An Interorganizational System (IOS) is one which allows the flow of information to be automated between organizations in order to reach a desired supply-chain management system, which enables the development of competitive organizations. This supports forecasting client needs and the delivery of products and services. IOS helps to better manage buyer-supplier relationships by encompassing the full depths of tasks associated with business processes company-wide. In doing these activities, an organization is able to increase the productivity automatically; therefore, optimizing communication within all levels of an organization as well as between the organization and the supplier. For example, each t-shirt that is sold in a retail store is automatically communicated to the supplier who will, in turn, ship more t-shirts to the retailer.

Organizations might pursue an IOS for the following reasons:

1. Reduce the risk in the organization
2. Pursue economies of scale
   Economies of scale
   Economies of scale, in microeconomics, refers to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. "Economies of scale" is a long run concept and refers to reductions in unit...
   
   
3. Benefit from the exchange of technologies
4. Increase competitiveness
5. Overcome investment barriers
6. Encourage global communication

The most common form of IOS is Electronic Data Interchange

Electronic Data Interchange

Electronic data interchange is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents or business data from one computer system to another computer system, i.e...

, which permits instantaneous computer-to-computer transfer of information.