Many inter-organizational systems are increasingly using electronic data interchange (EDI) to support the strategic supply chain by way of delivering and processing business documents. In a vendor–customer relationship, EDI can provide many benefits to both organizations; one such benefit is improved customer service. This study examines the impact of EDI on customer service, when the vendor and customer utilize EDI in their distribution operations. The primary hypothesis is that EDI improves customer service. A number of secondary hypotheses dealing with specific components of customer service were also tested. Data was obtained by administering survey instruments to purchasing managers of firms in the automobile and pharmaceutical industries.
The results provide strong support for most of the hypotheses. Specifically, EDI contributes to the following customer service components: order cycle time, product availability, distribution flexibility, distribution information, and distribution malfunction. An impact on post-sale product support was not discernible from the data. In addition, some industry influences were also observed on the impact of EDI.
Electronic data interchange (EDI) is a rapidly growing technology, even though it has been widely available since the beginning of the 1980s. The number of registered EDI users, according to EDI Yellow Pages International, has shown impressive gains in the past several years, well in excess of a 50% annual growth rate. Among the many benefits of EDI are: faster processing speed, greater accuracy, reduced costs, competitive advantage, improved operations, security, tracking and control, intra and inter company communications, and customer service ( Craig, 1989; Gourley, 1998; Hansen & Hill, 1989; Kimberley, 1991; Mele, 1999; Richardson, 1988). Due to its capabilities to support inter-organizational systems, EDI has made a special contribution to the strategic supply chain of companies. One important aspect of the supply chain is the customer–supplier relationship. In this article, we focus on EDIs impact on “customer service”. It should be noted that many other benefits of EDI manifest into customer service. For example, customer service offers a powerful basis for establishing competitive advantage ( Jackson, Lewis, & Cannon, 1991; Kyj & Kyj, 1989). Customer service may also represent the best opportunity for a firm to increase its market penetration and profitability ( Lambert & Harrington, 1990).
EDI can have significant bearing on customer service. EDI provides a faster, more accurate, and less costly method of communication with customers compared to other methods, such as mail, telephone, and personal delivery (Crum, Johnson, & Allen, 1998; Emmelhainz, 1989). Iacovou, Benbasat, and Dexter (1995) insist that integrated EDI systems increase customer service in addition to operational efficiency. One should be careful in sweeping generalizations, however. For example, EDI may weaken the level of customer service due to the locking of a buyer into a very limited number of suppliers and subsequent pressures on the suppliers (La Londe and Emmelhainz, 1985; Sokol, 1989; Suzuki & Williams, 1998). In any case, the various pronouncements of EDIs impact on customer service are based on rhetorical power and anecdotal evidence, and need to be investigated in detail and with rigor.
Our empirical investigation provides strong evidence of a positive relationship between use of EDI and improved customer service. Specifically, five of the six components of customer service showed marked improvement with the use of EDI. Additionally, while specific industry effects were not observed, such possibilities exist for future exploration.
The limitations of the study include those associated with survey methods. However, we took the necessary precautions and used the control variable of industry to increase generalizability. The results should instill more confidence in top executives and functional managers in decisions relative to the implementation of EDI. Management support is crucial to implementing EDI (Emmelhainz, 1986; Hoogeweegen, Streng & Wagenaar, 1998). Armed with empirical evidence from other organizations, senior management should be more willing to support and champion EDI projects.
This study also points to the need for further research. While we examined customer service, future researchers may wish to explore EDI impacts on other components of the value chain. Another fruitful avenue of research will be to investigate other factors that influence the adoption and success of EDI. While we explored the industry factor, others need to be explored in future studies.
Finally, as a concluding note, the study has provided empirical validation to the many EDI claims made in the literature. As Gene A. Nelson at Cincinnati Bell Information Systems said:
Increasing numbers of business in the 1990s will be faced with an ultimatum: adopt Electronic Data Interchange or suffer the effects of disorganized, inefficient environment. In other words, EDI or D.I.E.! (Kirkley, 1992).
