What is EDI
 For several hundred years, commerce has been based upon the movement of written documents. These documents contained the information that one company needed to convey to another company in order to do business.  Over a period of time the documents started to take on standard names such as Invoice, Credit Note and Order. However, the documents were certainly not of any standard layout. They did not need to be because the recipient was always a human being and humans have the ability to read, interpret and rationalise.
 Electronic Data Interchange is the computer-to-computer exchange of business data and documents between companies using standard formats recognized both nationally and internationally.  The information used in EDI is organized according to a specified format set by both companies participating in the data exchange.

 Much of the early work on EDI was driven by the industry sectors for:  transportation  pharmaceuticals  groceries  automobiles  banking . in the United States.History of EDI  The general idea behind EDI was originated by a group of railroad companies in the mid-1960’s.

when work began for national EDI standards. Both client and vendors input their requirements to create a set of standard data formats that were hardware independent. were unambiguous and could be used by all trading partners. reduced labor-intensive tasks such as dataentry. allowed the sender of data to control the exchange including receipt confirmation of by the other party .History of EDI It was not until the 1970’s.

Original Model Retailer A Wholesaler A Retailer B Wholesaler B Retailer C Wholesaler C Retailer D Wholesaler D .

Architecture of EDI .

From the lowest layer upward.Defining what overall standards format the EDI file will be in.Defining just how the data is to be transferred from the sender to the receiver. these three layers are: • The Communications Standards . • The Message Standards . . • The Syntax Standards .Defining exactly what the message is and what information is to be placed where within this message.

Value-Added Network (VAN) communication networks supplied and managed by third-party companies that facilitate electronic data interchange. Web services and transaction delivery by providing extra networking services .

VAN Model Retailer A Wholesaler A Retailer B Value-added Network Retailer C Wholesaler B Wholesaler C Retailer D Wholesaler D .

00.html .com/softwaretopics/software/appdev/story/0.64099. so most of the connection problems are eliminated http://www.computerworld.10801.Web Services Applications that use a universal language to send data and instructions to one another. with no translation required Uses the Internet.


Direct Routing Retailer A Wholesaler A Retailer B Wholesaler B Retailer C Wholesaler C Retailer D Wholesaler D .

maintain and build on the EDI standards.x12.org . Members meet three times each year to develop.  It is a not-for-profit membership. due to differences in formatting and information presentation.  Its purpose: To standardize the EDI formatting and exchanges between companies in order to make the transfers less time consuming.ANSI X12 Standard  Accredited Standards Committee (ASC) X12 was created in 1979 by the American National Standards Institute. http://www.

 As the standards evolved. http://www.org . subcommittees were added to ASC X12.ASC X12 Standard These standards have been updated 5 times since their creation in 1979. In 1986 X12F was added for the Financial Industry In 1989 X12M was added for the Warehousing sets In 1991 X12N was formed for the B2B Insurance and Healthcare needs.x12. They are updated to include new facets in the business world. or update any information that has become obsolete.

UCS History and Background  UCS = Uniform Commercial Standard  Subset of ANSI ASC X12  Foundation for creation from the Transportation industry  Grocery and Retail-oriented Industry – 1976  Sponsorship and Funding  Manufacturers  Retailers  Wholesalers  Brokers .

UCS standards released for general use by industry members .UCS Development (3 phases) 1st – Feasibility Study (Spring 1980) 2nd – Development of message and communication standards (August 1980) 3rd – Validity test of message and communication standards By late 1982.

UCS Implementation Guidelines Data Administration Ordering Logistics Financial Business Support .

UCS Communication Standard Design Objective Provide for the communication of EDI data Identify alternative communication methods Specify the communication standard for industry use Provide operational guidelines for using the standard .

uses EDI for:  Invoice processing  Remittance advice  Purchase order processing  Vendor replenishment and managed inventory  Advanced ship notice  Product transfer and resale report  Documenting price changes  Promotional announcement processing  Item maintenance . Co.)  Kroger Co.UCS Example (Kroger.

Item Maintenance (Kroger. Co.)  UCS 888 transaction  Receive detail finished good product information for new products or changes in the existing product specifications from suppliers  Benefits  Increased accuracy  Improved timeliness  Reduced operating expenses .

and Transport is the international set of EDI standards Became a UN standard in 1987 Maintenance and further development is the responsibility of the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) . Commerce.EDIFACT Electronic Data Interchange for Administration.

data elements. and other definitions Used for business-to-business (B2B) communication rather than business-toconsumer (B2C) Allows multi-country and multi-industry exchange Europe adopted EDIFACT early and has a large installed base indicating its continued use . code sets.EDIFACT Includes syntax rules and implementation guidelines. message design guidelines.

No data entry. so less human error  Increased Productivity-Making personnel more efficient and it improves business capabilities by speeding up throughput. Each re-entry of data is a potential source of error. saving time and reduced cost of business transaction and enabling the automatic processing of documents. thus. More efficient personnel and faster throughput  Faster trading cycle-EDI allows faster and streamlining trading cycle between organizations leading to improved relationships between trading partners. reducing the risk for human error.EDI replaces paper transactions with electronic transmissions. there is no need for re-entering data. Streamlined processes for improved trading relationships . Saves time and money  Less Errors = More Accuracy-With the implementation of EDI.Advantages of EDI  Lower operating costs.

 Difficult to agree on standard to be used .Disadvantages  High Dependence on the participation of trading partners .You need to be confident that they will do their part.  Costly for smaller companies . Cooperation between trading partners is needed in order to develop a common rules to avoid differences in interpretation. there are no ways to force trading partners to accept these standards. to get an EDI system running. It is beyond the resources these companies to invest tens or hundreds of thousands of dollars in setting and implementation costs. as well as weeks of personnel training. .Many small companies are facing resources problems in getting starter with the initial implementation of EDI system. EDI will be meaningless if your trading partner didn't get involved using EDI system effectively.Even though there are widelyaccepted and used standards.

Things you may want to remember . (for the test)  EDI – Electronic Data Interchange  VAN – Value-Added Network  ASC X12 is moving towards integration with XML formatting  EDIFACT – international set of EDI standards  In the near future EDI will be vital for business domestically and abroad . . .

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