Using Eletronic Data Interchange (Edi) to Improve the Efficiency of Accountin G Transactions

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Using eletronic data interchange (edi) to improve the efficiency of accountin g transactions

Definition

Electronic data interchange (EDI) is an information technology that standardizes the exchange of information between two parties to a transaction.

EDI as a transactional accounting information system that reduces the cost of transaction between firms and provides timely information decision making ( Chusing and Romney 1994)

Study on using edi

This study uses data from office furniture manufacturing (OFM) firm to evaluate the performance effects of EDI- transaction with dealers who order its product.

The firm adopted EDI to improve the efficiency of accounting transaction : Reduce order processing time
Improvement for complex order

Study on using edi

Previous research documented that the production of complex products reduces manufacturing performance.

MacDuffie et al (1996, 364) :employed lean manufacturing method able to minimize the complexity than traditional mass production.

Anderson (1995) : plant where complexity is normal has a lower marginal costs of complexity compared to two plants with less complexity.

Study on using edi

Benefit of edi
Establish secure computer-to-computer exchange data in standard formats among business partner.

Weill (1992); EDI will lead to increase productivity and profits.

However, does EDI improve the administrative work of document processing??

SIGNIFICANT OF STUDY

Implications for accounting research and practice :

Benefits for manufacturing operation.

To estimates the effect of order complexity on firm performance.

Provide implications for investment justification.

Provide implications for the design and implementation of new accounting information system. Research framework

Order complexity

Two aspect of order complexity :
Product complexity – detailed required to describe a particular order : mix of products order, specifications of options and...
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