Implementation of Electronic Data Interchange (EDI) System : Report

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Diploma in Supply Chain Management(DSCM 16/42)Implementation ofElectronic Data Interchange (EDI) system for acompanyLecturer:Mr. Roger LeeFinal Year ProjectTeam Members: Leo Chandran Desmond: Tan Huey Yi: Foo Chuan Keong: Jerry Quek: Liew Win Ney: Tan Sie ChieSubmission Date: 16 January 2017
Abstract
AcknowledgementWe have taken efforts in this project. However, it would not have been possible without thekind support and help of many individuals and organizations. We would like to extend oursincere thanks to all of them.We are highly indebted to Mr. Roger for their guidance and constant supervision as well asfor providing necessary information regarding the project and also for their support incompleting the final project.An honorable mention goes to friends for their understandings and supports on us incompleting this project. Without helps of the particular that mentioned above, we would facemany difficulties while doing this
ContentPage1Introduction1.1 Supply Chain Management1.2 EDI systems1.3 EDI in Supply chain management2Procurement2.1 EDI in Procurement2.2 The EDI Challenge : Large CompetitivePurchase2.3 EDI Application Example3Implementation3.1 EDI Implementation3.2 The Implementation Process4Benefits5EDI technology
6EDI and JIT7Competitive Advantage8Case Study8.1 Amazon8.2 WAL-MART8.3 DHL9Conclusion10Reference
Introduction1.1 Supply Chain ManagementASupply chainis a network of facilities and distribution options that performs the functionsof procurement of materials, transformation of these materials into intermediate and finishedproducts, and the distribution of these finished products to customers. Supply chains exist inboth service and manufacturing organizations, although the complexity of the chain may varygreatly from industry to industry and firm to firm.Below is an example of a very simple supply chain for a single product, where raw material isprocured from vendors, transformed into finished goods in a single step, and then transportedto distribution centers, and ultimately, customers. Realistic supply chains have multiple endproducts with shared components, facilities and capacities. The flow of materials is notalways along an arborescent network, various modes of transportation may be considered,and the bill of materials for the end items may be both deep and large.
Traditionally, marketing, distribution, planning, manufacturing, and the purchasingorganizations along the supply chain operated independently. These organizations have theirown objectives and these are often conflicting. Marketing is an objective of high customerservice and maximum sales dollars conflict with manufacturing and distribution goals. Manymanufacturing operations are designed to maximize throughput and lower costs with littleconsideration for the impact on inventory levels and distribution capabilities. Purchasingcontracts are often negotiated with very little information beyond historical buying patterns.The result of these factors is that there is not a single, integrated plan for the organization---there were as many plans as businesses. Clearly, there is a need for a mechanism throughwhich these different functions can be integrated together. Supply chain management is astrategy through which such an integrated can be achieved.Supply chain management is typically viewed to lie between fully vertically integrated firms,where the entire material flow is owned by a single firm, and those where each channelmember operates independently. Therefore coordination between the various players in thechain is key in its effective management. Cooper and Ellram [1993] compare supply chainmanagement to a well-balanced and well-practiced relay team. Such a team is morecompetitive when each player knows how to be positioned for the hand-off. The relationshipsare the strongest between players who directly pass the baton, but the entire team needs tomake a coordinated effort to win the race.1.2 EDI systems
Electronic Data Interchange (EDI) is the computer-to-computer exchange of businessdocuments in a standard electronic format between business partners.By moving from a paper-based exchange of business document to one that is electronic,businesses enjoy major benefits such as reduced cost, increased processing speed, reducederrors and improved relationships with business partners. Learn more about the benefits ofEDI.Each term in the definition is significant:Computer-to-computer– EDI replaces postal mail, fax and email. While email is also anelectronic approach, the documents exchanged via email must still be handled by peoplerather than computers. Having people involved slows down the processing of the documentsand also introduces errors. Instead, EDI documents can flow straight through to theappropriate application on the receiver’s computer (e.g., the Order Management System) andprocessing can begin immediately. A typical manual process looks like this, with lots ofpaper and people involvement:
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