Development of an Electronic Data Interchange Model for Channel Management

Article excerpt


In this paper, the authors propose a new paradigm for distribution management based upon research and data collected over an eighteen month period through contributions made to an online conference sponsored by the Journal of Business and Industrial Marketing. Technological linkages between value chain partners using Electronic Data Interchange (EDI) and Automatic Data Collection (ADC) offers firms significant potential for the transformation of interorganizational relationships. Electronic data transfers offer considerable benefits and responsibilities for all participants and, with the increasing technical literacy of the customer-base, are becoming a requirement for sustaining operations rather than a competitive advantage. The growing importance and ubiquitousness of ADC and EDI in logistics and distribution is considered as well as the need for additional conceptual consideration in strategic business pedagogy.


The World-Wide Web was used not only to survey those interested in distribution, but also to collect and synthesize global input on the topics of Automatic Data Collection and Electronic Data Interchange. Automatic Data Collection (ADC) is defined as the collection of data by a firm without human input or with minimal effort. Scanning devices to read products and meters are normally used to collect the data. Electronic Data Interchange (EDI), the main focus of the paper, is defined as the electronic exchange of business transactions between companies from one computer to another using an accepted standard format (Jenkins, 1994).

Poised to change channel relationships profoundly, the objective of EDI was to obtain time and cost efficiencies through the direct exchange of data between supplier and purchaser systems (Sawabini, 2001). EDI is sometimes mistaken for other communication methods, such as electronic mail, general access to the Internet (Larson & Kulchitsky, 2000) or derivatives such as "Rip-and-Read" (Lauer, 2000). When EDI is confused with other communication methods, its full potential is not realized (Quinn, 1991). For the exchange to be considered truly EDI, the process must go from one system to the other with no manual intervention (Porter, 1990).

In recent years the growth of EDI has been significant (Hill & Swenson, 1994). It is estimated that over one half of all interorganizational business documents is transmitted between corporations by way of electronic data interchange. Further, channel issues such as efficient customer response, Just-In-Time (JIT) manufacturing and stockless inventories have been researched based upon EDI. Organizations utilizing any of these strategies force their supply chain partners, either suppliers or purchasers of goods, to implement EDI or face possible extinction. Thus, organizations are being forced to realign their goals and make decisions with their supply chain partners in mind (Kopczak & Johnson, 2003). However, the data linkages provided by EDI can enable organizations to reduce their inventory costs while improving their response to customer demands. The speed at which data is electronically exchanged is much faster than the traditional paper-based method and systems can be programmed to replenish inventory levels automatically (Ali, 1994).

The increased accent on managerial application has again placed emphasis on the input of the social sciences and non-economic paradigms. However, any new development of channel marketing theory must contain both economic and noneconomic concepts. Relationships can be considered within the economic political paradigm concept. The paradigm is an excellent tool to structure teaching lessons regarding channel management. Marketing pedagogy will be improved with additional concepts to account for and explain the information access influence on channels as well as the economic impact of EDI and ADC on business.

Allowing other channel members access to electronic data makes each firm more dependent upon the other and more committed to them and the system of distribution. …