Chapter 4

Electronic Data Interchange

Introduction

Figure: Traditional business data transfer

Introduction (cont…)

Figure: Automatic data transfer with special translator for each trading partner

Introduction (cont…)

Figure: EDI eases automatic business data flow in a computer environment

Introduction (cont…)

Some of the business cycles where EDI can be used are:

Pre-order (request for quote)

Order (purchase order)

Materials management (advance shipping notice)

Transportation (freight bill)

Financial (invoice)

History of EDIEDIs where defined for strict transaction sets which addressed the needs for content, structure and the process for handling the data. Incorporation of business rules into the definition of the transaction set causes many problems, due to:

Business rules vary from company to company;

Business rules for a company of a certain size may be completely inappropriate fro other companies of another size;

Business rules are subject to change over time according to changes in market dynamics

History of EDI (cont…)

EDI is viewed by TDCC (Transportation Data Coordinating Committee) as to have the following functions:

1. It must provide generalised data standards and formats for computer to computer interfaces;

2. It must operate uniformly regardless of the company’s software or hardware;

3. It should allow for any type of networking services, protocols or transmission speeds;

4. It should be able to exchange documents with the corporate database.

Issues in EDI In order to implement EDI, some technical and non-technical issues must be considered. Here we try to introduce some of the issues related to EDI.

Which document types will be exchanged? Who will pay for these transfers? How will transactions be mapped? Which form of communication will be used? Conceptual barrier The communication issues in the Internet Data storage

Benefits of EDI EDI introduces a very efficient and fast data transaction between trading partners. The improvements on using EDI are:

Reduce time-to-market Reduce costs Improved quality Exploration of EDI all over the world More accurate records and decision-making information

Benefits of EDI (cont…)

The additional benefits introducing EDI can be listed as:

Improved customer service; Improved internal operations and responsiveness to customer; Improved accuracy and control of data; Increased financial control; Reduced order’s cycle time; decreased administrative costs.

EDI PlatformsIn the past, the EDI standards had been used to the

formal, traditional method of data transport which directed that EDI translation software must be used and a value added network or proprietary direct connection were required to do EDI.

Today, EDI data is moving over to many types of electronic messaging services including the Internet. The Internet’s open system based standards make it very easy to implement EDI at a minimal cost.

EDI HardwareValue Added Network

EDI HardwareThe choice of EDI hardware should involve the following tasks and considerations:

Analyse existing hardware

Analyse expansion potential of existing hardware

Analyse existing software

Determine the role that EDI will play

Estimate EDI volume

Allow for trading partner communication requirements

Value Added Network

Figure: VAN concepts for communicating electronic information

Batch EDI EDI Data Format

ANSI X12 EDI Interchange Structure

EDIFACT Interchange Structure

Mapping Software

Implementation convention

EDI Protocol

Mapping Software

Application of EDI in Business in General

EDI Data Format

Figure:

EDI and EDIFACT transaction set.

ANSI X12 EDI Interchange Structure

EDIFACT Interchange Structure

Mapping Software

4 basic steps are required in the process of translating a document to, for example, the X12 format:

1. Determine the segments to be used

2. Determine the specific structure of each segment

3. Determine which element are to be used in each segment

4. Determine the characteristics of each data element

Mapping Software (Cont…)

Figure: EDI data transaction for sending and receiving systems

EDI Protocol

Figure:

How EDI works to handle purchase order

EDI Protocol (Cont…)

The order of processing of the sending system is:

1. Data is extracted from in-house application files and placed on a record-based user-constructed file known as the Interface file.

2. The translation software’s programs simultaneously run through a table based on the appropriate message structure and the file created at the Interface file.

3. The formatted data is written to a file ready to be transmitted, known as the Interchange file.

4. Prior to the transmission, the data is enveloped by a communication protocol and transmitted.

EDI Protocol (Cont…)

The order of processing of the receiving system is:

1. Receiving the data can be direct or by calling it from a VAN mailbox. Special VAN interface software needed, this is done through the communication interface.

2. The received file is deformatted according to the message specification. Validation is carried out.

3. The required data is placed on an interface file for use, as necessary, in-house and probably, with further validation requirements.

4. The data is placed to the application.

EDI SoftwareDifferent software for EDI applications is currently available for mainframe computers, minicomputers, personal computers, or Macintoshes.

Selecting the proper software to meet organizational-specific needs and requirements can make EDI implementation either a time-consuming burden or a relatively painless process.

There are three main categories of EDI software:

• Stand-alone PC software- manual input is used to generate and EDI transaction.

• Integrated EDI software- includes the ability to integrate with existing company software and resolves many of the disadvantages

inherent to stand-alone systems.

• EDI server/gateway software- mainframe with numerous

trading partners requiring high volumes of EDI activity.

Cost Involved in EDI Implementation

What kind of costs will typically incur if a business is not already EDI-capable? Typically, a business entity will need to:

1. Purchase EDI software: The choice of automation depends on the choice of platform and software category.

2. Include a VAN service provider: Fees will vary based on services selected and traffic. Secure Internet (FTP, email) reduce cost.

3. Do a data analysis needed to map information from their application system into the EDI standard format, a one-time effort.

4. Do the programming required to create a file that can interface with EDI translation software, a one-time effort.

Application of EDI in Business in General

Here are several major areas with application of EDI

Sales: The classic application of EDI is in the sales process.

832:PRICAT, 840:REQOTE, 843: QUOTES, 864: not used

Order Processing and Purchasing:

Inventory management

Distribution

Financial Management

Other

Interactive EDI

Interactive EDI is characterised by the following:

A formalised association between the two parties using a dialogue.

The ability, dynamically, to direct the course of the interactive EDI transaction, depending upon the result of entire exchange within the dialogue.

Short response times.

All the messages exchanged within one dialogue relate to the same business transaction.

XML-based EDI The flexibility of incorporating necessary elements in

a web-enabled markup language leads different groups to develop XML-based EDI solutions. Such solutions are provided by different initiatives:

1. XML/EDI: (www.xmledi.com)

2. XEDI: (www.xedi.org)

3. CEN/ISSS XML/EDI workshop

4. EXPERTS (EDI?XML procurement Enabling Real Trade Standards): (www.ilc.at/experts.htm)

5. ebXML: An Initiative by UN (www.ebxml.org)

XML/EDI initiative

Essentially there are three core modules for deployment that are required to be supported by XML/EDI

Online real-time or “Interactive” Forms-based Batched transactions

XML/EDI initiative (Cont…)

XML/EDI business transactions will take place via servers, desktops and laptops using:

A general-purpose document browser as the user interface

A common language fro the description of templates and associated conversion rules.

Distributed processing to support centralised functions

XML/EDI initiative (Cont…)

XML/EDI is the fusion of the five technologies that makes the it so powerful. The five technologies are:

XML EDI Templates Agents, and Repository.

XML/EDI Layered Architecture

Figure: XML/EDI layered architecture

XML/EDI (Cont….)

The reasons XML/EDI may be the technology of the future are listed below:

XML/EDI:

• is built on open standards

•provides for self-describing transactions (XML)

•allows tool vendors to build on existing products

• its tools include workflow and document management functions as well as EDI “mappers”

XML/EDI (Cont….)

• interfaces with legacy systems very well

• its framework uses an evolving best of breed philosophy –i.e. dynamic shared dictionaries

•will allow for object-based documents – data and rules reside together

•provides the organisation the path to move down to a document-centric environment

•enables more flexible business models (rules/agents)

XML/EDI (Cont….)

• it is cheaper and easier to implement

• it has access to a greater number of trading partners

•and most importantly: it has access to interactive transactions enabled by the Web rather than being limited to system or batch transactions.

ebXML Specification

The goal of the ebXML initiative can be expressed as to:

Enable simple, easy and ubiquitous electronic business through the use of XML

Use XML technical specifications to the maximum extent

Provide a goal cross-industry open/inter-operable standard for b-to-b and b-to-c trade

ebXML Specification (Cont…)

Coalesce the structure and content components of divergent XML initiatives into a single usable XML business standard

Provide impetus so that common resources currently engaged in short-term solutions shall be marshaled to each a common long-term solution goal

Support vertical and horizontal segments of industry and business participants

ebXML Specification (Cont…)

Strive to minimise of doing business electronically

Provide multi-lingual support Accommodate national and international trade

requirements Provide a migration path from accredited EDI

and developing XML business standards Apply when possible the simplification

principles of SIMAC Business Requirements

Usability/InteroperabilityComponents of usability and interoperability are:• Architecture• Transport, Routing, and Packaging• Extensibility• Leveraging Existing Technology• Compatibility• Migration• Security• Legal• Digital signature

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