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Business Value of Information Technology: A Study of Electronic Data Interchange

Tridas Mukhopadhyay, Sunder Kekre and Suresh Kalathur
MIS Quarterly
Vol. 19, No. 2 (Jun., 1995), pp. 137-156
DOI: 10.2307/249685
Stable URL: http://www.jstor.org/stable/249685
Page Count: 20
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Business Value of Information Technology: A Study of Electronic Data Interchange
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Abstract

A great deal of controversy exists about the impact of information technology on firm performance. While some authors have reported positive impacts, others have found negative or no impacts. This study focuses on Electronic Data Interchange (EDI) technology. Many of the problems in this line of research are overcome in this study by conducting a careful analysis of the performance data of the past decade gathered from the assembly centers of Chrysler Corporation. This study estimates the dollar benefits of improved information exchanges between Chrysler and its suppliers that result from using EDI. After controlling for variations in operational complexity arising from mix, volume, parts complexity, model, and engineering changes, the savings per vehicle that result from improved information exchanges are estimated to be about 60. Including the additional savings from electronic document preparation and transmission, the total benefits of EDI per vehicle amount to over 100. System wide, this translates to annual savings of $220 million for the company.

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