EDI in Automotive Sector

Since the late 1960’s the automotive sector in the United States was utilizing EDI as a means for communicating with suppliers, and for communication within their own plants. The car industry fell into confusion when General Motors tried to lower costs through holding onto an inventory which could only be one day’s worth of supplies. Because of this, the inventory costs were greatly lowered. This was done via EDI, and it allowed them to set their own system of communication with their suppliers. This strategy was soon being used by other automotive companies to lower their costs in a similar manner.

This led to the need for a documentation standard throughout the industry. This was made clear via the Automotive Industry Action Group, which combined with automakers and their suppliers for the development of an EDI standard which could be used by the entire industry. With this system, the industry would be able to construct a standard which is specifically related to the automobile industry. Now, however, it is being used to streamline operations, reduce daily running costs, and implement complementary systems that allow the industry to work at an optimal rate. As with any industry, time is money, so when is reduced, ostensibly the other is increased.

By implementing EDI in a more wide reaching scope, the automotive industry is improving its bottom line. The following benefits were noted when a supply chain introduced EDI into their business system: shorter lead times; more inventory turns; reduced cost of data entry; fewer data entry errors; better scheduling; faster release processing; and increased productivity. The industry has been able to rework its business structure, and incorporate EDI into various new applications such as JIT or Just in Time, which is an inventory system which is designed to ensure inventory is delivered just when it is required.

This guarantees a reduction in inventory costs, and redundancy in inventory. It requires great co-operation between supplier and customer and an efficient communications system - which is where EDI comes in. Companies use EDI to order their requirements, and have them shipped in a timely manner.

Transport Sector

The transport sector was one of the first industries to adopt EDI services, whether by sea, air, road or rail. In 1968 the Transport Data Coordination Committee and the National Association of Credit Manager’s Credit Research Foundation began developing standards for electronic data interchange. In 1979, the American National Standards Institute charted the Accredited Standards Committee (ASC) X12 to develop uniform EDI standards.

Throughout the 1980’s, five standards were published, and they were gaining acceptance in North America. Europe was continuing to work using other standards. This was causing difficulty in international trade, as the lines of communication were becoming confusing. As such the creation of an international standard was required - and the United Nations EDI for Administration, Commerce and Transport (UN/EDIFACT) was born.

These established standards that were flexible enough to meet the needs of all parties, and also included three additional regions, of Australia/New Zealand, Asia and Africa. This enabled international shipping and transporting of goods to be much more seamless. Instead of each part of the transporting system such as ship, a then truck and then receiver all getting pieces of paper stating the delivery order and what was contained, each part of the process will receive exactly the same data electronically. EDI within the shipping industry allows for improved communications and more accurate descriptions of deliveries, on and off loading, and a saving in time and personnel.

It also allows for a more interactive experience for customers - as for the rail systems in Australia, where document exchange occurs between everyday customers and the system. The EDI system allows for swift and efficient flow of information to occur between the components of the shipping process.

The introduction of EDI has greatly improved the quality and efficiency of the shipping industry, whether it is between supplier and customer, or the elements of shipping. The improved communication also decreases the amount of paper and incidence of error, which is a common bonus of EDI usage.

The Automotive Sector

Transport Sector

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