Page 131 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Logistics and Supply Chain Management

Notes In another example, Texas Instruments reports EDI has reduced shipping errors by 95 percent,
field inquiries by 60 percent, data entry resource requirements by 70 percent, and global
procurement cycle time by 57 percent.
While EDI has made significant inroads into logistics communication, its penetration is beginning
to plateau at about 50 percent of the transactions. Large manufacturers, distributors, and retailers
have adopted EDI as a means to exchange information with major trading partners, but the
substantial setup costs and expertise required have limited its application by medium and small
firms.
Communication and information standards are essential for EDI. Communication standards
define technical characteristics so that the computer hardware can correctly perform the
interchange. Communication standards deal with character sets, transmission priority, and
speed. Information standards dictate the structure and content of the message. Standards
organizations have developed and refined two general standards as well as numerous industry-
specific standards in an effort to standardize both communication and information interchange.

Communication Standards

The most generally accepted communication standards are ANS X.I 2 (American National
Standards Committee X.12) and UN/EDIFACT (United Nations/Electronic Data Interchange for
Administration, Commerce, and Transport). X.12 is promoted as the U. S. standard; while
EDIFACT is promoted by the United Nations as more of a global standard. Each organization
has defined a structure for exchanging common data between supply chain partners. Experts
indicate that the most likely migration path is to EDIFACT standards. The National Institute of
Standards and Technology (NIST) and automotive experts are further driving information
integration by experimenting with approaches to exchanging data for the entire business cycle.
The program, known as STEP (Standard for the Exchange of Product Model Data), was designed
for exchanging design and engineering data between supply chain partners. STEP should allow
users to integrate business and technical systems data involving all elements of the business
cycle including design, analysis, manufacturing, sales, and service.

EDI Transaction Sets

Communication standards are implemented via transaction sets. A transaction set provides a
single common standard to facilitate information interchange between partners in any industry
and country. For each industry, the transaction set defines the types of document that can be
transmitted. Documents cover common logistics activities such as ordering, warehouse
operations, and transportation. The transaction set consists of a transaction code (or ID) and is
followed by the required data. The transaction code indicates whether the electronic
communication is a warehouse shipping order (code 940) or a warehouse stock transfer receipt
(code 944), for example. In addition to the transaction code, a warehouse transaction contains
warehouse number, item number, and quantity.

6.5.2 Internet

The widespread availability of the Internet and standardized interfaces offered through Internet
browsers such as Netscape and Internet Explorer has substantially expanded the opportunities
and capability to exchange information between firms of all sizes. The Internet is quickly becoming
the supply chain information transmission tool of choice for forecasted requirements, orders,
inventory status, product updates, and shipment information. In conjunction with a PC and an
Internet browser, the Internet offers a standard approach for order entry, order status inquiry,

126 LOVELY PROFESSIONAL UNIVERSITY