The outcome of fee negotiations among EDI networks could depend on the bargaining power associated with the relative size of the various networks competing for customers. For individual companies, the benefits of computerizing the data exchanges along the supply chain will fully emerge only when the majority of retailers and suppliers begin accepting electronic transmittals from external sources. Until then, most companies will continue to maintain parts of their paper-based systems. With the use of the Internet exploding, however, the ability of companies to conduct business electronically could grow significantly in the years ahead. At the most basic level, a large manufacturer can facilitate the electronic exchange of information with suppliers by creating an interactive web site on which production plans, component specification requirements, and the timing of likely outgoing orders for parts are made available to suppliers.
Suppliers can then bid on the jobs using standardized forms available at the web site.
This approach, however, only automates one piece of the procurement and distribution process. To manage all aspects of information exchange over the internet, the companies in a supply chain would need to adopt a common technology. Before Internet-based EDI can spread, however, companies will need to overcome a number of obstacles. Unless a dominant provider emerges or companies establish common standards, suppliers and retailers will need to support several Internet-based EDI systems. Thus, the incompatibility of EDI products developed for the Internet may continue to pose challenges for companies.