E-Commerce And EDI Essay, Research Paper

According to International Data Corporation more that ten million people are purchasing goods and services online in the United States alone. E-commerce allows people to exchange goods and services immediately and with no barriers of time or distance. E-commerce is a business growing at an exceptional rate. E-commerce at its simplest form is a goal to improve the way business is conducted, through technology. This technology includes marketing and online sales. There is a huge demand for e-commerce. Customers online want the freedom to buy items online in the convenience of their own home. Because of this increase in the demand of the customers the business must be able to provide properly functional sites. This isn?t as east as it sounds. A business using e-commerce must provide a positive experience for their customers that will build their brand equity.

Brand equity is providing access to your site that is error free. Your site should be easy to use and easy to access. By having these things you build customer loyalty. This loyalty becomes an ?extra? that will differentiate your business and products in the eyes of the customer. The most important part of you site should be availability and readiness to take orders. If your system crashes when taking orders not only are your customers going to have a bad experience but they will also still not be able to place their order. No orders means no money. There are many financial aspects of an up and running web site.

In order to run a successful e-commerce site you must be able to control the surges in traffic in your site. These are times where there is heavy traffic flow that could possibly slow your site to a crawl. There is a lot to look at when considering high volumes of traffic. The level of control a company has over their site is called Internet Quality Control. There are four main elements to this. They are server control, network control, control of applications and content, and network management. You need these four elements in order to have high control over your web site.

An important aspect of e-commerce is the development of EDI. EDI stands for Electronic Data Interchange. EDI was developed to increase supplier relationships and reduce costs. Greater interaction is created with the network of intercompany computers connected to exchange information. The goal of EDI is to eliminate the use of mail, courier and fax. With a new ?paperless? exchange companies would be connected electronically. All transactions are conducted through standardized processes to a trading partner. EDI has allowed firms to increase productivity, improved channel relationships, reduce operating costs, and increase ability to compete internationally. 1

The first benefit of EDI is the increase in productivity. Gains in productivity can be seen in both internal and external operations. Externally, companies can find increase in productivity trough fewer operations. For example most companies traditionally would create invoices with computer systems. The invoice then would be printed out ant sent to the customers. The customer would then enter into their computer system and then process the order. This process can take days, but with EDI it can happen with minutes. Internally, companies gain productivity through faster transmission of information as well as reduced data enter redundancy.2 A study by EDI Group, Ltd., reported the companies using EDI experienced reduced cycle times of 40.3% and a drop of error rates of 10.1% to 4.4%. This study shows how EDI can cause firms productivity to increase.

EDI strengthens relationships with suppliers. With cooperation and sharing information trading partners build ties that lead to stronger relationships and more commitment to each other. With stronger commitment comes a greater level of customer service. Fewer errors and the ability to give information on a ?real time? basis improve customer service.

EDI can save a firm a lot of money. First, overhead costs can be reduced or eliminated. Overhead can be reduced with less data entry, document handling, and storage of documents. With an ?paperless? environment printing costs, postage and filing costs will be reduced. On average companies who use EDI report cost savings of $2.20 per document. Second, EDI can reduce cycle time and uncertainty, which can lead to lower inventory carry costs and smaller inventory levels. EDI has also showed that transportation costs can be reduced. Firms can take advantage of premium freight charges. Perhaps one of the largest cost savings of EDI is error cost. With EDI once information is entered correctly, there is no opportunity for error because information is electronically entered after that. Texas Instruments reports that EDI has reduced shipping errors by 95 percent, data entry by 70 percent.

EDI has allowed companies to increased the ability complete internationally. This has been done by a firm?s ability to reduced cost and increase profitability through EDI. Firms have been able to do this with increased productivity and stronger relations with their suppliers. The sharing of information has lead to more commitment, and stronger customer service levels.

An example of a company using EDI and online tools to their advantage is UPS. It is currently positioning itself as a service for managing Internet-generated business processes, along with tracking product shipments, as was previously the case with it?s existing online software. It recently announced that it has formed a subsidiary that will perform back-end fulfillment functions for e-commerce companies and also help companies develop their supply chain management operations, the new subsidiary is to be called eVentures. UPS has operations in more that 200 countries, over 331,000 employees worldwide, and 1998 revenues of 24.8 billion dollars. Many companies including Micron Electronics, Automated Transaction Services, CommerceOne and INTERSHOP are already integrating UPS OnLine Tools into their systems. The information managed by the tools supports everything in the fulfillment cycle at the front-end, from just-in-time inventory to address validation to accounts receivable.

According to the company, e-commerce vendors and systems integrators can use UPS Online Tools to link their intranets and Internet web sites with UPS to allow their customers to quickly calculate shipping costs, select and compare shipping services and track packages from the point of order entry to delivery. The tools enable business processes, from order entry to accounts receivable to inventory control.

UPS is establishing itself as an E-Commerce Enabler, ?Electronic commerce is empowering buyers like never before. UPS online Tools support this trend by signing businesses and consumers product and shipping information where, when and how they need it ultimately turning customer support and internal purchasing costs from dollars to dimes?, said UPS?s VP of Ecommerce marketing.

UPS offers an array of online E-tools:

Enhanced Tracking-enables shippers and their customers to track packages using their own internally generated reference number.

Published Rate and Service Selection-enables an online merchant?s customers to compare UPS published rates for different level of UPS service.

Shipping and Handling-enables merchants to customize their rate tables to include a handling charge to allow the buyer to compare total shipping and handling charges.

Address Validation-catches discrepancies in city-state-ZIP code combinations and helps companies improve customer service and reduce costs by ensuring that shipping addresses are correct at the point of order entry, before the order has left the shipping dock.

Time-in-Transit-Provides the buyer with the time-in-transit in business days for UPS ground shipments between any two postal codes within the continental US.

Service Mapping-Generates a color-coded map displaying UPS ground transit time for any origin ZIP code within the continental US service. This is specifically geared for just in time planning inventory system.

Electronic Manifesting-enables customers who use a non-UPS OnLine compatible shipping system to upload shipment manifest information to the UPS mainframe, which is required for reference number package tracking, allowing UPS customers to designate their own tracking number, such as invoice number to shipments.

In conclusion e commerce is revolutionizing how business operates. Be it through improved customer relations and service or increased efficiency leading to immense savings. It is being recognized as not just improving clerical tasks but as an integral part of doing business today.