Page 268 - Electronic Commerce

Business-to-Business Activities: Improving Efficiency and Reducing Costs

9. The mail room sends the invoice to the buyer by mail or courier.
10. The vendor’s Shipping Department uses its copy of the invoice to create a bill
of lading and sends it with the machine to the buyer.
11. The buyer’s mail room receives the invoice at about the same time as its
Receiving Department receives the machine with its bill of lading.
12. The buyer’s mail room sends one copy of the invoice to Purchasing so the
Purchasing Department knows that the machine was received, and sends the 243
original invoice to Accounting.
13. The buyer’s Receiving Department checks the machine against the bill of
lading and its copy of the purchase order. If the machine is in good condition
and matches the specifications on the bill of lading and the purchase order,
Receiving completes a receiving report and delivers the machine to the oper-
ating unit.
14. Receiving sends a completed receiving report to Accounting.
15. Accounting makes sure that all details on its copy of the purchase order, the
receiving report, and the original invoice match. If they do, Accounting issues
a check and forwards it to the mail room.
16. The buyer’s mail room sends the check by mail or courier to the vendor.
17. The vendor’s mail room receives the check and sends it to Accounting.
18. Accounting compares the check to its copies of the invoice, bill of lading, and
sales order. If all details match, Accounting deposits the check in the ven-
dor’s bank and records the payment received.

EDI Purchasing Process
The information flows that occur in the EDI version of this sample purchasing process are
shown in Figure 5-6. The mail service has been replaced with the data communications of
an EDI network, and the flows of paper within the buyer’s and vendor’s organizations have
been replaced with computers running EDI translation software.
In the EDI purchasing process, when the operating unit manager decides that the
metal-cutting machine needs to be replaced, the following process begins:
1. The operating unit manager sends an electronic message to its Purchasing
Department. This message describes the machine that is needed to perform
the metal-cutting operation.
2. Purchasing contacts vendors by telephone, e-mail, or through their Web sites
to negotiate price and terms of delivery. After selecting a vendor, Purchasing
sends a message that the buyer’s EDI translator computer converts to a stan-
dard format purchase order transaction set that goes through an EDI network
to the vendor where the message is routed through its EDI translator and
sent to the Sales Department. At that point, the message is automatically
entered into the vendor’s Manufacturing Department production management
system (where the machine’s specifications are provided so Manufacturing
can begin work on building it) and the vendor’s accounting system (in their
Accounting Department).

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