INTRODUCTION

3.      Re-entry data is existing.  When a trading partner starts the process, it must key-in the manifest into its computer and must submit the data to the international trading organization.  Subsequently, this organization must re-enter those data, in exactly the same way as the original one, into its computer.  This wastes time and causes the inaccuracy of data,

4.      The process contains lots of paper documents, and

5.      Document loss is possible to occur.  Since requests and replies are kept and distributed in a paper form, those documents may be lost.

In its recent effort to promote the use of IT, the government has established the National IT Committee in March 1992, which serves to prepare, monitor, and facilitate implementation of the country’s IT development plan.  The committee comprises 21 high-ranking members from the leading and relevant public and private agencies, and is chaired by the Deputy Prime Minister in charge of economic and social development.  With its role complement to that of the Committee, the National Electronics and Computer Technology Center (NECTEC) – a government agency responsible for promoting industrial research and development in electronics and other IT-related field, was appointed to the Committee’s secretariat.  The committee also serves to gather and disseminate relevant information that will be useful in preparing policies as well as creating public awareness of the importance of IT to the nation’s economic and social development.

Recognizing the benefits that Electronic Data Interchange (EDI) can bring to Thailand’s trade, economy, and national development, the National IT Committee realized the need for EDI development, particularly in the area of international trade, in order for the country to achieve a level of development comparable to other countries that have already used EDI extensively. 

Most analysts predict substantial growth in the worldwide EDI markets. This coincides with the increasing number of companies that consider EDI as the catalyst for strategic programs to fundamentally change the way they conduct business between themselves and their trading partners.  The policy-makers imposed some public agencies such as The Customs Department, Port Authority of Thailand (PAT), Thai Airways International plc. (THAI) to be pilot international trade organizations implementing EDI with their trading partners.  They expected that EDI would be the catalyst to promote import and export.  The assessment of the IT policy emphasizing EDI, thus, becomes significant.

National EDI Policy

The Ananda Government tried to facilitate the economic growth by using Information Technology (IT) as a major factor.  The government delegated their authority through the National Information Technology Committee (NITC) to support and promote IT.  The Committee, thus, set up the Subcommittee on the development of EDI for international trade, later on called Thailand EDI Council (TEDIC), in addition to six other subcommittees under the National IT Committee.  Each subcommittee represents a priority area, namely, IT planning, IT utilization in public agencies, IT manpower, research and development, laws and regulation, and information dissemination.

The Subcommittee on EDI Development for International Trade (SC/EDI) was chaired by the Director General of the Customs Department.  The subcommittee responsible for EDI development comprises 19 representatives from the relevant public and private agencies including:

1.      Ministry of Commerce

2.      Thailand Board of Investment

3.      Thai Industrial Standards Institute, Ministry of Industry

4.      The Port Authority of Thailand

5.      The Airport Authority of Thailand

6.      Communications Authority of Thailand (State Enterprise, Ministry of Communications)

7.      Thai Airways International Plc.

8.      Federation of Thai Industries

9.      Federation of Thai Chamber of Commerce

10.  Thai Banking Association

11.  Thai Air Freight Forwarders Association

 The subcommittee has taken steps towards EDI development in Thailand.  Accomplishments are:

(1)   Assessment of current practice and procedures involved in international trading cycle

(2)   Define scope of activities that would be involved in EDI development in international trade projects.

Based on the information derived from (1) and (2), an EDI project proposal was developed and presented to the National IT Committee in December 1992.  The Committee approved the project in principle, but recommended that a more detailed study be conducted, before any decision was made regarding the EDI services administration.

To respond to the recommendation, NECTEC, a committee’s secretariat, coordinated with the subcommittee in the preparation of the terms of references for the EDI feasibility study.  Five proposals were submitted for review.  Subsequently, Andersen Consulting, an international consulting firm, was selected to perform the study, with the budget of approximately US $30,000, for the period of six months.  (Contract Number จ 06/2536 Measures to Identify and Analyze EDI Exchange Service Potential).  The study answered three questions (TradeSiam:  EDI Service Provider, 1996 : Appendix 2):

§         What is the appropriate EDI service for Thailand?

§         What is the appropriate organization to provide this service?

§         What is the financial feasibility of this organization?

The questions were answered within the context of the overall impact that EDI will have on Thailand.  The study commenced in August 1993 and concluded in December 1993.  The details of the study are as follows:

§         41 interviews with 31 organizations primarily involved with international trade.  Representatives from both government and private sectors were interviewed.

§         An analysis of responses to questionnaires.  The questionnaires were distributed to nearly 100 local-area businesses running primarily international trade.  The response rate was 55 percent

What is the appropriate EDI service for Thailand?

Recommendation One

A private, for profit, national, EDI service for international trade in Thailand should be established as soon as possible.  One name to be considered for this service is TradeSiam.  This company should not have a monopoly on the domestic EDI service in Thailand.  This service will utilize public data networks for access rather than establishing its own network system.

Justification:

A national EDI service will:

Timing:

Analysis:

EDI in Thailand is in its infancy.  As shown in Figure 1.1 almost half of the study questionnaire respondents know little about EDI.  Surprisingly, there was an optimistic response to how long it would take organizations to prepare for EDI, as shown in Figure 1.2.  Half the respondents feel they will be ready within one year.  The TradeSiam initiative must start now in order to meet the EDI demand that will surface in the next two years. 

Figure 1.2  Readiness to Trade Electronic Documents

Recommendation Two

TradeSiam should start with two EDI initiatives that focus on international trade:  A Regulatory System for communication with government bodies involved in international trade and an Air Cargo Community System.  This will enable TradeSiam to build the “critical mass” of messages required for a successful EDI service.

Justification:

Regulatory System:

The Air Cargo Community System (CCS) would allow freight forwarders to connect to Thai Airways International and other airlines to exchange cargo booking and tracking information.  The airlines and freight forwarders are the most ready for EDI in Thailand.  This system is depicted in Figure 1.4.  For this system to be successful, TradeSiam must provide the centralized translation between UN/EDIFACT and CARGO-IMP EDI standards.  TAFA members should adopt a policy of connecting to the Air CCS provided by TradeSiam only, and not directly connecting with Air CCS offered by airlines form other countries.

The Customs Department is the single largest player in the documentation required for international trade in Thailand.  By automating the lengthy, paper-intensive clearance process, the most benefit can be obtained.

In other countries, Customs’ commitment to EDI and the direction they have taken have influenced the success of the EDI systems for the entire country.  Customs has demonstrated that they are prepared to take a leading role in EDI by chairing the EDI Sub-Committee.

Figure 1.4  Air Cargo Community System

In order to make EDI successful, Customs needs to re-examine their business practices so that they can take full advantage of the benefits of EDI.  Percentage of consignments inspected and requirements for the signed original documents to accompany all shipments are two main areas where changes can take place.  Experience in other countries has shown that compliance with Customs regulations is higher in an EDI environment than in a manual one.

Plans:

The Customs Department has a four phase plan for their implementation of EDI:

1.      Exports at Don Muang airport by the end of 1994.

2.      Exports at the sea port in 1995.

3.      Imports at Don Muang airport in 1996.

4.      Imports at the sea port to be completed by the end of 1997.

Export declaration systems are simpler than imports, and they can be implemented quickly.  This will help the Customs Department go through their learning curve in a manageable fashion.  They will then have a skilled resource pool to implement the more complicated import process, which brings more benefits.

Benefits:

The Customs Department has to handle high volumes of paper documents including cargo manifests and declarations.  Currently, much of this information is keyed into the Customs computer.  This involves the re-keying of the data that already exist in the computers of other businesses.  The elimination of such re-entry is an immediate benefit of EDI.

The EDI system allows Customs to collect more data earlier, and from more organizations.  This allows Customs to control restricted and prohibited goods more effectively and to ensure that the correct duty has been paid.  Many of the current problems due to lost documentation will be thus removed.

EDI is recognized by Thai Airways International as a fundamental technology required to support their business objectives.  Without EDI, Thai Airways International could not do business.

Management at Thai Airways International is committed to the development of IT and EDI.  This is demonstrated by the internal project funding and commitment of resources.  Thai Airways representatives are actively involved in several committees, associations and other airlines to ensure that they can keep abreast of EDI development in the airlines industry in Thailand.  They currently represent the EDI Sub-committee and should represent the recommended Thailand EDI Council.

As Thailand’s national airline, Thai Airways International has been involved in EDI since the 1970’s, in both passenger and cargo area.  In addition to the standard EDI messages (manifests, bookings, confirmations etc.) and communication services provide by SITA (the international airline VAN), Thai Airways International has conducted several relevant EDI projects.  Locally, Thai Airways has provided on-line access to its cargo system to both freight forwarders and Customs.  This service, although limited in functionality, has proven successful.  This is the forerunner of TradeSiam’s Air Cargo Community System.

Standards:

Thai Airways International is committed to using the UN/EDIFACT standard.  They are currently using several messages.  In the cargo area they recognize that the transition from CARGO-IMP to UN/EDIFACT will be slow.

TradeSiam must offer central translation facilities between CARGO-IMP and UN/EDIFACT.  This is a key factor that will not only enable Thai Airways to communicate with the freight forwarders but also make TradeSiam attractive to other airlines.

Benefits:

As a major airline, Thai Airways International faces business challenges both abroad and at home.  Internationally, they are required to comply with other countries’ EDI regulatory requirements.  Domestically, EDI can benefit Thai Airways by electronically connecting with Customs.  Electronic transfer of regulatory documents to Customs will greatly reduce ground handing time and speed up the release of cargo.  Connections with freight forwarders will reduce data entry and provide access to timely information.  This will allow local freight forwarders to supply the level of customer service that they need to compete with multi-national cargo companies.

Recommendation Three

International trade organizations that will be pivotal in the success of EDI in Thailand, such as Customs, Thai Airways International, Port Authority of Thailand and the Ministry of Commerce, should choose a sole domestic supplier of EDI services.  TradeSiam should be the sole provider.

Justificaiton:

The most successful way to implement EDI in international trade is to have a single provider.  Experience in other countries has shown that multiple providers create confusion among users in the market.  This leads to slower pick up rates for all EDI service providers.  A single EDI service provider will eliminate user confusion.

In order to remain self sustaining and financially viable, EDI service providers need to obtain “critical mass” of users.  By choosing TradeSiam as their sole supplier, government bodies will greatly increase the chances of TradeSiam achieving such “critical mass”.  If multiple providers are chosen, it is more likely that no one will be able to achieve “critical mass” for some time.

Since it is partially funded by the government (see Recommendation Four), TradeSiam should serve the needs of the government regulatory agencies.

Having one service provider limits the flow and number of copies of important regulatory information.  This provides an environment of greater data security.

In summary, TradeSiam’s success depends on the chance to be chosen as a sole supplier of EDI services.

Not a monopoly:

TradeSiam will not have a monopoly on EDI services in Thailand.  The CAT has already licensed IVANs to operate, they provide EDI over their networks.  In addition, there is a domestic EDI provider offering services via a satellite communications network.

The National Economic and Social Development Board’s Seventh Plan points out that public agency monopolies have constraints for investment and cannot carry out an expansion of services speedily.  (Part II, Chaper 5, Section 1, Point 1.2.1)

Services:

TradeSiam will provide a complete line of services to satisfy the needs of its users, particularly government agencies.  If particular services are not provided by TradeSiam, government agencies would have to seek these elsewhere.  TradeSiam will also provide interconnection.  Users of other EDI providers such as IVANs, can connect to the major TradeSiam users through interconnection with TradeSiam.

A technical architect, with interconnections, and the list of services for TradeSiam is shown in Figure 1.5.

TradeSiam Services and Responsibilities:

Technical Services:

Figure 1.5  TradeSiam High Level Technical Architecture

Non Technical Services:

Responsibilities:

TradeSiam will not provide a data network (the bottom three levels of OSI).  This will be provided by existing public data networks.

What is the appropriate organization to provide EDI services?

Recommendation Four

Funding for TradeSiam should come from a consortium of public and private business partners who could either benefit directly from EDI or have a vested interest in  international trade in Thailand.  TradeSiam should be a private company, with no more than 49 percent government ownership.  No single party, either government or private, should own more than 25 percent ownership.

Basis:

In addition to Thai Airways International, 37 percent of the private businesses which responded to our questionnaires indicated that they would be willing to invest in an EDI services.  This included a combination of shipping lines, banks, couriers, importers and exporters.  (Thai Airways’ investment is subject to both board and executive management approval.)

The Ministry of Finance, as the Ministry responsible for Customs and a majority shareholder in Thai Airways should provide some funding (no more than 25 percent).  They should also be the Ministry that is the driving force behind TradeSiam.  They were contacted as part of the feasibility study and indicated their support for TradeSiam.

In addition to the Ministry of Finance, any combination of the following government organizations should be considered for investment, up to a total government ownership of 49 percent: Communications Authority of Thailand; Telephone Organization of Thailand; Airport Authority of Thailand; Port Authority of Thailand; and Thai Airways International.

The company should remain open for additional shares to be sold on an invitation basis as its services expand.

Figure 1.6  provides the results to the questionnaire question “should an EDI service in Thailand be run by the government, private business or both?”  There is large support for the recommended approach.  The following page shows the strengths and weaknesses of different funding approaches.

Funding Approaches:

Strengths and weaknesses of alternative funding approaches:

Recommendation Five

The establishment of Thailand EDI Council (TEDIC) is recommended.  This council would be the recognized EDI body for all Thai industries.  It would also represent Thailand on the Asian EDIFACT Board.  TEDIC should endorse UN/EDIFACT as the sole standard for domestic EDI messages.  TradeSiam would have a close relationship with TEDIC.

Standards:

TEDIC would clearly define to Thai industries the EDI standards.  This is needed to clarify the existing misconceptions about EDI standards in Thailand.  Thirty five percent of the questionnaire respondents said that it was a large barrier to implement EDI without existing standards to meet company needs.  Almost all interviewees stated that a clear direction to the standards was a key success factor of EDI in Thailand.

The EDI standard for Thailand should be EDIFACT.  If there is a requirement which does not have an EDIFACT message (none were identified as part of this study), a message can be developed and submitted for its approval.  As previously stated, TradeSiam will provide central translation facilities for prominent industry standards like CARGO-IMP until they are replaced by EDIFACT.

Thailand EDI Council roles and responsibilities:

TEDIC Board of Directors potential members include:

A proposed structure for the Thailand EDI Council is shown in Figure 1.7

Figure 1.7  A Proposed Structure for the Thailand EDI Council

What is the financial feasibility of this organization?

Recommendation Six

The Thailand EDI Council and TradeSiam’s initial investors must decide to establish TradeSiam using one of the three financial approaches:

Profit Considerations:

As stated in Recommendation One, TradeSiam is a “for profit” company.  This will make the organization technically and operationally efficient.

Research on other countries and discussions with IVANs indicate that it is difficult to make a profit with EDI.  TradeSiam is not expected to make a lucrative profit.  An economic analysis demonstrates that TradeSiam can make a profit over a ten-year time frame.  (Note: EDI in Singapore has proven to be profitable because the government mandated its use on certain regulatory documents.  Mandates in Thailand are not seen feasible.)

TradeSiam will operate on a cost plus basis.  Profits will be used to expand services, to pay for the skills required to keep the company competitive, and if possible, to pay a dividend to private shareholders.

The decision to proceed with the TradeSiam project cannot be made entirely based on profit.  The overall impact to Thailand, to international trade as well as to specific industries, must be examined.  (See Impact of EDI in Thailand).

Profit considerations support the need for partial government funding for TradeSiam.  (See Strengths and Weaknesses of alternative funding approaches).

Economic Model:

TradeSiam Alternatives:

Table 1.1 below demonstrates the financial performance of the three alternatives for TradeSiam under one set of assumption for 10 years.  As EDI is a new market in Thailand and TradeSiam is only at the feasibility study stage, many assumptions were made to assess financial performance.  Some of the more prevalent assumptions of the economic model are:

Table 1.1  TradeSiam Economic Alternatives

Recommendation Seven

Initially, TradeSiam should keep its EDI service charges below cost, as an incentive for organizations to use it.  Over a period of time, the charges should be increased until they become equivalent to those of other EDI providers in Thailand.

Basis:

When compared with Thailand, the average yearly wages in the three countries are considerably higher:

Australia – 17,000 USD.

Singapore – 17,000 USD.

Taiwan – 11,000 USD.

Thailand – 2,000 USD.

In order to promote the use of EDI rather than manual processing, cheap usage rates can be offered as an incentive.  This will help TradeSiam achieve “critical mass” earlier.

Once organizations have used EDI, they will appreciate its value compared to manual processing.  The charges can then be raised to be competitive with other EDI providers.

Consideration factors:

“The cost of EDI should not exceed the cost of manual processing” was a statement heard repeatedly throughout this study, particularly from smaller businesses.  They pointed out that it would be easy to add people to process documents.  However, when asked about their business problems, most people mentioned excessive paper work and a lengthy customs clearance process highly.  The conclusion is that cheap labor is not the solution to the current business problems.  Business process simplification and the use of technologies such as EDI are the genuine solutions.

As indicated below, we see the trends that are expected to affect EDI in the future; the benefits will increase, thus justifying TradeSiam’s price increases.  As hardware and software prices decrease, the actual cost of EDI processing will also decrease, while wages rise.

The following pricing was assumed in the financial analysis of TradeSiam.  This is the price for TradeSiam’s base service-domestic EDI transmission:

Year 1 of operation – 4 Baht per 1 KB*

Year 2 of operation – 5 Baht per 1 KB

Year 3 of operation – 6 Baht per 1 KB

Year 4 and after – 7 Baht per 1 KB

Other TradeSiam services such as connections to international value added networks or consultancy would be priced accordingly.

Pricing Variables:

TradeSiam’s pricing would vary depending on the type of customers.  Customer size (volume and size of EDI transactions), type of communications with TradeSiam, number of trading partners, etc. would all influence the amount paid by an individual customer.

Split Billing:

Unlike a typical telephone call, where the caller agrees to pay for everything, an EDI charge can be split between the sender and the receiver.  The details of who pays what percentage can be determined by the agreement between partners.

Other costs:

All users who connect to TradeSiam by dialing in through the TOT would be responsible for the TOT telephone charge.  Currently this is three Baht per call.

All TradeSiam users would be responsible for the hardware and software required to connect.  The minimum requirement for the hardware would include a personal computer and a modem.  TradeSiam would provide technical assistance with installation and training.

Price Comparison:

The following are the approximate current prices (per KB) found in the other countries included in the study:

Australia – 10.5 Baht.

Singapore – 8.75 Baht.

Taiwan – Free.  Planned for the first three years of operation.

An international value added network serving Thailand would charge a minimum of 7,433 Baht per month to both the sender and the receiver.  IVANs must pay 3.2 Baht to the CAT for every domestic KB of information transmitted.

A newly formed local EDI service provider is setting their price at five Baht per two kilobytes.  They also have a service charge of 3,000 Baht per month.

Summary of Recommendations

Recommendation One:

Private, for profit, national, EDI services for international trade in Thailand should be established as soon as possible.  One name to be considered for this service is TradeSiam.  This company should not have a monopoly on domestic EDI services in Thailand.  This service will use public data networks for access rather than establishing its own.

Recommendation Two:

TradeSiam should start with two EDI initiatives that focus on international trade:  A Regulatory System for communication with government bodies involved in international trade; and an Air Cargo Community System.  This will enable TradeSiam to build the “critical mass” of messages required for a successful EDI service.

Recommendation Three:

International trade organizations that will be pivotal in the success of EDI in Thailand, such as Customs, Thai Airways International, Port Authority of Thailand and the Ministry of Commerce, should choose a sole domestic supplier of EDI services.  TradeSiam should be this sole provider.

Recommendation Four:

Funding for TradeSiam should come from a consortium of public and private business partners who could either benefit directly from EDI or have a vested interest in international trade in Thailand.  TradeSiam should be a private company, with no more than 49 percent government ownership.  No single party, either government or private, should own more than 25 percent.

Recommendation Five:

A Thailand EDI Council (TEDIC) should be established.  This council would be the recognized EDI body for all Thai industries.  It would also represent Thailand on the Asian EDIFACT Board.  TEDIC should endorse UN/EDIFACT as the sole standard for domestic EDI messages.  TradeSiam would have a close relationship with TEDIC.

Recommendation Six:

The Thailand EDI Council and TradeSiam’s initial investors must decide to establish TradeSiam using one of the three financial approaches:

Recommendation Seven:

Initially, TradeSiam should keep its EDI service charges below the cost, as an incentive for organizations to use it.  Over a period of time, the charges should be increased until they are in line with those of other EDI providers in Thailand.

Business Issues

Many Asian countries have recently established national EDI services.  That fact in itself does not justify that Thailand should also establish the same service.  However, EDI is a key to developing efficient international trading practices.  Thailand needs to consider using EDI if it is to remain competitive in the world market.

EDI can benefit Thailand by addressing the business problems faced by Thai organizations.  Table 1.2 below shows some of the problems identified in the questionnaire.

EDI can shorten the customs clearance process by speeding up the input process of the required documents.  This would improve the overall satisfaction level with the customs clearance process.  Figure 1.8 indicates the current rating of satisfaction quite low.

Table 1.2  What are the problems facing your business today?

Figure 1.8  Are you satisfied with the overall customs clearance process?

Impact of EDI in Thailand

The Impact of services without EDI:

If a clear economical choice for domestic EDI is not provided in the near future, there may be some negative implications:

Barriers to EDI

Barriers in Thailand to EDI implementations:

Table 1.3 below shows the results of the survey regarding barriers to the implementation of EDI in Thailand.  Ninety-seven percent of respondents cited the lack of infrastructure as a barrier.  This overwhelmingly supports the major recommendation of this study: the creation of a national EDI service provider.  Fifty-three percent of respondents cited fear of technology as no barrier at all.  The conclusion is that businesses are not afraid of the implementation but constrained by the lack of supporting infrastructure.

The second largest barrier was the lack of locally-available skilled IT resources in Thailand.  This is a well known problem and the National IT Committee has a Sub-Committee examining this issue.

Table 1.3  Barriers to EDI

The third largest barrier cited was no existing EDI standards.  This supports the need for the Thailand EDI Council to endorse a recognized standard.  In Australia, where EDI has been used for some years now, standards are not seen as a barrier to EDI

Other barriers, identified during interviews include:

Key Success Factors

Key success factors identified by study, interviewees were asked their thoughts on key success factors to EDI implementation in Thailand.  These influenced the formulation of recommendations.  They are summarized below:

Next Steps

The recommendations presented in this report will be discussed along with other study findings at a public seminar on February 23, 1994 at the Emerald Hotel.  Hopefully all concerned parties will be attendance on that day to lend their support to the success of EDI in Thailand.

The implementation of the recommendations made in this report will be the responsibility of the National IT Committee’s Sub-committee on EDI for international Trade and the Thailand EDI Council.

The recommendations in this report and the economic model supporting the development of TradeSiam were based on assumptions about circumstances and events that have not yet taken place, they are subject to changes that could materially affect the results.  In addition, please note that this report was prepared under a time constraint and without compete information that could affect the results.  We cannot, therefore, guarantee their realization.

TradeSiam Profile

According to TradeSiam’s profile published in the Internet, TradeSiam has been founded on August 28, 1997.  The shareholders consist of the government and private sectors.  Government sector comprises Ministry of Finance, Ministry of Transport and Communications, Ministry of Commerce, and Ministry of Science, Technology and Environment.  Private sector comprises of Bureau of the Crown Property, Bank of Thailand Association, TAFA, and TIFFA.

It was established in accordance with the cabinet’s approval on September 19, 1995.  The proportion investment of Government Sector : Bureau of the Crown Property : Private Sector is 49 : 6 : 45.  There is a condition that no organization is able to hold the shares greater than 25 percent resulting in flexibility in operation and responsiveness.  At the same time, government sector can involve in controlling and monitoring the confidential data to protect and prevent the fraud.

TradeSiam has the principle objectives as follows:

1. To provide EDI in trading both domestic and international to public and private organizations,

2. To promote and develop EDI service as an efficient commercial tool in Thailand,

3. To promote and support UN/EDIFACT as a message standard to send EDI documents in Thailand,

4. To be a gateway in EDI services for all transportation and communication systems in Thailand, and

5. To be a central consultant to provide EDI technical knowledge.

Definitions of EDI

EDI stands for Electronic Data Interchange.  It is a procedure that allows the exchange of data between (a computer of) an enterprise and (a computer of) its "trading partners." A trading partner, in EDI parlance, is a supplier, customer, subsidiary, or any other organization with which an enterprise does business.  EDI system emphasizes the interchange of standardized data, which means that entire business documents must be translated into internationally defined standard electronic formats.  These data are readable by different computer systems and must be directly processed by the receiver’s computer without any adjustment. 

In short, EDI is the inter-organizational exchange of business documentation in structured, computer-processable without any modification form (Emmelhainz, 1990 : 4).  It is viewed as simply a way of replacing paper documents with electronic documents, and replacing traditional methods of transmission such as mail, phone, or in-person delivery with electronic transmission.  Actually, the exact purpose of EDI is not to eliminate paper, but rather to eliminate processing delays and data reentry resulting in data accuracy increase.  This leads to the concept of Paperless Trading.  The concept of EDI vs. traditional method is diagramed as shown in Figure 1.9 and EDI component is shown in Figure 1.10.

Source Electronic Data Interchange (Emmelhainz, 1990 : 5)

The Differences between EDI and File Transfer

EDI is not just file transfer or e-mail which employs computer technology to be a media for transmission.  EDI is the application to application exchange.  The senders and receivers do not have to have the same computer systems because the data is standardized with the precise structure.

Table 1.4  Type of Data Interchange Comparison

Electronic Data Interchange: The new way of business data communication (Shinawatra, Electronic Commerce Services : 7) explains that EDI consists of the important characteristics as follows:

1.    Structure.  Since EDI has precise structure, the receiver can obtain value from data, store into their databases, and present on the screen or print on the paper without human intervention to retype data from the sender.  This reduces the mistakes in the preparation and data storing stages,

2.    Code Representing Data.  Most EDIs use codes instead of text description for merchandise, place, vehicle, etc.  These codes are used and understandable world wide and exchange data across the world directly,

3.    Data Standard.  The data transmission can use the same or different standard.  If users use the different standard, the translation software must be used to convert to the same standard.  Therefore, if they use the same standard, number of translation software should be reduced, and

4.    Direct Data Interchange.  Since the data can be interchanged between application to application, the speed of document interchange will be faster.  Paper, time, and human resource can be lessened.

EDI Structure

EDI has four main components which are mailbox, translation software, communication network, and hardware.  The Figure represents these components are shown in Figure 1.10 and the descriptions of each component are as follows:

1.      Mailbox

Each EDI user must have their own mailbox to store data from receivers.  The mailbox will keep the incoming data until the receiver retrieves data from mailbox to their back office systems.  Most and common, mailbox will be at EDI server located at EDI Service Provider.  When the sender wants to send the data, he would connect to EDI server.  Then, EDI server will check the sender’s ID and the sender’s data.  If this is completed, the EDI server will forward this data to the receiver’s mailbox.  EDI Service Provider is therefore responsible for preparing communication system for clients all the time.

EDI Server should have the following characteristics:

2.      Translation Software

This is mandatory such that EDI users must install for both sender and receiver sides.  It is needed to translate back and forth between text files.  Types of translation software may be classified by back office connection as follows:

3.      Communication Network

There should be a wide coverage network being able to respond clients’ needs all the time.  The quality of service should be high meaning low system failure and errors but reliable and high availability.

This is the computer having translation software installed.  It acts like a gateway to send and receive data.  Normally, it is PC.  There are some rare cases that it is mini or mainframe computers depending on users’ need and the volume of data.

Steps to Send and Receive EDI Data

Basically, EDI is to send and receive business documents in a standard format via electronics.  At the very first time, the predefined format must be set.  A mailbox must be installed at EDI server and translation software must be installed at the computers of both sender and receiver.  Communication equipment e.g. Modem, VDM (Voice Data Multiplexer), etc. are at both sides.

EDI sender prepared document in the form of text file with in-house format.  This text file will be translated into standard format by translation software and then send to EDI receiver via public network or valued-added network (VAN) by using Modem or VDM.  Noted that EDI sender can send to several EDI receivers at a time.

EDI Service Provider will verify the sender’s password and check EDI data.  The only correct and complete data will be sent to each EDI receiver mailbox.

EDI receiver will use the computer that is connected to public network to receive EDI data from their own mailbox.  This data will be translated back by translation software so that it can be manipulated immediately by the existing system.

EDI Standard

EDI standard is important and directly affects the capability to link among EDI applications.  Currently, there are several standards e.g. EDIFACT, ANSI X12, AIAG, TRADACOMS etc.  EDIFACT standard is the most popular in Europe and Asia.  It covers complete trading details, has steps to verify number of internal data resulting in error reduction, and supports international codes being able to identify types and places of merchandise.  The example of developed EDIFACT documents which are able to implement in real life are as follows:

Purchasing Group

Financial Group

Transportation Group

Customs Group

Effectiveness and Outcome of the EDI policy

Policy evaluation involves the assessment of the overall effectiveness of a national program in meeting its objectives (Dye, 1981 : 366-367); that is, the comparison between actual program outcomes and desired outcomes which, typically, is outcomes evaluation (Patton, 1986 : 127).  The EDI policy is said to be effective if it meets the objectives as follows:

Impact of the EDI policy

Since some policies may pursue conflicting “goals”, limitation to the achievement of goals is not appropriate (Dye, 1981 : 367).  All of the consequences of public policy, called policy impact, should be concerned.  The impact of a policy is all its effects on real-world conditions. This will study the impact of an EDI policy on organizations and stakeholders using stakeholder approach. 

The impact on organizations is how organizations benefit from an EDI policy.  Stakeholders in this study are top management, middle management, EDI implementing staff, and EDI users in concerned organizations.  The impact on stakeholders is how stakeholders affect or are affected by an EDI policy.

Hypotheses of the Study

The hypotheses of this study can be stated as follows:

H₁:       An EDI Policy is effective.

H₂:       An EDI policy effectiveness is related to the policy contents, inter-organization cooperation, intra-organization cooperation, and demographic data.

Benefits of the Study

According to the National Electronics and Computer Technology Center, most organizations in other countries accept that the EDI helps facilitate the trading process.  In Thailand, due to different cultures and some other factors, EDI may not be effective.  This study will report the effectiveness of the EDI policy as a prime aim.  The policy-makers need to know why the policy is effective or ineffective.

This formative evaluation expects that the EDI policy will facilitate trading partners and international trade organizations concerning clearance process.  Deliverables are as follows:

1. A report on the EDI policy evaluation.
2. A report as an analysis documentation.

Objectives of the Study

It is essential to evaluate whether or not EDI policy solves the aforementioned problems.  If so, this will lead further to evaluate the policy effectiveness and the impact of the EDI policy.

Therefore, the main objective of this study is to assess the IT policy on an Electronic Data Interchange (EDI) context.  This would focus on a goal-based policy evaluation.  Other objectives are as follows: 

1.      To study whether EDI policy is effective, and

2.      To study the impact of EDI on organizations’ benefit and stakeholders.

Scope of the Study

This study will analyze an EDI policy only on the inward manifest process of Port Authority of Thailand (PAT) and the clearance process of The customs Department; and the process of document delivery between companies.  The trading process of Thai Airways International plc. (THAI) being in progress will also be presented.  The international trading organizations (public agencies) and trading partners (private agencies) will be pivotal in the effectiveness of EDI in Thailand.

EDI was approved in principle in December 1992 and subsequently a feasibility study had been done.  This study collected the data for pretest and posttest data during 1997-1999.

Organization of the Thesis

The major tasks completed in this study are reported in the following chapters.  The National EDI policy based on Anderson Consulting tries to facilitate the country in terms of macro and micro perspectives.  For macro view, the policy strongly encourages to set up TradeSiam as an EDI service provider to serve the “critical mass” and finally lead to economic growth.  For micro view, the policy encourages the use of EDI to speed up the clearance process, to reduce cargo clearance, and etc.  This study assesses the EDI policy in both perspectives with strong emphasis on micro view.

Chapter II is the review of literature.  It has three main parts.  The first part is EDI literature review on selected countries.  The second part is EDI prime case studies.  The third part provides E-Commerce and E-Business together with policy evaluation concepts.

Chapter III describes EDI Laws and Acts.  Besides, agencies involved with EDI in Thailand e.g. the Customs Department, the Port Authority of Thailand, and Thai Airways International are presented.

Chapter IV reports research methods used.  The topics discussed include the target population, research design, sampling procedures, data collection instruments, analysis techniques and variable measurements.  Policy outcomes are also presented in this chapter.

Chapter V presents the results from the preliminary data analyses.  Descriptive statistics of the total sample and subsamples on personal characteristics which is of interest are presented.  The average scores and distributions of each subgroup on satisfaction domains are also presented.

Chapter VI focuses model of analysis.  Path analysis has been used to analyze and shape up the model.

Chapter VII summarizes major fact findings and policy implications as well as recommendations for further study.  Nation EDI policy is mainly discussed in this chapter together with policy impacts collected data from stakeholders.