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Electronic Data Interchange (EDI)

Introduction to EDI
What is EDI?
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.
http://www.x12.org/x12org/about/faqs.cfm#a1

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

www.edi-guide.com/edi-history.htm

History of EDI
It was not until the 1970s, 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

www.gotedi.com/term_history.htm

Advantages of EDI
Lower operating costs Saves time and money Less Errors = More Accuracy No data entry, so less human error Increased Productivity More efficient personnel and faster throughput Faster trading cycle Streamlined processes for improved trading relationships
http://www.edi-guide.com/edi-benefits.htm

Disadvantages
High Dependence on the participation of trading partners Costly for smaller companies Difficult to agree on standard to be used

http://www.edi-guide.com/risks-of-edi.htm

Retailer A

Wholesaler A

Retailer B

Wholesaler B

Retailer C

Wholesaler C

Retailer D

Wholesaler D

Original Model
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Wholesaler A

Retailer B

Wholesaler B

Retailer C

Wholesaler C

Retailer D

Wholesaler D

Value-Added Network (VAN) communications networks supplied and managed by thirdparty 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

Web Services
Applications that use a universal language to send data and instructions to one another, with no translation required Uses the Internet, so most of the connection problems are eliminated

http://www.computerworld.com/softwaretopics/software/appdev/story/0,10801,64099,00.html

Options
EMAIL XML DIRECT ROUTING

Direct Routing
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Wholesaler A

Retailer B

Wholesaler B

Retailer C

Wholesaler C

Retailer D

Wholesaler D

Who Needs EDI or a VAN?


Companies still need Assistance with formatting problems Authentication of customers

EDI Standards

ANSI X12 Standard


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

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

http://www.uc-council.org/ean_ucc_system/stnds_and_tech/ucs.html

EDIFACT
Electronic Data Interchange for Administration, Commerce, 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)
http://www.x12.org/x12org/about/faqs.cfm#c8

EDIFACT
Includes syntax rules and implementation guidelines, message design guidelines, data elements, code sets, 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
Statistical Journal of the UN Economic Commission for Europe, 2002