Executive Summary of Survey Results:

Promoting Electronic Data Interchange: Building a Foundation for Support to Small Business

Jonathan A. Morell, Ph.D.
William Neal
Viki Fries

A copy of the complete report is available for downloading

This document provides results of a survey of EDI usage in 255 manufacturing firms. Most of the firms are small or mid-sized, and represent a variety of industrial sectors. The questionnaire employed included sections on:

• Respondent's work setting (e.g. type of business, revenue)
• EDI environment (e.g. software, networks and standards used, type of EDI with customers and suppliers)
• Initiating EDI relationships (e.g. reasons for initiating EDI, tactics used in implementation)
• Complying with requests for EDI (e.g. reasons for complying, tactics used by trading partners)
• Internal EDI operations (e.g. how are decisions about EDI made, extent of integration into other business applications)
• Costs and benefits of EDI (e.g. full time equivalents engaged in EDI, impact on a different elements of company operations)
• Facilitators and inhibitors of EDI implementation (e.g. resources, EDI functionality, training, management support, human resources)
• Future of EDI in your company (e.g. integration, number of trading partners, reliance on standards)

The graph shown below shows the relationship we discovered between the consequences of EDI and the extent of EDI integration into other business applications. "Integration" was defined as full or automated data flow between EDI and applications such as accounting, inventory control, and purchasing. "Impact" was defined as respondents' ratings on a four point scale of how EDI affected issues such as: customer good will, sales, expediting, production planning and labor usage. This and many other findings are explained in the full report.

Background: Electronic Data Interchange (EDI) is the automated transfer of standards-based, structured, business data. Because it can speed the flow of information and pass data automatically to other automated applications, EDI is a powerful tool for improving business processes. The importance of EDI will grow in the future because it can help in major transitions that are going on in manufacturing: smaller but deeper supply bases, more value-added activity contracted to suppliers, shorter product life-cycles, agile manufacturing, and network based bidding/contracting procedures. To provide value, EDI requires that members of a supply chain alter internal business systems, change inter-organizational business relationships, and adopt new information technology. To further complicate matters, many of the companies involved are small and ill-equipped to deal with socio-technical change. Those companies will need help. For help to be effective, assistance programs must be based on systematic information about the benefits of EDI, the conditions under which those benefits are manifest, and the difficulties that stand between implementation and payoff. In order to obtain this information a questionnaire was developed with funding from the Air Force Manufacturing Technology Program, and deployed with funding from the Manufacturing Extension Partnership of the National Institute of Standards and Technology. To assure a relevant set of respondents, mailings were chosen with the assistance of five organizations:

• Aerospace Industries Association
• Automotive Industry Action Group
• Semiconductor Equipment and Materials International
• Telecommunications Industry Forum
• U.S. Army Tank and Automotive Command

Recommendation 1: Specific, effective implementation methods must be supported by EDI assistance programs. The data identify a number of specific tactics which are particularly useful for helping to establish EDI with trading partners. Because we know these tactics work, EDI support programs should make a point of propagating their use. Those tactics are: meetings sponsored by the company requesting EDI, trading partner participation in pre-implementation planning, specification of particular transaction sets, specific target dates for implementation, implementation guidelines and manuals, a help desk, and consulting and technical assistance.

Recommendation 2: Programs must be able to help companies who are operating at many different levels of EDI maturity. Support programs must understand their clients' needs and must be prepared to render context-appropriate assistance. Critical aspects of context include: state of EDI and information technology sophistication, status of EDI integration, views of EDI as a tool to maintain customer good will or as a means to improve internal operations, and knowledge about the link between EDI and business process change.

Recommendation 3: EDI support programs must assist with integration. The benefits of EDI are clearly tied to levels of EDI integration, even for small- and medium-sized manufacturers. While many companies have some form of integration, those existing levels are minimal. Therefore, programs are needed to help move companies from states of lesser to greater integration.

Recommendation 4: Programs must help smaller companies establish EDI with their suppliers. We can expect an increasing number of smaller companies to attempt to establish EDI programs with their suppliers. These smaller EDI initiators, however, often do not have the experience needed to effectively mobilize and organize their supply base.

Recommendation 5: Programs must help companies make effective use of information system expertise in support of EDI. The impact of EDI increases with the number of information system (IS) personnel involved. Presumably this is because "number of IS personnel" is a proxy for the amount of talent, time and expertise that a company can bring to bear on its EDI operations. Because IS human resources tend to be limited in small firms, EDI support programs must assist in helping companies deploy IS expertise to best advantage.

Recommendation 6: Programs must help companies react to requests for EDI. A large number of companies have no EDI and are being pressured by customers to implement such systems. EDI assistance programs are needed to help those companies move from no EDI to some EDI, and thus avoid being put at a competitive disadvantage.

Recommendation 7: Support programs must be prepared to handle a large volume of business. EDI support programs should be structured in a manner that will allow them to assist a large number of companies. This capacity is important because over the next few years manufacturers will engage in a great deal of activity to increase their numbers of trading partners, numbers of transactions sets, and extent of integration.

Assuring Viable EDI Support Programs: If proper choices are made about program design, the coming expansion of EDI will yield a ready client base for EDI support activities. To assure the success of those activities, program evaluation, using clear metrics of success, should be implemented. One set of metrics must deal with the question of whether an assistance program is offering appropriate services and operating in a manner that allows it to meet customer needs. A second set of metrics must assess impact on the customer, thus making it possible to track a support program's functioning against its accomplishments.

This work is sponsored by the National Institute of Standards and Technology (NIST) under the cooperative agreement #70NANB4H1602, task #10. Copies of the entire report can be downloaded as postscript files. Before downloading, be sure to set your browser to load the file to disk. Refer to the instructions for further details on how to download and view or print these files locally. Select the file(s) you wish to download:

• finalrpt.pdf (103 kb) The Final Report in Adobe Acrobat format
• quest.pdf (77 kb) The Questionnaire in Adobe Acrobat format

If you have problems downloading the file or have questions about this report or our related activities in electronic commerce, contact the study Director, Dr. Jonathan A. Morell via e-mail at jam@erim.org or at: (734) 769-4395, fax 4064.