Technical note
The use of electronic data interchange for supply chain
coordination in the food industry
Craig A. Hill
a,∗, Gary D. Scudder
b,1aDepartment of Management, J. Mack Robinson College of Business, Georgia State University, P.O. Box 4014, Atlanta, GA 30302-4014, USA bOwen Graduate School of Management, Vanderbilt University, 401 21st Ave. So, Nashville, TN 37203, USA
Received 26 January 2001; accepted 18 February 2002
Abstract
Supply chain management (SCM) is concerned with the relationship between a company and its suppliers and customers. It is characterized by interorganizational coordination: companies working jointly with their customers and suppliers to integrate activities along the supply chain to effectively supply product to customers. More developed SCM is indicated by systematic integration, i.e. standardized and automatic interorganizational interfaces. Information technology (IT) engenders such systematic integration by allowing more efficient and automatic information flow.
This research focuses on electronic data interchange (EDI), an important class of IT used for interorganizational information transfers in the supply chain. Data from a survey of the food industry is used to examine the use of EDI with respect to interfirm coordination activities involving suppliers and customers. The influence of demographic characteristics on EDI use is also investigated. The results suggest that firms view EDI as a tool for improving efficiencies rather than as a tool for facilitating supply chain integration. There is also a surprising difference in firms use of EDI with customers vis-à-vis suppliers. Firms tend to be much more accommodating of the desires of their customers than of their suppliers. © 2002 Elsevier Science B.V. All rights reserved.
Keywords: Supplier management; Purchasing; Empirical research; Food industry
1. Introduction
Firms within a supply chain routinely communi-cate with each other. This form of interorganizational communication can occur in many ways, from the postal transfer of paper invoices and purchase orders to sophisticated information technology (IT) that links two companies databases. The development of supply
∗Corresponding author. Tel.:+1-404-651-3392;
fax:+1-404-651-2896.
E-mail addresses: chill4@gsu.edu (C.A. Hill),
gary.scudder@owen.vanderbilt.edu (G.D. Scudder). 1Tel.:+1-615-322-2625; fax:+1-615-343-7177.
chain management (SCM) requires that members of a supply chain, in this case the supplier and the cus-tomer, have relationships that would include the co-ordination of production and logistics activities. This type of coordination requires supply chain integration, suggesting that decisions are made jointly with regard to the two companies’ production, inventory, and de-livery activities. IT can facilitate supply chain coordi-nation, particularly when the technologies are used to span the traditional boundaries of supply chain firms. This class of IT is referred to as an interorganiza-tional information system (IOS), with electronic data interchange (EDI) being an example of such a system. The use of EDI has the natural effect of increasing 0272-6963/02/$ – see front matter © 2002 Elsevier Science B.V. All rights reserved.
interorganizational coordination activities, as well as increasing the integration that occurs between supply chain members.
The food industry has focused on the develop-ment of SCM techniques as well as the use of EDI. The strong promotion of efficient consumer response (ECR) initiatives by members of the food industry is evidence of this focus. This paper, through the use of survey data, explores the use of EDI and supply chain coordination within the food industry.
2. Literature review
2.1. Electronic data interchange
Our research looks specifically at EDI and its rela-tionship to supply chain coordination. EDI is defined as computer-to-computer transmission of standard-ized business transactions, as found in Walton and Marucheck (1997). In the food industry, there are standard interfirm EDI transactions which use the industry protocols that are defined in the uniform communication standard II (UCS II).
Our research also explores the frequency and depth of EDI use within the food industry.Evans et al. (1993) give a history of EDI and develop descriptions of the phases of EDI implementation through which an orga-nization would typically progress. A study on EDI im-plementation and benefits was published byWilliams (1994), who developed a framework for EDI adop-tion based on characteristics of the industry and its in-terorganizational relationships. EDI use and its value to the organization were explored byWilliams et al. (1998)with specific applications to the freight indus-try inMurphy et al. (1998). EDI’s impact on customer service and delivery were studied byLim and Palvia (2001)andAhmad and Schroeder (2001).
2.2. EDI and supply chain management
SCM places an emphasis on the flow of both infor-mation and material, synchronized to the customer’s requirements, from raw materials to the end consumer (Stevens, 1989). In effect, SCM blurs the traditional boundaries that exist between supply chain entities through interfirm activities such as: sharing of re-search and development, the placing of employees
with other firms, development of cost management systems across firms, collaborative inventory control and inventory placement decisions. SCM has an em-phasis that goes well beyond the traditional function of materials management (Cooper and Yoshikawa, 1994; Tzafestas and Kapsiotis, 1994). Information sharing between the buyer and supplier is considered to be a major indicator of the use of SCM. When informa-tion flows seamlessly in both direcinforma-tions, the effect is to create a virtual supply chain. Information transfer is used, in effect, to integrate the entire value chain into one longer chain (Shapiro et al., 1993; Rayport and Sviokla, 1995; Bhattacharya et al., 1995; Towill, 1997). In the context of SCM, the term integration relates to how closely, particularly at their interfaces, supply chain entities operate as a single unit. Higher degrees of integration occur when supply chain mem-bers automatically coordinate some aspect of produc-tion. EDI is important since it facilitates frequent and automatic transfers of information required for high degrees of integration and coordination within the sup-ply chain. Conversely, the use of EDI, without the in-tegration of supply chain activities, will simply speed up an existing process. This integration requires the reorganization and restructuring of the relationships between firms to achieve the full benefit from use of both EDI and SCM (Konsynski, 1993).
Coordination is an integral part of supply chain in-tegration. Clemons and Row (1992) focus their re-search on the coordination between firms, using it to measure integration. In particular, EDI is an enabling factor and the first step leading to integrated supply chains (Swatman et al., 1994; Curran, 1991).Evans et al. (1993) show that the degree of integration in SCM depends on the degree of EDI use within the firm. 2.3. Supply chain management and the food industry Effective implementation of EDI and SCM has great potential for improving efficiencies within the food industry’s supply chain. There are three industry pro-grams in place that promote SCM and the use of EDI for performing the routine transactions between trading partners. ECR, the largest program of this type, focuses on the grocery and food manufacturers’ strategy of developing closer relationships between distributors and suppliers (Kurt Salmon Associates, 1993). An underlying principle of ECR is the need to
develop EDI links between the supplier and customer. The estimated savings through cost reductions that could come from the use of ECR could potentially ex-ceed $30 billion. In the foodservice industry, a similar program, called efficient foodservice response (EFR), is being implemented with potential savings in sup-ply chain costs of $14 billion (Smith, 1996). The third program is the UCS II program that promotes the de-velopment of electronic data synchronization through the use of standard transaction sets for transferring information between retail stores and their suppliers (Kearney, 1995).
Thomas et al. (1995)give a detailed analysis of the grocery industry’s structure and exchange patterns. These exchange patterns have caused demand distor-tion and amplificadistor-tion in the supply chain, which are linked to inefficiency within this supply chain. The grocery industry uses buying practices, such as for-ward buying, that exacerbate the effect of industrial dynamics and the bullwhip effect (Lee et al., 1997). This phenomenon has been estimated to account for 40–50% of distributors’ inventories. Clark and Hammond (1997)study the performance benefits that occur from reengineering the process of supplying products to the retailer in the food industry. In this case, EDI is the enabling technology which makes continuous replenishment possible as a result of the reengineering process.
Current activity, as described above, makes the food industry an interesting one to study. Our research looks at EDI use and the demographics of the food compan-ies that use EDI. Supply chain coordination and its re-lationship to EDI use are also explored in this research. This paper is similar to other research in SCM where the focus is centered on the relationship between suppliers and buyers (Ellram, 1991; Cavinato, 1992).
3. Research questions
This research is directed toward answering ques-tions concerning the frequency of use of EDI in food industry firms. We also examine how well integrated EDI is into firms everyday activities. We explore these questions by looking at the types of information trans-actions for which a company uses EDI.
Q1: How prevalent is the use of EDI in the food in-dustry?
Q1a: How many firms use EDI?
Q1b: How integrated is the use of EDI among firms?
The next section is concerned with determining which types of firms are more likely to use EDI. For example, does the size of the firm, in terms of sales volume and the number of employees, affect their tendency to use EDI? It would seem likely that larger firms would be more sophisticated in their communi-cation with their supply chain partners and would be more likely to use EDI. Also it would seem that the market the firm competes in would be an indicator of whether a firm uses EDI or not. EDI would provide greater benefits in firms that produce more products because of the larger number of transactions to be processed. Market competitiveness could indicate the need for gaining the efficiencies that would come from EDI. The research questions concerning the use of EDI and the firms demographics are:
Q2: Do the demographics of the firms indicate EDI use?
Q2a: Does the firms size affect EDI use? Q2b: Does the company’s market type affect EDI
use?
The preliminary case studies and interviews used to build the survey questionnaire show that there are sev-eral activities that are indicative of supply chain co-ordination. This coordination occurs when interfirm activities are planned and implemented with mutual action and agreement between the parties. Some of these coordination activities would naturally require the use of EDI technology and some would not. In this research, to accommodate the comparison of EDI users and non-users, only the coordination activities that do not require the use of EDI were included. The descriptive statistics of the firms usage of these coor-dination activities form the basis of the third research question.
Q3: How disseminated are the coordination activities in the food industry?
For the development of SCM, firms necessarily co-ordinate their interfirm activities, including making mutual decisions and taking actions related to these ac-tivities. The simple use of EDI would just automate in-terfirm activities, whereas SCM would integrate these
activities. EDI is one technology that facilitates sup-ply chain coordination. Therefore, is a firm that uses EDI more coordinated with their supply chain partners than one that does not use EDI?
For this analysis, the activities related to the cus-tomer were separated from those relating to the sup-plier. The last research questions are expressed as hypotheses and are related to how the usage of EDI leads to an increased use of supply chain coordination activities. The hypotheses, separated by customers and suppliers, are:
H0a. Firms that use EDI have equal customer coordi-nation to those that do not use EDI.
H1a. Firms that use EDI have more customer coordi-nation than those that do not use EDI.
H0b. Firms that use EDI have equal supplier coordi-nation to those that do not use EDI.
H1b. Firms that use EDI have more supplier coordi-nation than those that do not use EDI.
4. Questionnaire development and data collection The survey questionnaire had its genesis in ex-ploratory interviews and limited case studies. The purpose of the initial research was to gather unstruc-tured, qualitative information from the industry; in this case, from the distributors and retailers of food prod-ucts, as well as food manufacturers. The interviews and case studies focused on the firms current use of EDI, benefits from EDI, the implementation process, and the determining indicators of the successful use of EDI technology. The case study research was also useful in gaining insights into the current status of the use of supply chain coordination in the food in-dustry. Campbell (1979) and Fielding and Fielding (1986) suggest the use of this type of multiple re-search methodology where qualitative, exploratory research provides a basis for survey questionnaire development.
A draft questionnaire was developed from the infor-mation gained from the interviews and the case stud-ies. It was then reviewed for content validity by two members of the food industry who were active in the
development of the case studies and closely involved in an EDI implementation process. The final question-naire included input from many individuals, both in industry and in academia, and included refinements made from the analysis of the results of the pilot study. The sections of the questionnaire that are relevant to this research study are presented inAppendix A.
The mailing list was obtained from the American production and inventory control society (APICS). The survey was administered with a focus on receiving the highest possible response rate. A pre-notification letter was used to overview the research to potential respondents. The questionnaire included a cover letter, and a letter promoting the research from the Education and Research Foundation at APICS. Non-respondents were later sent a reminder postcard as a follow-up to the first questionnaire. The non-respondents to the first survey then received a second questionnaire and subsequent follow-up postcard. Finally, phone calls were made to all second round questionnaire non-respondents.
For the data analysis, both the pilot study and full survey data were combined, since the two question-naires were practically identical. The gross response rate, with a reduction for returns to sender and pre-notifications of refusal to participate, was 225 out of 486 or 46.3%. The response rate for usable surveys, with a further reduction for the respondent being in a non-food industry, was 185 out of 446 or 41.5%. A telephone call was made to non-respondents as a last attempt to persuade them to respond. From the phone calls, it was ascertained that over 18% of the mailing list was not available at their listed telephone number or location. Additionally, there was not an apparent pattern in the type of companies that did not respond, or in the reason given for not responding. In general, it does not appear that a particular type of company was more likely to respond to the survey, helping to alleviate the chronic concern for non-response bias in industry surveys.
The survey respondents were most heavily con-centrated in food manufacturing, with 70% of the total respondents indicating that their company per-formed this function. The next two highest categories were manufacturers of raw material supplied to food manufacturers (20%) and distributors to a foodservice provider (12%). The questionnaire allowed for more than one type of industry to be indicated by a single
respondent. With a mailing list from APICS, whose members are more concentrated in manufacturing, it would be natural to find a large majority of the re-spondents in manufacturing or distribution.
5. Data analysis
The cover letter to the questionnaire outlined the purpose of the research and explained the topic of EDI and supply chain coordination. The questionnaire, in this research, focused on three areas; EDI, supply chain coordination, and company demographics. An overview of the research questions and data analysis is given inFig. 1.
5.1. The use of EDI
One purpose of this research is to learn how preva-lent the use of EDI is in the food industry and which types of companies are most likely to use EDI. The first issue is what percent of the companies in the food industry use EDI, and of those who use EDI, how fre-quently do they use it. This measurement should indi-cate the commonality of EDI within the food industry. This measure alone lacks the dimension of depth or
Fig. 1. Overview of data analysis.
an indication of how assimilated EDI is into the rou-tine activities of the organization. We approached that measurement by asking for information about several specific types of EDI transactions (developed from the UCS II) the company uses and with how many of their supply chain partners.
This research also addressed the issue of which types of companies are most likely to use EDI. We looked at two demographic dimensions in answering these questions. The first was company size, measured in number of employees and sales dollars. The sec-ond dimension looks at the type of market that an organization’s product is competing in. The attributes of the company’s market are product competitiveness, seasonality, perishability, and the number of competi-tors in the market. The next two sections look at these issues.
5.1.1. Prevalence of EDI use
From the industry survey, the number of respon-dents that used EDI was 133 or 72% of the total food industry respondents. The average length of time that these respondents have been using EDI was 5.25 years, with a range from newly implemented EDI to two companies that had been using EDI for over 19 years. In addition, the questionnaire asked for the frequency
of EDI use by the company. The categories ranged from routine, to on-an-exception basis, indicating that the activity was used only when requested by the sup-ply chain partner or for another special reason. The majority of the respondents that used EDI do so rou-tinely (57%) or at least daily (32%). A much lower percent (11%) used EDI only weekly or on an excep-tion basis.
The depth of EDI implementation within a com-pany was measured by asking the respondents to indi-cate the percentage of the total number of customers and suppliers with whom they use EDI to perform eleven specific information transfers. These transac-tions were identified in the case studies and are stan-dard EDI transactions (similar to UCS II transactions) and range from invoices through sales activities. For an indication of how many supply chain members the transactions are used with, the responses were placed into a five point scale with the following categories: 0–5, 6–20, 21–50, 51–75, and 76–100%.
Purchase orders and invoices were the largest use categories, with over 50% of the respondents indicat-ing that they used EDI with more than 5% of their cus-tomers. These two transactions are used as the starting point for development of EDI, as they are the most common and routine supply chain activities. Other transactions were used less frequently. The transac-tions for the transfer of production and sales activity information, along with promotional activity transac-tions, were least likely to be transferred through EDI. In summary, the transactions that were the most rou-tine and frequent, with both customers and suppliers, were the ones most likely to be completed using EDI. Table 1shows the average percent of customers and suppliers, calculated using the center point of the ques-tionnaire category value, that a company is currently using EDI transactions with.
5.1.2. EDI use and the firms demographics
The two variables on firm size, sales volume and number of employees, were tested for differences be-tween the two groups using a Pearson’s chi-square test. The test was used to see if there was a differ-ence between users of EDI and non-users of EDI. The tests showed that there were significant differences be-tween the two groups on these variables. The level of significance is very high for both of these two-sided tests,<0.0005. Cross-tabulations were done on each
Table 1 EDI transactions
Types of EDI transactions Percent use of EDI With customers With suppliers Invoices 21.1 10.6 Purchase orders 28.5 14.0 Pricing 11.6 9.6 Maintenance 8.0 7.1 Promotion 7.7 6.6
Advanced shipping notices 11.5 10.7
Warehouse orders 19.2 12.5
Notices of order receipt 13.9 11.8
Schedule information 9.6 9.7
Current production activities 7.7 8.9 Current sales activities 8.9 8.7
of these variables with EDI use. Analysis of actual category membership, as compared to the expected membership for each category, indicated that the larger the company, in both sales volume and employees, the more likely it is to be an EDI user. Conversely, the smaller the company, the less likely it is to be a user of EDI.
Using a seven point Likert scale, respondents were asked to rate the characteristics of their company’s product and market. The characteristics of interest are product seasonality, product perishability, petitiveness of the market, and the number of com-petitors. The results for the two groups, EDI users and non-users of EDI, were measured using the Mann–Whitney non-parametric test for difference of means since the data for these variables was not sym-metric. None of these variables showed significant differences between the two groups. The nature of the company’s product and market do not, from this data, predict whether the company is more likely to either use, or not use, EDI. The firms that would seem to receive the most benefits from EDI, firms whose products were in a highly competitive environment or firms that have many transactions because of a larger number of customers, were not any more likely to use the technology.
There might be some other attribute of the com-pany, other than size, that would better predict the use of EDI. The reasons might include the forcing of technology use by a stronger supply chain partner,
segments of the food industry being more likely to use EDI, etc. This research did not explore these possible alternative reasons, due to the limitations of question-naire length. The next section focuses on the study of supply chain coordination and its effect on the use of EDI.
5.2. The use of supply chain coordination
This next section of the questionnaire was designed to measure the degree of supply chain coordination that a company has with both it suppliers and cus-tomers. Nine statements were provided with which the respondent could either agree or disagree. Based on observations from the case studies, these questions should be good indicators of how closely the company coordinates its activities with its supply chain mem-bers. These nine questions were asked with regards to both the company’s suppliers and the customers. Both EDI users and non-users of EDI were asked to complete this section of the questionnaire. In this re-search, only the indicators that did not include the use of IT, specifically EDI, were used in the data analysis to accommodate the comparison between EDI users and non-users. This includes five indicators of dination with the supplier and five indicators of coor-dination with the customer.
The central research question in this area is: Are the firms that use EDI more likely to use coordinating ac-tivities with their customer or supplier? This question is approached through the use of Principal Compo-nents Analysis to develop coordination variables for the customer and the supplier. A t-test was then used to test the means between the EDI users and non-users of EDI on these variables.
5.2.1. Customer and supplier coordination
The questionnaire measured interfirm coordination through responses to items that are associated with coordinating activities with both the supplier and cus-tomer. The respondents were given five point Likert scales with a range from strongly disagree, measured with a value of one, to strongly agree, measured with a value of five. The questions are divided into two five-question parts, one for customers and one for sup-pliers.Table 2provides a summary of these variables. The data is skewed towards agreement with the ma-jority of items that ask about the use of coordinating
Table 2
Response on coordination items
Coordination item Percent of respondents Agree Neutral Disagree Customers C.1: strives to be preferred supplier 94.7 3.0 2.4 C.2: active in business practice innovation 69.2 21.9 8.9 C.3: mutual system design 45.0 21.3 33.7 C.4: customers are Partners 73.4 22.5 4.1
C.5: ECR 36.9 35.1 28.0
Suppliers
S.1: try to reduce suppliers 79.3 15.4 5.3 S.2: active in business
practice innovation
65.9 22.9 11.2 S.3: mutual system design 25.9 27.6 46.5 S.4: suppliers are Partners 74.0 19.5 6.5
S.5: ECR 27.5 39.5 32.9
activities with their supply chain partner. The item in-dicating whether their company strives to be the pre-ferred supplier to their customer (C.1) received over 90% of the responses in the strongly agree and agree categories. Also, a large majority of responses indi-cated that they considered their customer and/or sup-plier to be a partner.
The one item that did receive a majority of responses indicating disagreement was the items concerning the accommodating of supplier needs in the development of the respondents systems (S.3). The similar item about customers received a majority of the responses in agreement. It appears that the respondents treat their customers needs differently than their suppliers needs, and in this case, are more willing to accommodate the customers needs than the suppliers needs when developing their information systems.
The following are the items concerning customer coordination:
C.1: Our company strives to be the preferred supplier to our customers.
C.2: Our company plays an active role in developing innovative business practices between our cus-tomers and ourselves.
C.3: We developed different procedures and systems to accommodate each customer’s preferences for purchase orders, billing, and delivery.
C.5: Our company is taking an active role in the imple-mentation of ECR incentives with our customers. The following are the items concerning supply co-ordination:
S.1: Our company strives to reduce the number of suppliers that are used for a specific item. S.2: Our company plays an active role in developing
innovative business practices between our sup-pliers and ourselves.
S.3: We developed different procedures and systems to accommodate different suppliers preferences for purchase orders, billing, and delivery. S.4: We consider our suppliers to be our partners. S.5: Our company is taking an active role in the
imple-mentation of ECR incentives with our suppliers. 5.2.2. Interfirm coordination and the use of EDI
This section investigates if there is a difference in the degree of coordination between the two groups of respondents, those that use EDI and those that do not. The hypotheses were developed to test this question. The items that measure this coordination are the same as those used in the previous analysis. The variables in this analysis for customer coordina-tion are C.1, C.2, C.3, C.4, and C.5. The variables used for supplier coordination are S.1, S.2, S.3, S.4 and S.5.
In the test for internal consistency using Cronbach’s Alpha, item S.3 was eliminated to raise the alpha value. The remaining variables were then used in the PCA, done using varimax rotation and the missing values were deleted listwise. The analysis yielded the customer coordination items and the supplier coordi-nation items extracting into one component with an eigenvalue >1. The extraction commonalities in both cases had items, C.3 and S.1, with a low commonal-ity value. With the removal of these last variables, fi-nal alpha values of 0.7209 for the customer items and 0.7674 for the supplier items were achieved. The final PCA was used to develop the coordination variables used in the analysis of Hypothesis 1.
The total variance explained by the customer co-ordination factor was 56.140%, and by the supplier coordination factor was 68.627%. The component matrixes for both analyses are shown inTable 3. For both the customer and supplier coordination variables, all items had a positive loading. These two variables
Table 3
Result of principal components analysis on coordination items Factor loading Customer coordination
C.2: actively develops innovations with customers 0.828 C.4: customers are considered to be partners 0.827 C.1: strives to be the preferred supplier 0.692 C.5: active in developing ECR with customers 0.631 Supplier coordination
S.2: actively develops innovations with suppliers 0.844 S.4: suppliers are considered to be partners 0.824 S.5: active in developing ECR with suppliers 0.818
were then used as measures of coordination in the testing of the hypothesis that EDI users have higher coordination than non-users of EDI.
5.2.3. EDI use and supply chain coordination The hypothesis that firms using EDI have more interfirm coordination than those that do not, has been broken into two parts for this analysis. The first part is for customer coordination and the second part is for supplier coordination. The results of the t-test show that there is not a significant difference (P =0.658) between the two groups on the coordi-nation variable for customers. So the null hypothesis that there is not a difference in coordination with customers between EDI users and non-users of EDI cannot be rejected. For coordination with suppliers, the t-test gave a significant (P = 0.033) result that the group means are different. There is a difference in coordination between EDI users and non-users of EDI and from the descriptive statistics for the variables means, it is shown that EDI users have a higher degree of coordination. This allows the re-jection of the null hypothesis and acceptance of the alternative hypothesis that EDI users have more co-ordination with their suppliers than do non-users of EDI.
The results from these two hypothesis tests indicate that there is a difference between the use of EDI and coordination between the company’s customers and suppliers. The data from the survey indicates that EDI is not necessarily used for the purposes of coordinat-ing with the customer. This analysis also shows that when a company is using coordinating activities with
its suppliers, based on the coordination variable, they are more likely to use EDI. It may be inferred that EDI is a tool used to gain coordination with suppliers, but not necessarily so with customers. An explanation for this difference lies in a limitation of this study; most of the respondents were manufacturers. Perhaps the wholesalers and retailers of the product have the power to force EDI systems onto the manufacturers. So in fact, the firm uses EDI with its customers but does so in a system not of their own making. When the firm forms a relationship with its suppliers for the purposes of implementing EDI, the manufacturer aims to improve the relationship through coordinating ac-tivities to entice the supplier into adopting the new technology.
6. Discussion
6.1. Summary and implications of this research This research explored how strong the dissemina-tion of EDI is in the food industry. Beyond just the number of firms that use EDI, which in this study was 72%, this research explores the frequency of the other types of standard EDI transactions that are used. This includes the separation of the relationships a firm has between their customers and suppliers. While most firms used EDI for the frequent and routine trans-actions, invoices and purchasing orders, they were not using EDI as often for the transactions that are more coordinating, such as transferring current sched-ules, production, and sales activities. This suggests that firms may see EDI as a tool for improving efficiencies rather than a tool for developing SCM. A surprising result was the difference in the use of EDI depend-ing on whether the supply chain member was a cus-tomer or a supplier. More EDI activity was seen with the customer than with the supplier. One limitation of this study is the use of a mailing list that is heavily populated in manufacturing. The differences between supplier and customer treatment may be linked to the firms position in the supply chain rather than the char-acteristics of the firms.
The likelihood of a firm using EDI is correlated to firm size, measured in both sales dollars and number of employees, but not with the type of market where the firms are placed. Obviously the larger a firm, the
more efficiency may be gained from automating sup-ply chain activities. So it is not unexpected that the larger firm is more likely to adopt new technologies. With regard to the market type and competitiveness of this market, the adoption of EDI is not correlated. It is an unexpected result since the larger the num-ber of transactions and the more competitive pressures placed on the firm, should lead the firm to develop technologies that bring efficiencies as well as ties to their supply chain members (coordination).
Additionally, hypotheses were tested as to whether or not EDI users are more coordinated with their customers and suppliers than non-users of EDI. The results show that companies would use EDI to become more coordinated with suppliers, but not necessarily with their customers. It may be a characteristic of manufacturers that they try to satisfy the customer requirements. In their relationship with their suppli-ers, the manufacturers may find a need to encourage participation in the process of adopting EDI. Perhaps a better indication of the coordination would be the characteristic of the supply chain partner not the firm itself. This research did not address this question.
6.2. Extensions and future research
There are questions that are left unanswered from this research such as: Do the customer or supplier characteristics affect the adoption of SCM and EDI by a firm? Are these characteristics a stronger influence than the characteristics of the firm? Further research could look specifically at one position in the supply chain such as the retailer; or intentionally develop a respondent profile that is representative of the entire chain. Extensions to this research would include lon-gitudinal studies, as well as studies in different indus-tries. The development of measures of performance as well as the measures of performance improvements coming from the use of coordination activities and EDI with the food industry would be the next logical step.
Acknowledgements
This research has been supported in part by the APICS E&R Foundation.
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