EDI 101 \ Private Company Standards

A few major companies, such as General Motors and Kmart, charged into the EDI arena and developed their own standards. GM's EDI involvement was an outgrowth of their “Just-in-time” plant inventory approach. With Just-in-time inventory, each plant stocked only those parts required for one day's production. Because of the low inventory levels, GM needed a fast reliable way to order parts so that they arrived at their loading docks just-in-time for assembly. This approach allowed GM to save millions in inventory costs. EDI was the enabling technology without which Just-in-time inventory would not be possible.

We should note here that while GM saved millions, the inventory cost didn't disappear. The burden of inventory was shifted to the suppliers. Some of these suppliers were large enough to absorb these costs, but many were not. This put many suppliers in tough situations as GM was requiring EDI connections for suppliers providing production material to Just-in-time plants.

To complicate matters even more, Ford and Chrysler adopted similar plans, which led to confusion throughout the Automotive Industry. Also, several large suppliers, such as Rockwell, wanted to use EDI with their own suppliers. The question was whose standard should they use?