SolutionWeb > Business > What are the disadvantage of EDI?
9
Jan

What are the disadvantage of EDI?

Disadvantages of EDI:-“Electronic data interchange (EDI) Is the electronic exchange of business documents in standard, computer-processable, universally accepted format between the business partners.”

Following are the disadvantages of EDI:-

  1. Too many standards:-

There are too many standard bodies developing standard documents formats for EDI. For example, one company may be following the x12 standard format, while it’s trading partner follows EDIFACT standard format.

  1. Changing standards:-

Each year, most standards bodies revisions to the standards. This poses a problem for EDI users. One organization may be using one version of the standard while it’s trading partners might still be using older versions.

  1. EDI is too expensive:-

EDI is expensive and requires a heavy investment to launch and maintain the technology. Small companies might find it difficult to invest in EDI because of the expenses to be incurred in implementing and maintaining it.

  1. EDI limits your trading partners:-

Some large companies tend to stop doing business with companies who don’t comply with EDI. For example, WalMart is doing business with only those companies that use EDI. The result of this is a limited group of people you can do business with.

  1. Rigid requirements:-

EDI needs highly structured protocols, previously established arrangement, unique proprietary bilateral information exchanges.

  1. Requires maintenance of links with other systems:-

Responsibilities may have to be changed during the introduction of the EDI system. Unless this system and the links with the other systems are managed well, it is not possible for the data processing department to be involved in production and purchasing decisions.

  1. Open to limited traders:-

EDI requires expensive VAN (Value Added Network) networking to operate at peak efficiency. Only high-volume, large trading partners can afford this investment.

  1. Requires implementation of EDI program:-

Some companies are only doing business with others who use EDI. If a company wants to do business with these organizations, they have to implement an EDI program.

  1. A requirement of special hardware and software:-

EDI is a point to point Every contact requires special hardware and software.

  1. Usage not easy:-

As a system, EDI is not easy to learn, use and implement.