ELECTRONIC DATA INTERCHANGE

Presented by:
Dimanshu Bakshi
2K18/MBA/706
 What is EDI?

 Electronic Data Interchange (EDI), is the computer-to-computer exchange of

standard business documents in electronic format between two companies

 EDI operates under two principles, firstly electronic documents replace paper ones
and secondly the exchange of documents takes place in a standardised format.
What are the Basic Steps for EDI?
 Value-Added Network (VAN)
 Communications networks supplied and managed by third-party companies that facilitate
electronic data interchange, Web services and transaction delivery by providing extra
networking services.

Retailer A Wholesaler A
Value-added
Network
Retailer B Wholesaler B

Retailer C Wholesaler C
Why use EDI?
 Working of EDI

1. Exchange ofdata with several trading partners directly in a standard

format.

2. Interaction with multiple companies through a central information

clearing house. Here each companies add EDI program to its computer
to translate the company data into standard formats for transmission,
and for reverse translation in the data.
Working of EDI cont…
Supplier
One to Many
Manufacture Supplier

Supplier

One to Many
Manufacture Supplier
Third
Manufacture Party Supplier
Vendor
Manufacture Supplier
 EDI Business Cycle
Vendors

Company XYZ Customers

Branch
Office
Notes, Documents,
Images, Letters,
Purchase Orders, EDI Service Distributors
Invoice, Queries, Network
Order Entry,
Shipment Details,
Payment Orders,
Stores
Bankers Advice,
Miscellaneous claims.
Banks
Computer
with EDI
Transporters
software
 EDI services
1. Application Services :-
It provides the link between application and EDI. It allows you to send
documents from an EDI system. The set of callable routine is used to
transfer document from the business application into EDI document
destination can be either intra-company or to the external companies .
EDI services
2. Translation service:-
Converts the out going documents from an internal format file to an
agreed external format.
Translates internal document from external format to EDI internal
format file.
EDI Services cont…

3. Communication service:-
The communication service sends and receives transmission files to
and from the trading partners either directly or by using party
service called a valued added network(VAN).
What are the Benefits of Using EDI?
Need for Speed
 Sending an electronic message locally or
globally takes seconds

 Information sent by EDI is available

immediately for use within internal
applications

 Faster receipt of documents can provide a

competitive edge in any business
Need for Accuracy

 Electronic transfer of business documents

 Eliminates the need for copying data between
paper-based documents
 Eliminates errors caused by manual updates
or intervention
 Helps to reduce re-work
 Reduce the risk of lost data.
Disadvantages

 High Dependence on the participation of trading

partners.

 Costly for smaller companies and also Cost per partner is

higher when number of partner is small

 Difficult to agree on standard to be used

Thank you