Edi
Edi
EDI Definition
Simply termed as Paperless Trading
International Data Exchange Association (IDEA) formally
define EDI as:
The transfer of structured data, by agreed message
standards, from one computer system to another, by
electronic means.
Four elements essential to an EDI system:
Structure Data: transactions contain codes, value and
pieces of text, each piece of information with a defined
purpose. Codes for the customer and product.
EDI Definition
Agreed Message Standard: a universal standard not only
agreed between business partners but also national and
international bodies. A Purchase Order is one the agreed
standards.
From One Computer System To Another: any EDI message
is sent between two computer applications. A message is
directly sent between the customers Purchasing System and
the suppliers Order Processing System.
Advantages of EDI
1. Cost Cutting
Minor costs reduction are postage and stationery costs. Major
savings are staff costs. The cost savings need to be offset
against the system development and network costs.
2. Shortened Ordering Time
Orders are directly sent into the network and the only
possible delay is the amount of time the supplier retrieves
messages from the system.
3. Fast Response
Advantages of EDI
4. Accurate Invoicing
An e-Invoice is automatically matched against the original
order (made by the customer) and cleared for payment,
eliminating any sort of queries.
5. EDI Payment
Payment can also be made by an EDI system. Electronically
matching against the relevant invoices.
6. Elimination of errors
It eliminates the source of errors - the customer will get what
the customer asked for.
Disadvantages of EDI
1. High Dependence on the participation of trading partnersYou need to be confident that they will do their part. EDI will
be meaningless if your trading partner didn't get involved
using EDI system effectively.
2. Costly for smaller companies-Many small companies are
facing resources problems in getting starter with the initial
implementation of EDI system. 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, to get an EDI system running.
3. Difficult to agree on standard to be used-Even though
there are widely-accepted and used standards, there are no
ways to force trading partners to accept these standards.
Cooperation between trading partners is needed in order to
develop a common rules to avoid differences in
interpretation.
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EDI Technology
Its technology is defined by EDI standards, EDI networks
and EDI software that interface with the business
applications. The technology however plays only a small part,
as it is often said that EDI is 90% business and 10%
technology.
EDI Standard
Essence of EDI is the coding and structuring of the data into
a common and generally accepted format - anything less is
nothing more than a system of file transfers.
Standards have been developed in various sectors for the
coding and structuring of data to be used in business
transactions.
These bodies include American National Standards
Institute (ANSI X12 standards) and International bodies such
as the UN (EDIFACT standards).
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Supplier
Best Bread
Super
Food
Fresh Fruit
Save Food
Mighty
Meat
Sava Store
Very Veg
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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)
Includes syntax rules and implementation guidelines, message
design guidelines, data elements, code sets, and other
definitions
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EDIFACT
Used for business-to-business (B2B) communication rather
than business-to-consumer (B2C)
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EDI Communications
Standards specify a syntax for coding of the eDocument,
and NOT the method of transmission.
Methods of transmitting an eDocument are:
i) A magnetic tape or diskette
ii) A direct data communication link
iii) A value added data service (VADS), also known as value
added network (VAN)
Postboxes and Mailboxes
VADS basic facility is a post and forward network
Each user of the system has two files:
postbox - where outgoing messages are placed
mailbox - where incoming messages can be picked from
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EDI Communications
Customer
VADS
Super
Food
postbox
mailbox
Save Food
postbox
mailbox
Sava Store
postbox
mailbox
Supplier
postbox
mailbox
Best Bread
postbox
mailbox
Fresh Fruit
postbox
mailbox
Mighty Meat
postbox
mailbox
Very Veg
EDI Communications
The postbox/ mailbox system is also referred to as a store
and forward system.
Principle advantages:
i) Time Independence
The sending and receiving of the interchange are
asynchronous. These two processes can be carried out at the
convenience of all users involved.
ii) Protocol Independence
The type of a communication link to be used is an option
available for each user of the VADS system. Low volume
users will opt for a dial-up modem link whereas high volume
users may use leased line or a packet switching network.
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validated
for
EDI Implementation
EDI in the Internet
The Internet has started to be used as an EDI VADS by
several organizations. Here security and reliability are two
major concerns and unlike the traditional VADS, the Internet
does not guarantee delivery of data sent.
The Internet on the other hand is cheaper than any other
commercial network.
The technical element of the EDI system is the EDI
software.
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EDI Implementation
Pens and
THings
Packaging
Solutions
Production
Control System
Production
Control System
EDI Software
VAD
S
EDI Software
5-20
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5-22
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