Electronic Data Interchange Adoption in Saudi Arabia

Dr. Mohammed A. T. Al-Sudairy Assistant Professor Business Department Faculty of Economics & Administration King Abdul Aziz University, Jeddah E-mail MAS@KAAU.EDU.SA

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EDI adoption in SA

Presentation Layout
Introduction EC and EDI Methodology Findings Conclusion

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EDI adoption in SA

Inter-Organization Systems
Electronic

Data Interchange (EDI) Electronic Commerce (EC) Electronic Fund Transaction (EFT) Electronic Mail (E-mail) Electronic Form (EF) Integrated Massaging and Shared Database
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Electronic Commerce
EC

is the handling of business transaction over communication networks. EC is not enabling technology but it is simply conducting business electronically through enabling technology such as EDI, VANs and Internet.

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EDI adoption in SA

Electronic Commerce Categories

Business to Business (B2B) Business to Consumer (B2C) Business to Government

(B2G) Government to Consumer (G2C) Consumer to Consumer (C2C)

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Electronic Data Interchange

EDI is the electronic transmission of business data between or within firms in structured, computer processable data format, which permits information to be transferred without re-key from computer application in one location to computer application in the other location.
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EDI Components
EDI Standards Communication Standards EDI Software EDI Networks

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EDI adoption in SA

Sender
Application

Receiver
Application

Translator

Translator

Communication Software

VAN

Communication Software

EDI Network

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EDI adoption in SA

Translating from a Human Readable to a Machine Readable Standard Format

:From
Quantity
1 12 4 1 EA EA DZ

Unit
CSE

No.

Description

Price

6900 CELLULOSE SPONGES 12.75 P450 PLASTIC PAILS .457 1640Y YELLOW DISH DRAINER .95 1507 6 PLASTIC FLOWER POTS 3.00

:To

ANSI X12 FORMAT

IT1*1*1*CSE*12.75**VC*6900 IT1*2*12*EA*.457**VC*P450 IT1*3*4*EA*.95**VC*1640Y IT1*4*1*DZ*3**VC*1507 EDI Translator
EDI adoption in SA 9

Application systems e.g. accounts system

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ANSIX12 Invoice

Application System Application System

EDI Interface

Application Interface EDI Translator Communications Interface

Application System

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EDI adoption in SA

Communications Interface

EDI Interface EDI Translator

Application System Application System

Application Interface

Application System

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EDI adoption in SA

EDI Benefits
Reduced

overhead costs Reduction in labour Increased accuracy Improved communications and management control Improved inventory control Enabled retailers to be more responsive to consumer needs
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Motivation Factors
Strategic
Better

Operational

communication Quick response & with trading partner access to information Remaining competitive Increase data accuracy Butter customer service Reducing stock

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EDI adoption in SA

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EDI Barriers
Difficulty

of a cost/benefit evaluation The need to keep in use two information systems Standardisation Externalities of EDI applications can overstep the firms boundaries and modify the business and market perspective from competition to collaboration. Resistance to change.
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The Ned for EDI in SA

To participate in international free trade To liberalise trade and economic To become a member of WTO

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Factors influencing the Decision to use EDI

Organization size External Pressure Competitors Local customers or suppliers Overseas customers or suppliers

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Methodology & Sample

An

Exploratory Study

Survey

Questionnaire The

Sample

297 40

Response
126 (37%) 34 use EDI 92 None user
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10

15

20

0
Distributer Appliance Sup / mrk Car Dairy Dep / Furnitur store Pharmacists Stationery Supestore Food Cosmetics Toys Cothing
18 EDI adoption in SA

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Business Type

Others

Finding
Job Title
47% MIS Manger 17% CEO 15% MIS Employee

Annual Sale
42% 25-199 MSAR 41% >200MSAR 17% <25 MAR
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Finding / Pressure
Local Suppliers
7

Local Customers
7

Overseas Suppliers
26

Overseas Customers
5
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Hypotheses Results
Variables Organization size Competitors use EDI Pressure local sup Pressure overseas sup Pressure local custm. Pressure overseas custm. Chi-Q 2.27 7.26 3.25 12.3 20.88 3.00 Sig 0.32 0.02** 0.07 0.00*** 0.00*** 0.08

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EDI Barriers in SA
The lack of MIS staff An inadequate training program An unsatisfactory

communication lines Poor awareness about EDI Standardized business operating procedure
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IT Barriers
Lack of technical expertise either by Service providers or Organizations the users Shortage of technical skilled employee Lack of technical support

suppliers Lack of Knowledge about IT

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by IT

23

Closing
Government

Education Promoting Employment Leading

Private
Need to be computerized Treat IT as a competitive weapon Joint venture and strategic alliances
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