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 Electronic Commerce
This article was published in Focus. The Executive Magazine On Canada's Public Service. Focus is published by Multidirect Communications Inc. and the article was published in their publication for October/November 1994.

Prepared By Dr. Mir F. Ali

Let me begin this article by saying that Electronic Commerce (EC) is not a technology. The term EC was used for the first time to define a group of analogous business transactions with the potential to utilize complementary technologies.

However, the term EC became so popular in Canada that everybody started definingit slightly differently. Perhaps EC can be defined as a group of enabling technologies which could be used for exchange or buying and selling of products or services on a large scale, involving interchange of related data. The technologies covered under this definition can be divided into two categories: one with the capability to interchange data, for instance - Electronic Data Interchange (EDI), Electronic Funds Transfer (EFT), Automated Teller Machine (ATM), Smartcard, etc - and another category with compleimentary capabilities to transmit data. Necessarily these technologies are capable of interchanging data, through FAX, E-Mail and other electronic means. The purpose of this series of articles is to provide you with an indication of opportunities associated with these technologies as well as share with you the experience we have gained working with these technologies.

EDI is gorwing at the rate 0f 70 percent annually and has become a top priority for thousands of companies around the world. EDI offers a strategic opportunity to reengineer the business environments, and smart companies are taking advantage of this unique opportunity by adopting new ways of doing business, resulting in improved service and profitability. In the area of international trade alone, EDI has a savings potential fo $15 to $20 billion annually.

Japan has achieved the highest level of excellence by using EDI as a strategic tool to reengineer their business environments and in taking maximum advantage of Just-In-Time (JIT) caoabilities. As a result, the Japanese are enjoying the "power of shopping". The have injected efficiency into order processing, manufacturing procedures, and delivery mechanisms to bridge the gap between product ordering and delivery. They have eliminated the concept of warehousing and redefined the meaning of inventory. Consequently, when the Japanse shopfor a car, they go to a car dealer and physically draw a car of their choice by utilizing Computer Aided Design (CAD) and the next day they get their car delivered to their home.

France took advantage of EDI capabilities by significantly imrpoving the effective speed of trucks moving goods internationally. There is less waiting at customers' lines, fewer problems with trade documentation, and foster processing at every step in the process. Two French ports, Le Havre and Marseilles are running large EDI systems. ADEMAR applications allow forwarders to access a tracking system and enter customers' declarations.

Air France, the national airline, implemented a tracking and booking system called PELICA. GSI, a VAN operator, supplies a service, Fretair, which is based on videotext standards that provides information, booking, and tracking facilities for air forwarders. French compannies have adopted INOVERT standards and use a private network to exchange EDI messages between their host computers and their clients PCs. The public French railway company, SNCF and its subsidiary for motor carriers, SERNAM, have invested in EDI, in particular in freight tracking services.

America has been reaping the benefits of this technology for a long time. According to an estimate, $1.5 trillion of financial transactions flow through New York City's telecommunications systems each day. Well over half of the major money centre banks' revenues are derived from ATM transactions, foreign exchcange trading, and electronic funds transfers. No doubt, EDI is rapidly becoming one of the most pragmatic applications of the 1990s in the United States of America.

The US Defense Department launched a $1 billion program called CALS. the purpose of this progrsm was to create a partially paperless pentagon. Since 1990, the CALS program has required that all new weapons' proposals, including engineering drawings, be submitted on disks and tapes that Pentagon computers can read.

Eventually, data will be sent electronically directly from the contractor's computers to Pentagon computers, eliminating disks and tapes. This program is expected to cu $1 billion, which represents 20 percent of the annual expenditure.

EDI is finally becoming popular in Canada. Canadian businesses are positioning themselves to take advantage of this technology. Currently there over 6,000 Canadian businesses which have already adopted EDI as a means of doing business. In addition, there are several EDI projects initiated in the federal, provincial, and municipal governments. However, it is becoming abundantly clear that very few companies know how to use EDI as a strategic tool. Most of these companies have a narrow focus, and they are only looking at the interfaces between the buyer and supplier as an EDI opportunity. Evidently, these companies are missing the opportunity to maximize the benefits associated with these technologies.

EDI technology has existed for decades but only recently has started to receive the attention it deserves. Finally, senior managementhas realized that EDI is capable of saving time and resources by lifting an immense paper burden off shoulders of managers and workers. Business managers started feeling comfortable with this technology partly due to the fact that it is not in the hands of information technology specialists. The potential benefits listed below may also have something to do with the change in attitude of business managers:
  • Competetive advantage;
  • Reduction in costs;
  • Speeding up information flow;
  • Streamlining business processes;
  • Achieving a higher level of automation;
  • Online business;
  • Economics of scale;
  • Just-In_Time (JIT) capabilities; and
  • Electronic marketing.
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