Frequently Asked Questions
What is EC and why is it important?
Electronic commerce (e-Commerce or EC, for short) is the
transaction of business using the paperless exchange of information, including
e-mail, websites, bulletin boards, electronic funds transfer, electronic data interchange
(EDI), and related technologies. EDI provides a standardized format for the exchange of
routine business transactions using third-party, value-added telecommunication networks.
Typical e-commerce transactions include purchase orders,
request for quotes, shipping authorizations, invoices, etc. E-commerce allows a
company to make money faster through reduced inventory and reduced operating expenses.
Why is EC so important?
The question is not if you will
have to use e-commerce, but when? EC/EDI is rapidly becoming a requirement
for many industries, particularly automotive and manufacturing, as well as retail and
healthcare. For example, the military and federal government mandate the use of EDI for
many transactions. Armed with a personal computer, a modem and software, any company
can compete for lucrative E-commerce-based business.
What is EDI and how do you implement it?
The basic components of electronic data
interchange (EDI) are:
- Computer Equipment
- Telecommunication Equipment
- Trading Partners (Customers)
- Value Added Networks (VANs)
EDI software products, computer and communications
equipment, and VANs are all commercially available. EDI software products link companies
to trading partners and provide interfaces with accounting, manufacturing resource
planning (MRP) and inventory systems. Currently, there is a wide selection of EDI software
available for all platforms, from personal computers to mainframes. The basic
"hardware" required for EDI is a personal computer, a modem, and a printer.
VANs provide services that are similar to the post office in
that they gather, store and distribute electronic mail. VANs, such as AT&T, GE
Information Services, Sprint, etc., provide small suppliers with access to customers
through various telecommunications networks. Trading partners are companies that you do
business with. Standards provide for a common communications medium. The EDI standard used
in the United States is the American National Standards Institute (ANSI) X12 format.
How to implement
The most important thing to remember when considering an EDI
system is that it is a "business decision." You should follow the same process
that you would in purchasing any other piece of equipment or software for your company.
There are hundreds of software products on the market and, because of this, it may appear
to be more difficult than it needs to be. You should try to select EDI software that meets
your business needs based on a predefined set of evaluation criteria. The same is true for
VANs. There are over 60 commercial VANs in the United States. How do you select the one
that is right for your business? Selecting a VAN is similar to selecting a long distance
telephone provider. You should weigh costs versus the services provided, making sure that
the VAN meets your business needs.
For equipment, you may be able to use equipment that
you already have in your company. If you plan to purchase dedicated equipment, select the
components that will address your EDI needs, now and in the future.
What are some benefits of EC?
The benefits from EC are as follows:
- Faster turnaround
- Reduced inventory
- Less clerical errors
- Increased productivity
- Lower cost per transaction
- Improved customer relations
- Shortened order cycle times
- Faster payment terms
You should consider the above benefits, in addition to the
capital costs, when deciding whether or not to implement EC/EDI in your business. However,
another very important consideration is that most of your current and potential customers
will be using it. If you are not EC capable you could lose your customers or, at a
minimum, miss out on additional opportunities.
How does the Internet impact EC/EDI?
The Internet is rapidly defining EC/EDI. The Federal
Government and most industries are rapidly integrating the Internet for EDI transactions,
thereby replacing or supplementing the use of VANs. Improved connectivity, bandwidth, and
security issues are being resolved, and as a result the Internet, may become the preferred
How can MTTC help with EC/EDI?
While many vendors will consult on the selection and
implementation of proprietary solutions, you should shop around and examine at
least three or four products/service providers It is especially important in EC to
try before you buy.
If you need impartial advice and assistance in selecting and
implementing an EC/EDI System, you can contact Roy Coleman; Electronic
Commerce Director, email: [email protected] phone:
(502) 367-2186, ext. 315. The MTTC helps businesses with EC/EDI and Internet-related