EBM Assignment

How do you distinguish between E-mail and EDI? Do you

think Pakistan cotton and rice-mill owners take advantage
of EDI services? Propose a business model for these mill
owners along with flowchart so they can visualize the use of
EDI. How will this E-business model benefit local employees
and suppliers of these mills? Give a detailed account of all
the hurdles and tactics involved in this model.

Group members:
Raheel Ahmed Narejo
Muhsin Memon
Bashir Ahmed Naerejo
Suhaib Soomro
Tanya

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Introduction

Traditional electronic data interchange (EDI) has been evolving for approximately 25
years and has truly become the paperless environment that is so often talked about. EDI is
a complicated mixture of three disciplines: business, data processing, and data
communications. This paper examines the concepts from the perspectives of each
discipline.

Internet standards are excluded from the discussion of communications protocols, since
the audience is probably already familiar with SMTP, MIME, and other Internet
messaging protocols.

EDI and E-mail:

Similarities also exist between e-mail and EDI. Both travel from computer to computer
and both use an electronic mailbox. However, three of the four differences listed for EDI
vs. fax also apply to EDI vs. e-mail: e-mail message format is not standard but EDI has
some standard format, e-mail requires human interface but EDI not requires human
interface and e-mail is not acceptable to applications.
Email is just messages sent from person to person. EDI is "electronic data interchange"
and is typically used between businesses to transfer info such as purchase orders,
invoices, routing instructions, pricing, etc. between the 2 companies instead of having to
mail/fax this information
Electronic mail and EDI are both tools to help a hospital communicate with its trading
partners. E-mail and EDI have different applications, but providers will be using both
more as the decade progresses.
The world of E-mail
Many organizations have used E-mail for more than a decade for internal
communications. Many PC users now use E-mail designed for use in a local area
network. How do E-mail and EDI differ? EDI is used for computer-to-computer
transmission without human intervention. E-mail is meant to be read by the person
addressed. Another difference between the two is that most E-mail users are exchanging
the electronic equivalent of interoffice memos with coworkers. They seldom exchange E-
mail messages with others outside of their organizations. In contrast, most EDI exchanges
are between different organizations.
Wanted: Interorganizational E-mail
There is a business need for electronic messaging between different organizations. Avid
EDI users within a hospital have undoubtedly wished to send messages to those outside
the hospital. Unfortunately, the E-mail capability of most providers usually does not
allow for such communications because the E-mail system of one organization is unable
to "talk" to the E-mail system of another organization without conversion software to
allow for this exchange.

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Using E-mail is not technologically challenging. The challenge is to change business
procedures to take advantage of the technology. If senior managers do not use networks
to communicate, neither will their employees. As is the case with EDI, E-mail can save
money and improve service, but the biggest gains will come from imaginative financial
managers who use the technology to change the way in which their organizations do
business.

EDI Wise change for Manufacturers helps manufacturers meet vendor requirements by
giving them the ability to exchange EDI transactions. Often, being able to exchange EDI
transactions with vendors (or other business partners) is a must, when starting a business
relationship. We therefore developed our EDI for Manufacturers solution that has the
capability of sending and receiving purchase orders, invoices, advanced shipping notices,
shipping schedules and routing carrier instructions.

In order to grow and become competitive in today�s market, the manufacturer needs to
be able to exchange data quickly. For that reason, they have to use electronic mechanisms
to transfer their transactions fast from one side to another (warehouses, transportation
carriers and other manufactures). Our EDI for Manufacturers solution will not only give
you the ability to exchange EDI transactions with others, but will also give you an
advantage over other manufactures who don�t have an EDI solution or have a solution
that is not so easy to use.

But in our Pakistan cotton and rice owner take less advantage of EDI, because most of
the flour mill owner are unaware about this technology, even this technology is very
helpful in production via, Collecting and Sharing information about Wheat grower, agent
and Buyer’s Need.

Business Model for Mill Owners with flow chart so the can visualize the use of EDI

The business model describes how a company functions; how it provides a product or
service, how it generates revenue, and how it will create and adapt to new markets and
technologies. It has four traditional components as shown in the figure, the e-Business
Model. These are the e-business concept, value proposition, sources of revenue, and the

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required activities, resources.

For Mill Owner: through EDI they can capture their market share which comes in e-
business concept, if mill owner using EDI the customer attract towered that flour mill
because the information of that flour mill is shared to the ultimate consumer of that Flour
Mill’s Product…. Mostly the customer is thinks about the Quality of the product at
constant price (All most same price of flour in all flour mills). If EDI used by Flour Mill
Owner the customer know that, what is the production process of that flour mill? What
are the integrants used in production of flour? If they satisfied then they purchase that
flour not any other’s mills.

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In Satisfaction of Customer Stage the second component (value Proposition) of Business
Model will achieved in which we talk about the:

• Reduced price
• Improved service or convenience such as the "1 click" checkout
• Speed of delivery and assistance
• Products that lead to increased efficiency and productivity
• Access to a large and available inventory that presents options for the buyer

If customer purchases that flour means our Revenue will boost up! Through sharing
information (EDI) we do following activities:

• Advertising
• Affiliation
• Agent commissions

Through these activities (using Edi) flour mills increase revenue…….

The last component of our business model is activities, resources, and capabilities:

Activities

Activities are specific business processes or groups of processes such as design,

production and sales that implement the business concept. The operational business
model identifies the costs and outputs of each activity.

Activities drive the need for resources. Existing activities should be carefully scrutinized
in order to conserve resources and reduce costs. Activities left over from previous
initiatives, but not currently necessary should be curtailed. This may sound elementary
but businesses start many activities over time, especially if its business concept changes.
But one doesn't often hear of a large business curtailing its activities in order to focus on
its current mission.

Resources

In order to perform activities an organization requires human, tangible, intangible and

supporting resources. Human resources, in particular the skills and knowledge of
employees are important, as are the programs (e.g. incentives, training) and institutions
that support them. Of related importance is the "corporate culture" that shapes how
employees work together and which may also be instrumental in determining how a
company works with its partners, or whether a merger between two companies can be
successful.

Tangible, or physical and financial, resources include facilities, equipment, and cash
reserves. Intangible resources include intellectual property, business processes that can be

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patented, brands, customer profiles and personalization data in databases, and customized
software. Supporting systems include organizational structure, information systems or
communications processes that may have little value as stand-alone resources.

Capacity

The total resources of the organization represent its capacity. When resources are
underutilized, the company has resources that aren't used, or idle capacity. Idle capacity
in manufacturing tends to be measured in terms of additional output that could be
produced. In service organizations the measure for idle capacity is usually a number of
employees. Resource capacity can also be measured in job-hours, machine-hours, sales
per employee, or square feet. Often these are compared with industry standards to assess
the efficiency of the organization.

Resources may also misallocate. Processes may be successively introduced over time that
results in an overall inefficiency. This may be a significant potential problem in e-
Business since activities are accumulated based on market demand and there are few if
any other companies available for a comparison.

Capacity also represents a constraint to growth. Demand for product or services may
exceed capacity and managers may take a variety of steps to temporarily resolve the
problem: overtime for existing employees, additional shifts to increase the utilization of
equipment, contracting to outside entities, even competitors! For example, a software
company may outsource code writing, which is standard fare - almost a routine activity,
in order to increase its design capacity. Of importance here is to be able to distinguish
between real growths in demand versus periodic spikes in activity, which frequently
occur in some industries such as printing. Real growth would merit the expansion of
capacity. However, this should take place only after careful analyses of the current and
future market, relevant technologies, and resource and financial requirements. And it
should be executed based on an implementation plan.

Capabilities, Competencies and Competitive Advantage

In order for the business to be successful, workers with certain skills, or capabilities, must
be available. This is important for two reasons. First wages are usually the highest
expense of a business, as much as 70% of the budget of an organization with low capital
requirements (e.g. an accounting, or legal firm). Second, capable workers may not always
be available, which may lead to the issue of outsourcing, as discussed in a following
section.

When activities, or sets of activities, are performed extremely well and are, in fact,
among the best in the industry, then these are known as competencies. Competencies
result from workers with distinctive capabilities; skills and processes that efficiently
utilize resources, and combinations of activities that add significantly to the value of the
output. Competencies become organizational strengths and an important component of
the business model.

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Sometimes competencies will allow a firm to lead an industry in providing value to
customers. When other companies can't easily duplicate these competencies, the firm is
said to have a competitive advantage. For example, a low cost manufacturing process
may enable a company to sell products at a very low price and still make a profit - a
situation that can't be matched by competitors.

Competencies may also point to possible future directions for the firm. When the
business model fails due to factors beyond its control, such as a shift in the market, then a
new business concept may be based on the competencies of the firm. Firms with leading
edge programming staffs, for example, can often shift to another type of software
application without too much difficulty. An e-tail operation such as Amazon can easily
add new product groups to its Web site due to its industry-leading competencies in online
transactions, customer tracking, order fulfillment/shipping, and customer service. EDI
helps a lot in this component… What activity is followed by which activity, how much
resources are used in which areas and what are our capabilities these things are very
important to share between employees, Share Holder Owner) and etc..

Flowchart

Pre cleaner magnet separator D Stoner Width Grader

B C D E

E
L
E
V Water polisher Plansifier Friction polisher
A H G F
T
O
R

HOPPER Intended cylinder Color sorter Intended

A I J K

Final tank

Bagging

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Advantage of using EDI
Companies use EDI to exchange information for a variety of different reasons, mainly
increased efficiency and cost savings. For example, EDI allows business transactions to
occur in less time and with fewer errors than do traditional, paper-based means. It reduces
the amount of inventory companies must invest in by closely tying manufacturing to
actual demand, allowing for just-in-time delivery. By doing away with paper forms, EDI
also reduces postage costs and the expenses and space considerations involved in paper-
based record storage. Some companies have seen dramatic improvements in their
business processes, such as the shortening of delivery times from days to hours.
However, other EDI users have continued to experience snags.

In Planet IT, Procter & Gamble, a leading packaged goods manufacturer, reported that it
found errors in more than 30 percent of its electronic orders, although these were mainly
due to human mistakes. Although many companies don't view EDI as a strategic weapon,
it certainly can be used as one. Having the capability to engage in EDI is a marketing
tool, because it makes suppliers attractive to retailers and other companies who buy
goods and services. In a situation where several suppliers offer similar products, being
EDI-enabled can be an important differential. EDI also can be used to form alliances
between companies that provide advantages over competitors in several ways, including
the ability to offer the lowest market prices and the best customer service. Such alliances
also can lead to newer or more innovative services.

This model helps both local employees and Suppliers of flour mill In Following accounts:

• Reduce Typing errors

• Save time

• Save money

• Purchase orders

• Invoices

• Advance shipment

• Information about employees

• Help Employee in Compensation Claim.

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Two characteristics set EDI apart from other ways of exchanging information. First, EDI
only involves business-to-business transactions; individual consumers do not directly use
EDI to purchase goods or services. Secondly, EDI involves transactions between
computers or databases, not individuals. Therefore, individuals sending e-mail messages
or sharing files over a network does not constitute EDI.