The impact of electronic data interchange on reducing bullwhip effect and supply chain inventory costs

This paper uses a web-based supply chain simulator to demonstrate the potential benefits of using Electronic Data Interchange (EDI) in supply chain management. The simulation experiment measures the impact of EDI on mean inventory costs, orders placed, cumulative cost, amplification and net excess stock in the supply chain. In all cases, there are statistically significant reductions in the values of the variables studied for the simulations with EDI. The comprehensive use of EDI provides substantial savings in costs as well as notable improvements in supply chain management.