Pankaj Thapa pankajkeith@gmail.co m

• Electronic Data Interchange (EDI) refers to the structured transmission of data between organizations by electronic means. • A way to exchange transcripts (and other important data) without paper. • The National Institute of Standards and Technology in a 1996 publication defines Electronic Data Interchange as "the computer-to-computer interchange of strictly formatted messages that represent documents other than monetary instruments. • EDI can be transmitted using any methodology agreed to by the sender and recipient. This includes a variety of technologies, including modem (asynchronous, and bisynchronous), FTP, Email, HTTP, AS1, AS2, etc

Working of EDI
1. Exchange of data 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…
One to Many


Supplier Supplier

One to Many

Manufacture Manufacture Manufacture Third Party Vendor

Supplier Supplier Supplier

EDI Business Cycle
Company XYZ
in st e io at n

Notes, Documents, Images, Letters, Purchase Orders, Invoice, Queries, Order Entry, Shipment Details, Payment Orders, Bankers Advice, Miscellaneous claims.

on ID ati tin ED es ID ED n natio Desti ED I

Customer s Branch Office
Distributor s

EDI Service Network

EDI Destination


ion ED ID es ED tin ati ID on es t in at io n

De s


Stores Banks
Transporter s

Computer with EDI software

Processing of EDI message
External User Interface External User Interface

Applicatio n Translatio n Services EDI Service Network Access Control

Applicatio n Translatio n Services EDI Service

EDI Service Network

Network Access Control

Benefits of EDI
• Generation of a paper document on a form by software application. • Delivery of a few copies of document to the internal dept to be filed and others to the trade partners via postal service. • Retyping the document received by the trading partner on the form into their computers which may offer introduce errors. • Generation of a paper acknowledgement and sending it to the originating company. • Generation of a file containing the processed document by the application program.

Benefits of EDI cont…
• Conversion of the document into agreed standard format. • Electronic transmission of the file containing the document over the network , which may link the originating company and its trading partner. • Automatic generation of the receipt and its delivery over the network to the originating company.

Features of EDI
• Exchange of structured business information in standard formats between computers. • It has reduced data entry link, eliminates the need for a paper bases system and improved business cycle. transfer structured business documents internally • EDI among groups of departments or externally with its suppliers, customers and subsidiaries. • In EDI, information transferred over a network will not have to read, retyped or printed but must have predefine structure agreed between the two company's which send and receive data. • The two companies or groups which exchanged information through EDI are called the Trading Partners.

Components of EDI
There are 3 types of component

1. Application service 2. Translation service 3. Communication service

Components of EDI cont…
Business Application Trading Partner

Application Service

Transmissio n Service

Communicati on Service

File Types
Edi creates following files as a document passes through the system: 1. Internal format file (IFF):It contains single document for single trading partner. 2. External format file(EFF):It contains same data as the internal format file translated into the appropriate standard document format. 3. Transmission file:it contains one or more document for the same trading partner. Documents of same format are packed into an functional groups. The functional groups going to one trading partner are packaged into an interchanged set. An interchanged set. An interchanged set contains one or more functional groups of documents with the same sender and receiver.

EDI software
1.Translators:Every EDI sender and receiver should have EDI translator. It varies based on the computer on which it is going to reside. The computer may be a micro computer or a midrange or a mainframe. Translator reads the fixed length file and generates valid Edi standard and maintains control information. 2.Application link software:There are 2 components of software, which is generally used to link the existing business application to the EDI data. One is the translator and the other is application link software . Application link software is used to collect information from the business application and then it formats into fixed length computer file and passes it onto translators.

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 cont…
File Server
Document Internal Format File

Business Application


Callable Routines

Internal Format File

Management - Interface

Application Service

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…
Translation Service

File Server
Internal Format File Transmission File


External Format File

Transmission File

Internal Format File


External Format File


Management - Interface


Converter Transmission file Builder

, ,


Translator Transmission file Splitter

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).

EDI Services cont…
Communication Service
File Server
Transmission File Transmission File

CC Gateway 1 Gateway 1 Management - Interface CC = Communication Controller

Transmission File Transmission File

EDI Standards
1. Transaction set standards:These defines the procedural format and content requirement for specified business transactions. Eg: Purchase orders. 2. Data Dictionary And Segment Dictionary:These defines the precise content for data content and data segment used in building transaction sets. 3. Transaction control standard:These define the format s for the information required to control the data interchange

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