Question

What are the advantages and disadvantages of using Electronic Data Interchange?

Answer 1

Answer below here -

Electronic Data Interchange can be defined as interchange of business infomation electronically. Instead of using conventional techniques of sending information using paper, electronic mediums are used to tranmit information to the counter business party.

Advantages of Electronic Data Interchange are -

1. High Speed - Using the electronic medium helps to reduce the time involved in information processing. Using of EDI helps to speed up the business process significantly. The purpose is achieved here by eliminating time taking manual activities.

2. Lower Costs - By using the electronic medium for information exchange, the costs associated with paper, printing, storage, postage etc are reduced and it helps in easing administrative efforts and costs.

3.Increases overall business efficiency - Since electronic devices are much more smart and error free as compared to human, so it provides humans to focus on all those tasks which are much more crucial to business success instead of manual report prepration task. Therefore, it increases business efficiency.

4. Serves Environmental Prevention Motive - Using the electronic medium for data exhange, the use of paper and such resources are reduced. Therefore, it helps to prevent global warming and serves environmental purposes.

5. Enhances the security and precision - Using electronic softwares and tools the possibility of human errors is minimised. Also it leads to much more precision and security as compared to manual administrative process. Therefore, it ultimately adds to overall business efficiency.

Disadvantages of Electronic Data Interchange are-

1. High Setup and Initital Costs - The costs associated with the setup of electronic infrastructure for the EDI is expensive and requires high investment in electronic systems and tools.

2. High Protection Costs - Apart from high setup costs, additional costs related to protection like antivirus solutions, backup solutions also needs to be incurred so as to keep the electronic infrastructure safe and sound.

3. Time Consuming - The initial setup apart from expensive is also time consuming. Since each and every data point needs to be entered in the system therefore intial setup involves taking a lot of time.

4. Too many choices - With the EDI advancement, the choices available for the EDI infrastructure have multiplied which leads too many varities and standards available. These huge variety sometimes creates hetrogeneity and creates problem in exhange of EDI among two parties.

The above are the common advantages and disadvantages of EDI.

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