BENEFITS OF EDI

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Master of Commerce – M.Com First Year Solved Assignments for July 2019 and January 2020 Admission Cycles

M.COM First Year Tutor Marked Solved Assignment

Course Code: IBO – 04
Course Title: Export-Import Procedures & Documentation
Assignment Code: IBO-04/TMA/2019-20
Coverage: All Blocks

IBO – 04 Export-Import Procedures & Documentation Solved Assignment for 2019-20

Q1.) (b.) What is Electronic Data Interchange? Describe the benefits of Electronic Data Interchange for the Export-Import Organization.

Ans: Electronic Data Interchange (EDI) is the structured transmission of data between organizations by electronic means, which is used to transfer electronic documents or business data from one computer system to another computer system, i.e. from one trading partner to another trading partner without human intervention.

EDI can be transmitted using any methodology agreed to by the sender and recipient. This includes a variety of technologies, including modem (asynchronous, and bisynchronous), FTP, Email, HTTP, AS1, AS2, etc.

EDI benefits can generally be classified into:

1.) The strategic benefit includes:

• Faster trading cycle.
• Ability to adapt to new business processes such as Just-in-Time manufacturing techniques.
• Ability to win new business or retain existing customers leading to improvements in business efficiency.
• Ability to respond to highly competitive new market entrants.

2.) Operational benefits include:

• Reduced costs- paper and postage bills cut- reduction in money tied up in stock-manual processing costs (e.g. associated with verification, keying and re-keying of documents and the cost of manual filing systems).
• Improved cash flow.
• Security and error reduction.
• Acknowledged receipt.

3.) Opportunity benefits include:

• Enhanced image.
• Competitive edge.
• Improved corporate trading relationships.

4.) EDI includes the direct transmission of data between organizations VAN. EDI is not facsimile transmission (fax) of the information nor is its electronic mail (e-mail). Both of these transmission types are in "free format" (not standard format) and, therefore, generally require rekeying of data into the receiver's computer system.

5.) EDI would also cut down on the tendency for "human error". EDI eliminates this possibility because the receiving end is a computer that simply translates the message that has already been keyed into the system.