Electronic Data Interchange
By: Gonika Kathuria MBA (II Semester)

Definition of EDI 

It is not easy to define EDI in strict terms. terms. ‡ EDI defines the paradigm of exchanging data electronically more than anything else. else. 

EDI Is the electronic transfer of information between two trading that have been adopted as a national or international standard for the particular business function or partner¶s systems using a set of transactions

Characteristics of EDI 

The interchange has to be hardware independent. independent. The message syntax has to be unambiguous, although not always self-describing. self-describing. It has to reduce labor intensive tasks of exchanging data such as data reentry. reentry. Should allow the sender to control the exchange, including knowing if and when a recipient has received the message. message.   

The Transcript Trail
Print Transcript Re-key Data Receive Transcript

U.S. Mail

Student Information System

Request Transcript

Recipient¶s Student Information System

The Transcript Trail with EDI
Print Transcript Re-key Data Receive Transcript

U.S. Mail

Student Information System

Recipient¶s Student Information System

Request Transcript

The Structure of EDI System 

The basic EDI structure is given below:
‡ Each partner has their own internal software systems. ‡ Special EDI adapters have to be implemented which will be able to interface with the internal system as well as communicate with the value added network. ‡ The particulars of the message syntax and interaction process are negotiated between partners in advance. Sometimes a dominant partner will impose its standards on smaller partners.

Partner A Internal EDI Software System


Partner B EDI Software Internal System

Components of EDI 

EDI standards EDI software Communication networks  

EDI Standards
In order to make communication from computer of one organization to computer of another organization, it is necessary that information should be independent of hardware, software or the nature of implementation. implementation. So, EDI standards are used which lay down the syntax and semantics of the data being exchanged. exchanged.

EDI Software
EDI software consists of computer instructions that translate the information from unstructured, company-specific companyformat to the structured EDI format, and then communicate the EDI message. EDI message. software also receives the message and translates from standard format to company specific format. format.

Communication Network
EDI documents are electronically exchanged over communication networks which connect trading partners to one another. These another. documents are stored in user¶s mailbox on the network¶s EDI server from where they can be downloaded/uploaded at the user¶s convenience. convenience.

Components of EDI System
Business Application Business Application






Value Added Networks 

VANs are third-party communication networks thirdestablished for exchanging EDI traffic amongst partners. partners. The VAN is responsible for routing, storing and delivering EDI messages. They also provide delivery messages. reports. reports. Depending on the VAN type, messages may need extra envelopes or may be routed using intelligent VANs which are able to read the EDI message itself. itself.  

Benefits Of EDI
It can be classified into two types: types:

(A) Direct Benefit
‡ ‡ ‡ ‡ No re-key information. reinformation. Cost of processing much smaller then that of processing paper documents. documents. Improved customer services. services. Effective information. information.

(B) Strategic Benefits
‡ ‡ ‡ ‡ ‡ Improved customer relations. Competitive edge is maintained. Improved business relations. Accurate sales and future forecasting. Improved job satisfaction among data entry operators.

Drawbacks of EDI 

Expensive software The software has to be practically rewritten for different combinations of VANs, internal hardware and trading scenarios. scenarios. The EDI system is highly static and every business process has to be meticulously negotiated between partners. partners. Since there is no common registry or discovery mechanism, partners have to retain information on institution codes, product codes, up-to-date up-tocatalogs etc. associated with everybody they etc. do business with. with.

Thank you!!!

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