EDI Maturity Model

The development of EDI within an organisation or a trade sector goes through a number of stages. Saxena and Wagenaar suggest a three stage EDI maturity model as a part of a three-way analysis of EDI development in organisations, trade sectors and nations. 

Figure 2.20 shows the concept of EDI maturity with a six-stage maturity model, and links it to the opportunities for competitive advantage.

The stages of EDI development as represented in the model are: 

Stage 1:Discovery: The first stage in EDI development is the discovery stage. Discovery can be by an organisation choosing to adopt EDI to gain competitive advantage or to solve an administrative problem. 

Stage 2: Introductory: This stage requires investment hardware and software but, atleast significant, will be the time commitment in establishing the parameters of the electronic trading relationship. This stage, on its own, does not result in any cost saving or efficiency gain. there are direct costs in computer as

Stage 3:Integration: This stage is referred to as the integration stage. The work involved in this stage is very variable but often expensive. To establish the service EDI software can be bought 'off the shelf. Integrating the EDI software and the business system will often require writing a tailor-made interface system. The EDI software will provide interface file formatting facilities but is not likely to be able to match the validation and integrity checks that a business system would normally apply to input data. Integration is an essential stage for the large user of EDI. 

Stage 4:Operational: The conversion of the major part of the trade cycle, both in volume of trading partners and in numbers of message types is the operational stage. Different organisations have placed differing emphasis on the completion of the operation stage. Retailers have been keen to convert all their suppliers to EDI orders but there has been less emphasis on electronic invoicing and payment. The vehicle assemblers however tend to be more advanced in implementing other message types. Completing the electronic trade cycle speeds up business transactions and gives the opportunity to look at the organisation of that trade cycle and the supply chain.

Stage 5:Strategic: There are savings to be made by simply replacing paper documents by their electronic equivalent. The real opportunities come from making changes to established business practice. These opportunities only arise when significant progress is made in the operational stage - the implementation of these changes is the strategic stage. Possible areas of change and examples of where such changes have taken place are: 

i) The sequence of trade documents can be revised. Document matching is a considerable problem in order processing. Customers have to match deliveries to the orders, and invoices to the deliveries; suppliers have to match payments to invoices, each process made more complex by disparate document types, part deliveries (i.e., less than the full amount ordered) and incorrectly recorded codes. EDI makes the process easier at the very least codes should be correct and in the proper place. EDI also gives the opportunity to re-engineer the trade document cycle.

ii) EDI can give dramatic time savings. The time between formulating a replenishment demand and the order being processed by the supplier can be as short as is required -  for all orders not just rushed orders. This has facilitated the reduction or elimination of stock holding (by the customer organisation atleast) and is a part of the development of Just-in-Time (JIT) manufacture and quick response supply.

 

Stage 6: Innovation: The establishment of an operational EDI infrastructure and the change of operational procedures that it facilitates also give the possibility of changing the nature of the product or the provision of new services. These developments are termed the innovation stage in the model and it is contended that they open up new possibilities 'for competitive advantage.

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