24-09-2012, 02:01 PM
THE BENEFITS AND CHALLENGES OF ELECTRONIC DATA INTERCHANGE
EDI.pdf (Size: 322.87 KB / Downloads: 117)
Abstract
Many organizations are applying Electronic Data Interchange (EDI) to improve operational efficiency, enhance
information quality, and achieve reductions in processing time of critically important business information. EDI
today represents an opportunity to improve business processes and business controls directly even though
challenges are expected. It is in light of the opportunities and challenges that this study is done, specifically focusing
on the benefits and challenges of implementation and application of EDI in Kenya considering the case of Kilindini
Waterfront Project. Data was collected from 45 managers of the firms selected using convenient sampling. The
respondents were asked about perceived benefits of EDI application and perceived challenges of EDI
implementation and application. The questionnaires were mainly hand delivered to the respondents. The data
collected was analyzed with the use of frequency tables, proportion, percentages, cross tabulations and factor
analysis using SPSS. Majority of the firms that were studied had less than 1,000 employees which may possibly
mean the firms are less labor intensive and therefore relying more on automated processes. This study also show
that most of the respondents were experienced with EDI implementation and application and therefore had the
necessary knowledge sought for. From the factor analysis carried out on the variables of the benefits of EDI
application, the deduction drawn indicates that firms that apply EDI benefited. Some of the benefits include reduced
errors, access to information, enhanced competitive capacity and improved trading partner relationship.
Introduction
General Background
Globalization coupled with development in
Information and Communications Technology (ICT)
has resulted in emergence of various new information
and communication applications. One of these
applications is Electronic Data Interchange (EDI)
which has facilitated the growth of business to
business electronic commerce.
The emergence of ICT has led to the introduction of
businesses in electronic form hence the emergence
and development of inter-organization systems
including EDI. In addition, the development of the
Internet and the subsequent realization of its business
capabilities further resulted in a new round of
technological innovations within inter-organizational
systems, ranging from Web forms and extranets to
Internet based EDI (Sanchez and Perez, 2003).
There are some misconceptions about what is to be
referred to as EDI. For example E-mail is not
considered EDI and the reason being that it is used to
send information between humans in a form that
humans understand, whereas EDI is a computer to
computer process (Al-bakri, 2007). Similarly sharing
of files through a network such as a Local Area
Network (LAN) or Wide Area Network (WAN) is
not considered EDI because this does not conform to
the definition of EDI.
The Electronic Data Interchange
Implementation
The implementation of EDI can be divided into four
main phases of action. These are planning, analysis
and design, construction and installation, and
operations (Kappelman et al, 1996).
Long before EDI implementation, dialogue needs to
be established between all parties involved to discern
EDI implementation strategies and timelines.
Inherent in the discussions for the partners involved
is the joint planning and system specification that
will facilitate the process of EDI implementation
(Smith et al, 1994).
Planning: A project proposal is what is realized from
the planning phase. This proposal is required to
outline the economic feasibility of the project,
proposed changes to business processes and
applications. Other areas that should be captured in
the planning process include anticipated impacts on
business strategies, potential changes in relationships
with business trading partners, a preliminary
timetable, resource requirements, and an estimate of
costs and benefits (both tangible and intangible) for
the development and implementation of EDI
(Kappelman et al, 1996). A firm decision from
preferably the top management is required to proceed
to the next phase of analysis and design phase.
Research Strategy
This study concerns the benefits of EDI application
and the challenges of its implementation and
application in the KWFP. A survey research design
was chosen in this study since not much has been
done in this area. Also, there was no adequate
background information relating this research for a
more advanced research. The population of interest
for the study comprised stakeholders in the Kilindini
Waterfront project (See Appendix I). The project
involved the Kenya Ports Authority, a number of
Shipping Lines operating in the Port of Mombasa, a
number of Clearing and Forwarding companies,
Kenya Revenue Authority and the Kenya Bureau of
Standards. The total number of shipping lines,
clearing and forwarding firms operating at the port of
Mombasa is over three hundreds.