EDI communication system

Ayman al majdlawee

outline

EDI definition History of EDI The essential elements of EDI are Standards Advantages of using EDI over

paper systems• Barriers to implementation

EDI definition

Electronic data interchange (EDI): is the structured transmission of data

between organizations by electronic means. It is used to transfer electronic documents or business data from one computer system to another computer system, i.e. from one trading partner to another trading partner without human intervention.

A more careful definition of EDI is

'the exchange of documents in standardized electronic form, between organizations, in an automated manner, directly from a computer application in one organization to an application in another'.

History of EDI The early applications of what became known as EDI

were undertaken in the United States. The idea's origins have an international flavour, however, being traceable back to the 1948 Berlin Airlift, where the task of co-ordinating airfreighted consignments of food and consumables (which arrived with differing manifests, languages and numbers of copies) was addressed by devising a standard manifest. Electronic transmission commenced during the 1960s, initially in the rail and road transport industries. The standardization of documents was a necessary concomitant to that change. In 1968 the United States Transportation Data Coordinating Committee (TDCC) was formed, to coordinate the development of translation rules among four existing sets of industry-specific standards. A further significant move towards standardization came with the X12 standards of the American National Standards Institute (ANSI), which gradually extended and replaced those created by the TDCC.

The essential elements of EDI are the use of an electronic transmission medium )

originally a value-added network, but increasingly the open, public Internet) rather than the dispatch of physical storage media such as magnetic tapes and disks;

the use of structured, formatted messages based on agreed standards ) such that messages can be translated, interpreted and checked for compliance with an explicit set of rules (

relatively fast delivery of electronic documents from sender to receiver (generally implying receipt within hours, or even minutes) and

direct communication between applications (rather than merely between computers).

EDI depends on a moderately sophisticated information technology infrastructure. This must include data processing, data management and networking capabilities, to enable the efficient capture of data into electronic form, the processing and retention of data, controlled access to it, and efficient and reliable data transmission between remote sites.

Standards EDI is considered to be a technical

representation of a business conversation between two entities, either internal or external. Note that there is a perception that "EDI" constitutes the entire electronic data interchange paradigm, including the transmission, message flow, document format, and software used to interpret the documents. EDI is considered to describe the rigorously standardized format of electronic documents. EDI is very useful in supply chain.

Advantages of using EDI over paper systems

EDI and other similar technologies save a company money by providing an alternative to, or replacing information flows that require a great deal of human interaction and materials such as paper documents, meetings, faxes, etc. Even when paper documents are maintained in parallel with EDI exchange, e.g. printed shipping manifests, electronic exchange and the use of data from that exchange reduces the handling costs of sorting, distributing, organizing, and searching paper documents. EDI and similar technologies allow a company to take advantage of the benefits of storing and manipulating data electronically without the cost of manual entry. Another advantage of EDI is reduced errors, such as shipping and billing errors, because EDI eliminates the need to rekey documents on the destination side. One very important advantage of EDI over paper documents is the speed in which the trading partner receives and incorporates the information into their system thus greatly reducing cycle times. For this reason, EDI can be an important component of just-in-time production systems.

Barriers to implementation

There are a few barriers to adopting electronic data interchange. One of the most significant barriers is the accompanying business process change. Existing business processes built around slow paper handling may not be suited for EDI and would require changes to accommodate automated processing of business documents. For example, a business may receive the bulk of their goods by 1 or 2 day shipping and all of their invoices by mail. The existing process may therefore assume that goods are typically received before the invoice. With EDI, the invoice will typically be sent when the goods ship and will therefore require a process that handles large numbers of invoices whose corresponding goods have not yet been received.

Another significant barrier is the cost in time and money in the initial set-up.

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