves a dedicated app, though some banks have started
experimenting with the use of chatbots and messaging apps.
3. Mobile payments.
There are so many diverse mobile payment options that we have chosen to cover them in detail further in this
article.

As a business owner, and user of BigCommerce, your exposure and interest in mobile commerce would mostly
relate to shopping and payments, which is what the rest of this article will focus on.
Common Benefits of Mobile Commerce
1. Better overall experience for customers.
2. Phenomenal growth potential.
3. A true omni-channel experience.
4. Variety of payment options.

Common Pitfalls of Mobile Commerce

1.Constant need for optimization.
2. Variety of payment options.
3. Easier for customers to compare prices.
4. Need to know and comply with a wider range of regulations.