The impact of EDI on the components sector of the Australian automotive industry

Electronic data interchange is an example of a cooperative inter-organizational system capable of providing competitive advantage and the greatest benefits were gained by organizations in which EDI was not only used, but fully integrated into their internal application systems.

Abstract

Electronic data interchange (EDI) is an example of a cooperative inter-organizational system capable of providing competitive advantage. This article examines the inter-organizational impact that EDI has had on the first Australian industry-wide adoption of the technology — the Australian automotive industry. The research focused on the component sector of the automotive industry which supply parts primarily to the locally-based multinational car manufacturers. It was this sector that has felt the greatest impact of EDI adoption, and the sector that expected the least benefits. In fact, about two-thirds of suppliers indicated they adopted EDI only because they were told to by their much larger customers (the car companies). Despite their apparent pessimism, the component sector did receive benefits from EDI adoption. In assessing the benefits, participants cited improved relations with trading partners, enhanced customer service, improved data accuracy and increased productivity as ranked in the highest group of claimed benefits from adoption. The greatest benefits were gained by organizations in which EDI was not only used, but fully integrated into their internal application systems. The analysis also indicated that senior management support was an important factor in achieving the stated benefits.