E D I

E D I E D I a new business paradigma new business paradigm

MADE BY-RICHA MADE BY-RICHA ASHUASHU NITINNITIN ASIFASIF

ComponentsComponents

DefinitionsDefinitions Strategic Importance InitialStrategic Importance Initial Benefits of EDIBenefits of EDI Technical Aspects of EDITechnical Aspects of EDI StandardisationStandardisation Legal Aspects of EDILegal Aspects of EDI

DefinitionsDefinitions

Electronic Commerce (EC)Electronic Commerce (EC) is the paperless exchange of business is the paperless exchange of business

information, using Electronic Data information, using Electronic Data Interchange (EDI), electronic mail, electronic Interchange (EDI), electronic mail, electronic bulletin boards, electronic funds transfer bulletin boards, electronic funds transfer and other similar technologiesand other similar technologies


Electronic Data Interchange (EDI)Electronic Data Interchange (EDI) a major part of Electronic Commerce (EC), a major part of Electronic Commerce (EC),

is the computer-to-computer exchange of is the computer-to-computer exchange of business data in a standard, machine-business data in a standard, machine-processable format. The information is processable format. The information is generally patterned after a conventional generally patterned after a conventional paper document, such as a purchase order paper document, such as a purchase order or invoice. It is a “paperless trading”or invoice. It is a “paperless trading”

Trading Partner Trading Partner A trading partner is any company, A trading partner is any company,

government department, or commercial or government department, or commercial or non-commercial entity with whom an non-commercial entity with whom an organization regularly exchanges documents organization regularly exchanges documents of formatted data (not just letters or memos).of formatted data (not just letters or memos).



Trading Partner Agreement Trading Partner Agreement A signed document between trading A signed document between trading

partners outlining all the conditions that will partners outlining all the conditions that will allow electronic communication. The allow electronic communication. The agreement states that the parties intend to agreement states that the parties intend to be legally bound in the same manner as be legally bound in the same manner as though they were exchanging paper though they were exchanging paper documents. documents.


Mapping Mapping The process of taking data from a company-The process of taking data from a company-

specific format and fitting it into the EDI specific format and fitting it into the EDI standard electronic format (as defined by a standard electronic format (as defined by a particular transaction set).particular transaction set).

Transaction Set Transaction Set An EDI standard electronic format for a An EDI standard electronic format for a

business document.business document.


Translation Software Translation Software Software used to take information from a Software used to take information from a

flat data file and convert it into an EDI flat data file and convert it into an EDI standard electronic format.standard electronic format.

Definitions Definitions

Value Added Network (VAN)Value Added Network (VAN) A third party network performing services A third party network performing services

beyond the transmission of data. For beyond the transmission of data. For example, VANs provide mailbox, data example, VANs provide mailbox, data security, and data archiving services. Many security, and data archiving services. Many also offer e-mail services.also offer e-mail services.

Definitions Definitions

VAN Interconnection VAN Interconnection The connection The connection

between two VANS between two VANS that allows messages that allows messages from one VAN’s from one VAN’s customers to be customers to be communicated to the communicated to the customers on the customers on the other.other.

Strategic Importance InitialStrategic Importance Initial

TimeTime Through the use of EDI, companies able to Through the use of EDI, companies able to

improve their response time and decrease improve their response time and decrease their time to market by accelerating the their time to market by accelerating the Purchase Order-to-Invoice-to-Payment Purchase Order-to-Invoice-to-Payment process from weeks or days to hours, or process from weeks or days to hours, or even minutes. Not only were they shorter, even minutes. Not only were they shorter, but they were also more accurate and but they were also more accurate and reliable. reliable.


ServiceService Another benefit of these changes was the Another benefit of these changes was the

improvement in customer service levels. improvement in customer service levels.

MarketMarket Companies could then use these Companies could then use these

advantages to respond more quickly to new advantages to respond more quickly to new entrants in the market.entrants in the market.


Costs benefitsCosts benefits Through the use of EDI, innovative Through the use of EDI, innovative

business programs such as Just-In-Time business programs such as Just-In-Time inventory management were possible. EDI inventory management were possible. EDI and JIT allowed companies to have more and JIT allowed companies to have more control over their inventory levels and control over their inventory levels and reduce their costs by increasing inventory reduce their costs by increasing inventory turns and decreasing safety stocks.turns and decreasing safety stocks.

Benefits of EDIBenefits of EDI

Transactions speed Transactions speed has greatly increased with the creation of has greatly increased with the creation of

EDI.EDI. EDI drastically reduces this problem by EDI drastically reduces this problem by

sending transactions electronically where sending transactions electronically where they can be sent and received almost they can be sent and received almost simultaneously.simultaneously.


Direct transmissionDirect transmission EDI includes the direct transmission of data EDI includes the direct transmission of data

between organizations VAN. EDI is not between organizations VAN. EDI is not facsimile transmission (fax) of information facsimile transmission (fax) of information nor is it electronic mail (e-mail). Both of nor is it electronic mail (e-mail). Both of these transmission types are in “free format” these transmission types are in “free format” (not standard format) and, therefore, (not standard format) and, therefore, generally require rekeying of data into the generally require rekeying of data into the receiver’s computer system.receiver’s computer system.


Cut down the possibility of human Cut down the possibility of human errorerror EDI would also cut down on the tendency for EDI would also cut down on the tendency for

"human error”. EDI eliminates this possibility "human error”. EDI eliminates this possibility because the receiving end is a computer because the receiving end is a computer that simply translates the message that has that simply translates the message that has already been keyed into the system. already been keyed into the system.


Reduces the risk of lost dataReduces the risk of lost data whether that means the data is physically whether that means the data is physically

unable to be located, or if only part of the unable to be located, or if only part of the data has been lost through the numerous data has been lost through the numerous steps require to conduct business through steps require to conduct business through the use of paper.the use of paper.


The benefits of EDI include:The benefits of EDI include: Time savings and associated financial Time savings and associated financial

savings accrued,savings accrued, Improved accuracy,Improved accuracy, Improved trading partner relationships and Improved trading partner relationships and

client interactions,client interactions, Improved reconciliation of transactions Improved reconciliation of transactions

exchanged.exchanged.

Technical Aspects of EDITechnical Aspects of EDI

EDI messages EDI messages EDI messages are passed through a Value EDI messages are passed through a Value

Added Network or "VAN." In principle a VAN Added Network or "VAN." In principle a VAN is an electronic mail station for holding and is an electronic mail station for holding and passing messages. passing messages.


Services for a VAN would include:Services for a VAN would include: Storing and forwarding messages Storing and forwarding messages Communications between standard data Communications between standard data

formats formats Detecting and correcting errorsDetecting and correcting errors Message decryption and encryption Message decryption and encryption


EDI softwareEDI software Translation softwareTranslation software takes raw data and takes raw data and

arranges it into the X12 format or the United arranges it into the X12 format or the United Nations EDIFACT standard on the sender's Nations EDIFACT standard on the sender's end.end.

Mapping softwareMapping software is used to exchange is used to exchange information between the company's EDI information between the company's EDI transactions and its other internal transactions and its other internal applications such as inventory and accountsapplications such as inventory and accounts

StandardisationStandardisation

UN/EDIFACT UN/EDIFACT the ANSI X12 standards and the European the ANSI X12 standards and the European

standards, known as "Guidelines for Trade standards, known as "Guidelines for Trade Data Interchange" (GTDI). Immediately prior Data Interchange" (GTDI). Immediately prior to the formulation of EDIFACT, European to the formulation of EDIFACT, European EDI standards had undergone a process of EDI standards had undergone a process of reconstruction by the United Nations reconstruction by the United Nations Economic Commission for Europe (UNECE)Economic Commission for Europe (UNECE)

Legal Aspects of EDILegal Aspects of EDI

AuthenticityAuthenticity Determining the authenticity of information Determining the authenticity of information

transmitted electronically (genuine; true; transmitted electronically (genuine; true; real; pure; reliable; trustworthy; having the real; pure; reliable; trustworthy; having the character and authority of an character and authority of an original;...competent, credible, and reliable original;...competent, credible, and reliable as evidence).as evidence).

Legal Aspects of EDILegal Aspects of EDI

Existing LawsExisting Laws it is clear that something needs to be done it is clear that something needs to be done

to clarify the laws with regard to EDI at this to clarify the laws with regard to EDI at this time and especially in the near future. time and especially in the near future.

Business

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