Electronic Data Interchange

(EDI)

Rebecca FoutsLaura FryeLaura GrayMatt Muller

Ariana Pelayo

Introduction to EDI…

• What is EDI?– Electronic Data Interchange is the

computer-to-computer exchange of business data and documents between companies using standard formats recognized both nationally and internationally.

– The information used in EDI is organized according to a specified format set by both companies participating in the data exchange.

http://www.x12.org/x12org/about/faqs.cfm#a1

History of EDI

• The general idea behind EDI was originated by a group of railroad companies in the mid-1960’s, in the United States.

• Much of the early work on EDI was driven by the industry sectors for: – transportation– pharmaceuticals – groceries– automobiles– banking

www.edi-guide.com/edi-history.htm

History of EDI

• It was not until the 1970’s, when work began for national EDI standards.

• Both client and vendors input their requirements to create a set of standard data formats that – were hardware independent; – were unambiguous and could be used by

all trading partners; – reduced labor-intensive tasks such as

data-entry; – allowed the sender of data to control the

exchange including receipt confirmation of by the other party

www.gotedi.com/term_history.htm

Advantages of EDI

• Lower operating costs– Saves time and money

• Less Errors = More Accuracy– No data entry, so less human error

• Increased Productivity– More efficient personnel and faster

throughput• Faster trading cycle

– Streamlined processes for improved trading relationships

http://www.edi-guide.com/edi-benefits.htm

Disadvantages

• High Dependence on the participation of trading partners

• Costly for smaller companies

• Difficult to agree on standard to be used

http://www.edi-guide.com/risks-of-edi.htm

Retailer A

Retailer C

Retailer B

Retailer D

Wholesaler A

Wholesaler B

Wholesaler C

Wholesaler D

Retailer A

Retailer C

Retailer B

Retailer D

Wholesaler A

Wholesaler B

Wholesaler C

Wholesaler D

Original Model

Value-Added Network (VAN)

•communications networks supplied and managed by third-party companies that facilitate electronic data interchange, Web services and transaction delivery by providing extra networking services

Retailer A

Retailer C

Retailer B

Retailer D

Wholesaler A

Wholesaler B

Wholesaler C

Wholesaler D

Value-added Network

VAN Model

Web Services

• Applications that use a universal language to send data and instructions to one another, with no translation required

• Uses the Internet, so most of the connection problems are eliminated

http://www.computerworld.com/softwaretopics/software/appdev/story/0,10801,64099,00.html

Options

• EMAIL

• XML

• DIRECT ROUTING

<?xml version=”1.0” standalone=”yes”?><NewDataSet> <Order> <Customer><Name>Company Name</Name> <Address>Address, City, State, Zip</Address> <Customer Number>101</Customer Number></Customer> <Items> <Item><Product Number> 25</Product Number> <Qty>25</Qty></Item> <Item><Product Number> 30</Product Number> <Qty>15</Qty></Item> </Items> </Order></NewDataSet>

http://aspalliance.com/487

Example of XML

Retailer A

Retailer C

Retailer B

Retailer D

Wholesaler A

Wholesaler B

Wholesaler C

Wholesaler D

Direct Routing

Who Needs EDI or a VAN?

Companies still need…

• Assistance with formatting problems

• Authentication of customers

EDI Standards…

ANSI X12 Standard

• Accredited Standards Committee (ASC) X12 was created in 1979 by the American National Standards Institute.

• It is a not-for-profit membership. – Members meet three times each year to

develop, maintain and build on the EDI standards.

• Its purpose:– To standardize the EDI formatting and

exchanges between companies in order to make the transfers less time consuming, due to differences in formatting and information presentation.

http://www.x12.org

Example of ASC X12

Note: Linefeeds and "(Continued)" notes inserted for clarity

ISA*00* *00* *01*123454321 *01(Continued) *012341234 *031016*2359*U*00401*987600111*0*P*: \GS*RA*123454321*012341234*031016*2359*987600111*X*004010 \ST*820*987600111 \BPR*C*77.77*C*ACH*CTX*01*234056789*DA*0099109999*(Continued) *123454321*01*045678099*DA*1008973899*031016 \TRN*1*0310162359 \REF*AA*EDI6 \N1*PR*WHIZCO OF AMERICA INC \N3*55 MEGAPLEASANT ROAD*SUITE 999 \N4*SUPERVILLE*NY*10954 \N1*PE*YOWZACO \ENT*1 \RMR*AP*1111111111111111*PO*11.11 \RMR*AP*2222222222222222*PO*22.22 \RMR*AP*4444444444444444*PO*44.44 \DTM*055*031016 \SE*000000014*987600111 \GE*1*987600111 \IEA*1*987600111\

http://www.x12.org

ASC X12 Standard

• These standards have been updated 5 times since their creation in 1979, – They are updated to include new facets in

the business world, or update any information that has become obsolete.

• As the standards evolved, subcommittees were added to ASC X12.– In 1986 X12F was added for the Financial

Industry– In 1989 X12M was added for the

Warehousing sets– In 1991 X12N was formed for the B2B

Insurance and Healthcare needs.

http://www.x12.org

ASC X12

• ASC X12 is looking to integrate with XML.– 1999 the first summit was held to draft

policies and procedures to create XML in ASC

– 2002 the second summit was held to further develop ASC/XML bonds.

(www.disa.org)

• Currently there are more than 300 X12 transaction sets in XML format for B2B transactions. – They are used in the insurance, franchises,

automotive, finance, communication, and merchandising industries.

http://cleo.com/university/tech-terms/EDI_X12.asp

UCS History and Background

• UCS = Uniform Commercial Standard• Subset of ANSI ASC X12 • Foundation for creation from the

Transportation industry• Grocery and Retail-oriented Industry –

1976• Sponsorship and Funding

– Manufacturers– Retailers– Wholesalers– Brokers

http://www.uc-council.org/ean_ucc_system/stnds_and_tech/ucs.html

UCS Development (3 phases)

• 1st – Feasibility Study (Spring 1980)• 2nd – Development of message and

communication standards (August 1980)

• 3rd – Validity test of message and communication standards

• By late 1982, UCS standards released for general use by industry members

http://www.uc-council.org/ean_ucc_system/stnds_and_tech/ucs.html

UCS Implementation Guidelines

• Data Administration• Ordering• Logistics• Financial• Business Support

http://www.uc-council.org/ean_ucc_system/stnds_and_tech/ucs.html

UCS Communication Standard

• Design• Objective

– Provide for the communication of EDI data

– Identify alternative communication methods

– Specify the communication standard for industry use

– Provide operational guidelines for using the standard

http://www.uc-council.org/ean_ucc_system/stnds_and_tech/ucs.html

UCS Internet Standards

• Design• E-commerce Transport

Communication Guidelines

http://www.uc-council.org/ean_ucc_system/stnds_and_tech/ucs.html

UCS Example (Kroger, Co.)

• Kroger Co. uses EDI for:– Invoice processing– Remittance advice– Purchase order processing– Vendor replenishment and managed

inventory– Advanced ship notice– Product transfer and resale report– Documenting price changes– Promotional announcement processing– Item maintenance

http://edi.kroger.com/edi/homepage_edi.htm

Item Maintenance (Kroger, Co.)

• UCS 888 transaction– Receive detail finished good product

information for new products or changes in the existing product specifications from suppliers

• Benefits– Increased accuracy– Improved timeliness– Reduced operating expenses

http://edi.kroger.com/edi/homepage_edi.htm

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)

http://www.x12.org/x12org/about/faqs.cfm#c8

EDIFACT

• Includes syntax rules and implementation guidelines, message design guidelines, data elements, code sets, and other definitions

• Used for business-to-business (B2B) communication rather than business-to-consumer (B2C)

• Allows multi-country and multi-industry exchange

• Europe adopted EDIFACT early and has a large installed base indicating its continued use

Statistical Journal of the UN Economic Commission for Europe, 2002

Example of EDIFACT

UNB+IATB:1+1APPC+LHPPC+940101:0950+1’ UNH+1+PAORES:93:1:IA’ MSG+1:45’ IFT+3+?*XYZCOMPANY AVAILABILITY?*’ ERC+A7V:1:AMD’ IFT+3+NO MORE FLIGHTS’ ODI’ TVL+240493:1000::1220+FRA+JFK+DL+400+C’ PDI++C:3+Y::3+F::1’ APD+74C:0:::6++++++1A’ TVL+240493:1740::2030+JFK+MIA+DL+081+C' PDI++C:4’ APD+EM2:0:1630::6+++++++DA’ UNT+13+1’ UNZ+1+1’

http://en.wikipedia.org/wiki/UN/EDIFACT

Things you may want to remember . . . (for the test)

• EDI – Electronic Data Interchange

• VAN – Value-Added Network

• ASC X12 is moving towards integration with XML formatting

• EDIFACT – international set of EDI standards

• In the near future EDI will be vital for business domestically and abroad

Sources of Information

• http://www.x12.org

• http://www.edi-guide.com

• http://www.gotedi.com/

• http://www.phharval.com/edi/whatisedi/edibasics.html

• http://www.computerworld.com

• http://aspalliance.com/487

• http://cleo.com/university/tech-terms/EDI_X12.asp• http://www.uc-council.org/ean_ucc_system/

stnds_and_tech/ucs.html

• http://edi.kroger.com/edi/homepage_edi.htm

• Statistical Journal of the UN Economic Commission for Europe, 2002

• Professor Byron Marshall, Ph.D.