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Disadvantages of EDI

1), Operating Procedures: Since EDI is a structured way of working, companies usually change operating procedures. 

2) Production and Purchasing Decisions: Responsibilities may have to be changed during the introduction of EDI system. Unless this system and the links with other systems are managed well, it is not possible for the data processing department to become involved in production and purchasing decisions. 

3) Transparent: Less transparent than paper-based systems. 

4) Flexibility: Certain EDI systems are highly flexible, others are very simple to implement. 

5) High Costs: Applications are costing to develop and operate; especially new entrants find this more difficult to have EDI. Many small companies are facing resources problems in getting starter with the initial implementation of EDI system. It is beyond the resources these companies to invest tens or hundreds of thousands of dollars in setting and implementation costs, as well as weeks of personnel training, to get an EDI system running.

6) Limited Accessibility: It does not allow consumers to communicate or transact with vendors in an easy way. A subscriber must subscribe to an online service called VAN (Value Added Network). 

7) Rigid Requirements: Needs highly structured protocols, previously established arrangement, unique proprietary bilateral information exchanges. 

8) Trading Partners Involvement: It involves high dependence on the participation of trading partners. It is extremély difficult to get a high level of supplier compliance. EDI will be a meaningless if your trading partner didn't get involve using EDI system effectively. 

9) Difficult to Agree on Standards Used: Even though there are widely- accepted and widely-used standards, there are no ways to force trading partners to accept these standards. Cooperation between trading partners is needed in order to develop a common rules to avoid differ in interpretation. 

10) Deviation of Management: Concentration of control of EDI causes management to rely more heavily on computer systems and places control in the hands of fewer individuals, potentially increasing risk


11) Data Processing, Application, and Communications Errors: Errors in computer processing and communications system may result in the transmission of incorrect trading information or the reporting of inaccurate information to management. Application errors or failures can also result in significant losses to trading partners. 

12) Lack of Audit Trials: In some cases, EDI transaction data may not be maintained for a long period of time. Without proper consideration of legal  and auditing issues, the entity may not be able to provide adequate or appropriate evidence in hard copy or on magnetic media for the legal dispute to be resolved favorably or for the audit to be completed cost effectively. Backup of the transactions must be made and maintained to guard against this possible problem. 

13) Reliance on Third Parties: The organization will become more dependent on third parties to ensure security over transactions and continuity of processing. 

14) Security Threats: EDI may share the same kinds of security threats associated with any electronic data communications and other ecommerce applications. A number of potential risks include the following: 
i) Confidential information could be exposed to unauthorized third parties or competitors.  
ii) Third-party staff could introduce invalid and/or unauthorized transactions. 
iii) Transactions could be lost because of disruptions of data. processing at third-party network sites or en route to the recipient partner, causing business losses and inaccurate reporting
 
15) Total Systems Dependence: All EDI transactions entered by an entity could be corrupted if the EDI-related application became corrupted. If the error remains undetected there could be an impact on cash flow, adverse publicity and loss of business confidence by customers and suppliers. Undetected errors transactions received from trading partners could cause losses from inappropriate operating decisions.

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