Chapter 10  Logistics Information Technology

10.5 Electronic Data Interchange：Application of logistics information technology

10.5.1 The concept of EDI in Logistics 

    It is known to all that effective supply chain management can provide a major source of competitive advantage. The goal of a supply chain manager is therefore link the end customers, the distribution channels, the production processes and the procurement activity in such a way that customers' expectations are met and yet at a lower total cost. One of the enabling factors for the achievement of this goal is the effective use of information technology (IT).

    For example, in retailing, margin erosion and the need for ever improving levels of customer service have both been instrumental in increasing the levels of IT investment to support supply chain improvements. Retailers will continue to invest in technologies such as electronic data interchange (EDI) in order both to facilitate further reductions in supply chain stock levels and to forge stronger supply chain linkages between both their customers and suppliers.

    EDI refers to the method of logistics data exchange between cargo owner, carrier owner and other relevant units through EDI system, and based on this, implements logistics operation activities.

10.5.2 The Advantages of EDI

    1. Reduce human cost, resource cost and cost caused by mistakes;

    2.Shorten the time of information transmission and speed up capital turnover;

    3.Improve channel relationship and improve customer service level;

    4.Provide information query, information conversion and other value-added services.

10.5.3 The Characteristics of EDI

    1. EDI is used by different computer systems, usually with fixed format business information and regular business contact units.

    2. The data transmitted by EDI is business data, such as invoice, order, etc. It's not a general notice.

    3. Adopt common standardized formats, such as the United Nations EDIFACT standard, which is different from the general e-mail.

    4. Manual intervention operation should be avoided as far as possible, and the data can be exchanged directly by the receiving and sending computer system.

    5. It can connect with the database of the user's computer system smoothly, directly access the database or generate EDI message from the database, which is a feature not possessed by fax or e-mail.

    6. EDI has a series of strict security functions, such as tracking, confirmation, tamper proof, anti false claim, electronic signature and so on. Its security is more reliable than other communication methods and information processing methods.