SCM Terminology

EDI (Electronic Data Interchange)


When a supply chain of different companies and different processes is carried out, data needs to be exchanged among them. However, data exchange is difficult if each of them uses different computers. Electronic data interchange (EDI) will be useful in that case.

"EDI (Electronic data interchange)" is indispensable for QR (Quick Response) and ECR (Efficient Consumer Response). Both QR and ECR require EDI as a fundamental technology for exchanging order placement/receipt data and billing/payment data between manufacturers and distributors.

When a supply chain is carried out among different companies, transaction data needs to be exchanged amongst computers through communication lines. At that time, even though manufacturers and distributors have the same concept, EDI cannot be realized if they use different computers. EDI is a breakthrough for this technical bottleneck. In EDI, various arrangements that need to be made among interested parties should be based on widely-agreed standard conventions as much as possible.

While EDI is an infrastructure of a supply chain management system for QR and ECR, it is also a technology that supports concepts such as computer-aided design (CAD) and computer-aided acquisition and logistic support (CALS), a higher-level concept of CAD. EDI is based on standardization of electronic data exchange. There are many organizations that make rules for the standardization, such as ANSI (American National Standards Institute), EDIFACT (Electronic Document Interchange For Administration, Commerce and Transportation), CII (Center for the Informatization of Industry), EIAJ(Electronics Industries Association of Japan), and VICS (Voluntary Interindustry Commerce Standards Association). The rules differ depending on the types of applications for each industry that are installed on the infrastructure of EDI.

Management practice such as supply chain management that transcends industries can be realized only when an infrastructure of society's resources exists. However, you cannot always gain the benefits immediately even if the infrastructure exists. Promoting the standardization through budgeting by the government and industry organizations will lead to the establishment of a nation's industrial base.

Taken with kind permission from the book:
"Understand Supply Chain Management through 100 words" by Zenjiro Imaoka.