2. 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.
3. History of EDI
The general idea behind EDI was originated by a group of
railroad companies in the mid-1960’s, in the United States.
Much of the early work on EDI was driven by the industry
sectors for:
Transportation
Automobiles
Banking
5. 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 B
Retailer A
Retailer C
Wholesaler A
Wholesaler B
Wholesaler C
Value-added
Network
7. The EDI Alternative
The buyer raises a Purchase Order (PO) with EDI software, which can be automatically
transmitted to the seller in near real-time
The seller’s order entry system receives the PO and an acknowledgement is transmitted to
the buyer with delivery confirmation
What can take five days with paper takes minutes with EDI
8. 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.
9. Working of EDI cont…
Manufacture
Manufacture
Manufacture
Manufacture
Supplier
Supplier
Supplier
Supplier
Supplier
Supplier
Third
Party
Vendor
One to Many
One to Many
10. EDI Business Cycle
Company XYZ
Computer
with EDI
software
EDI Service
Network
Vendors
Customers
Branch
Office
Distributors
Stores
Banks
Transporters
Notes, Documents,
Images, Letters,
Purchase Orders,
Invoice, Queries,
Order Entry,
Shipment Details,
Payment Orders,
Bankers Advice,
Miscellaneous claims.
11. What Does an EDI Message
Consist of ?
Paper-based documents are posted in envelopes and it is possible to mail many documents in one
envelope, EDI is just the same
A “message envelope” defines the start and end of a document
“Functional Group envelopes” contain all message envelopes of a specific type, eg POs, invoices etc
“Interchange envelopes” enclose all functional group envelopes
12. 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 contains one or more functional groups of documents
with the same sender and receiver.
13. 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:-
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.
14. 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 .
15. 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.
16. 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).
17. 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.
18. ASC X12 Standard
These standards have been updated 5 times since their
creation in 1979,
As the standards evolved, subcommittees were added to
ASC X12.
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.
19. UCS History and Background
UCS = Uniform Commercial Standard
Subset of ANSI ASC X12
Sponsorship and Funding
Manufacturers
Retailers
Wholesalers
20. UCS Communication Standard
Design
Objective
Provide for the communication of EDI data
Identify alternative communication methods
Specify the communication standard for industry use
21. 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)
22. 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-to-consumer (B2C)
Allows multi-country and multi-industry exchange
Europe adopted EDIFACT early and has a large installed
base indicating its continued use
24. 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
25. 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
26. Disadvantages
High Dependence on the participation of trading partners
Costly for smaller companies
Difficult to agree on standard to be used
