introduction to edi - what is edi? - edi history - edi benefits - edi status - edi system approach -...

Introduction To EDI

- What is EDI?- EDI History- EDI Benefits- EDI Status- EDI System Approach- Migration to Open EDI

Copyright@1999. Jerry Gao, Ph.D

- What is EDI?

EDI - the inter-organization exchange of well-defined business transactions in standardized electronic form directly between computer applications.

Style: Business-To-Business

EDI - provides a collection of standard message formats to exchange data between organizations’ computers via any electronic service.

EDI covers:- traditional business facets:

inquires, planning, purchasing, acknowledgments, pricing, order status, scheduling, test results, shipping and receiving, invoices, payments, and financial and business reporting.

Additional standards:interchange of data relating to security, administrative data,trading partner information, specifications, contracts, distribution..


- What is EDI?

EDI’s goals:

- Enable easy and inexpensive communication of structured information throughout the corporate community.

- Reduce the amount of data capture and transcription.

Applications:

- EDI has been used in a number of specific industry groups:- automotive, retail, chemical, electronics,- metals, electronics, electrical, petroleum,- paper and office product sections.

- The overall penetration of EDI has been relatively limited.< 1% of potential business in the U.S.A in 1993.


- What is EDI?

The key aspects of EDI are as follows:

-The utilization of an electronic transmission medium (normally a VAN)rather than the transfer of physical storage media such as paper, magnetictapes, and disks.

- Use of structured, formatted messages based upon agreed standards.

- Relatively fast delivery of electronic documents from sender to receiver.(generally implying receipt within hours or minutes)

- Direct communication between applications (rather than just between systems)



EDI Process Architecture

Purchasingapplication


Application file

EDI System EDI System

Application link

Fixed-length file

Translator

Communication

Communication

Communication

Communication

Internal files

EDIstandardfile

Internal files



Application file

EDI System EDI System

Application link

Fixed-length file

Translator


TRADINGCOMPANY

Protocol

PARTNER 1

PARTNER 2

PARTNER 3

Partner 1Mailbox

Partner 2Mailbox

Partner 3Mailbox

TradingCompanyMailbox

Transaction files for all trading partners

Transaction files FROM all trading partners & VAN control reports

Transaction TO/FROM all trading partners & VANcontrol reports

EDI VAN

EDI VAN

- EDI’s Benefits:

- Automating existing business procedures in - inventory management, transport and distribution- administration, and cash management

- Cost saving in - document preparation, postage, and handling of mainstream transactions- reduced errors and exceptions handling- dispatch of applications for approval by a regulatory authorityor other reporting function

- Faster handling of transactions results in increased cash flow.

- Improve customer services

- Enhance the business process and operations


- EDI History:

- Electronic transmission started during 1960s.- Initially in the road and rail transport industries.

- In 1968, the United States Transportation Data Coordinating Committee (TDCC) was formed to coordinate the development of translation rules among existing four sets of industry-specific standards.

- Later, the X12 standards of the American National Standards Institute (ANSI) gradually extended and replaced those created by the TDCC.

- At the same time, the U.K. Department of Customer s and Excise was developing stands for documents used in international trade. These extended by the United Nations Economic Commission for Europe (UNECE) as GTDI (General-purpose Trade Data Interchange)

- A United Nations Joint European and North American working party (UN-JEDI) addressed the harmonization between the two sets of standardized documents. They developed EDI for administration, Commerce, and Transport (EIFACT) document translation standards.

- Today, EDI messages are coded in a standard data format based on X12 and

EDIFACT specifications.


- EDI’s Status:

- EDI technology have matured.

- EDI has been growing in the past, although the penetration is still low.

- In spite of its moderate success, EDI has failed to gain total acceptance and become ubiquitous in industry.

- Although EDI technology works well, until now this technology has been relatively expansive to implement.


Year Companies using EDI Penetration (against 5 million potential)(%)

1987 1,000 0.021989 5,500 0.111990 12,000 0.241991 21,000 0.421993 58,500 1.161995 80,000 1.601996 100,000 2.00

- EDI Roll-out Cost:

- EDI Roll-out cost facts:

- Reaching a legal agreement between the parties regarding responsibilities and dispute settlement. (This may involve expensive lawyers)

- Building and installing the EDI system

- Modifying and interfacing with the existing computer system

- Obtaining network services

- Testing and installation cost

- Reengineering internal processes with the goal of taking full advantages of the technology.

- Training cost


- EDI System Approach:

There are several ways to set up EDI.

- A dedicated PC link to the EDI network.

- A group of computers via modems linking to the EDI network

- A dedicated server link to the EDI network

Communication link could be:- dial-up phone line (such as ISDN line or switched digital services) - a dedicated link to the network’s local hub point.

Required software:- Application software- Message translator- Routing manager- Communication handler


- Migration to Open EDI:

The Internet and the transition to Open EDI will change the economics of EDIby reducing setup and rollout costs.

Migration groups:- A nonuser becoming a private network/VAN user.- A current EDI user who wishes to make a transition to Open EDI.- A non-EDI user who can make a direct transition to Open EDI.

- EDI transactions across the Internet in two ways:Email and FTP

The benefits:- Reduction of the cost of transferring EDI messages- Increase the performance- Supporting E-Commerce- Increase the interoperability of networks increasing the usability of EDI.

The problems and challenges:- Security issues- Many companies using EDI based on VANs. Not all VANs have connections to Internet.


introduction to edi - what is edi? - edi history - edi benefits - edi status - edi system approach -...

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