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Electronic Data Interchange

Electronic Data Interchange (EDI) allows for the computer-to-computer exchange of routine business data between trading partners in standard data formats without human intervention. EDI is used for common business documents like purchase orders and invoices. However, implementing EDI requires companies to agree on standard data formats to ensure compatibility, which can be difficult. While large companies can realize benefits from lower costs and increased accuracy, EDI implementation has high initial costs that may only be practical for large, sophisticated organizations.

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97 views17 pages

Electronic Data Interchange

Electronic Data Interchange (EDI) allows for the computer-to-computer exchange of routine business data between trading partners in standard data formats without human intervention. EDI is used for common business documents like purchase orders and invoices. However, implementing EDI requires companies to agree on standard data formats to ensure compatibility, which can be difficult. While large companies can realize benefits from lower costs and increased accuracy, EDI implementation has high initial costs that may only be practical for large, sophisticated organizations.

Uploaded by

sudha_advent
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Electronic Data Interchange

EDI Overview
Electronic Data Interchange is The computer-to-computer exchange Of routine business data between trading partners Standard data formats. This definition contains 3 key concepts about EDI: Computer Computer Routine business data Standard data formats

EDI Overview
Computer-to-computer: EDI in its most efficient form flows directly out of a senders computer system directly into a receivers computer system without any human intervention

however, it is not always possible for EDI to flow in this most efficient manner.

EDI Overview
Routine business data: Routine business data : purchase orders and invoices Non routine business data : complicated contracts and Documents needed to be read and analyzed EDI is used for routine business documents

EDI Overview

Standard data formats:


A standard definition regarding data is provided for

location
Structure Unstructured text is not EDI.

EDI Overview
Suppose some ABC company wants to connect electronically with customers by providing them the virtual inventory. ABC must put up a home page on the Web to describe its products and then allow its customers to order from the internet

EDI Origins
Detroit auto manufacturers were the first to encourage suppliers to accept orders electronically The main idea is:

A buyer sends an order electronically to the supplier Supplier acknowledges the order electronically When supplier sends the ordered items, customers electronically acknowledges receipt The firms set up an electronic billing and payment systems
Concept is simple but implementation is much more difficult

EDI MAJOR ASPECTS


EDI needs : most expertise and resources the companies need to agree on data formats.(dealing with compatibility problems) But adds unimaginable value to the organizations Ex: Chrysler JIT-EDI shows tremendous gains, but it is very large company ranked 15 in top US companies.

EDI MAJOR ASPECTS


Data Formats Means

A firm sending a purchase order must put data in exactly the right format in the electronic message so the supplier can interpret it.

Examples:
ANSI X.12 in US AND EDIFACT in Europe are intended for this purpose only.

EDI MAJOR ASPECTS


Because of this data format, as per reports about 50% EDI data needs rekeying to bring compatibility. To deal with the compatibility problems: A firm should change internal computing systems Purchase special software to map the data from existing systems to an accepted EDI standard Programmer of that company can also do this mapping.

EDI Applications
EDI networks exist in retailing, transportation an d Insurance. In US companies have developed two different kinds of networks Electronic Data Interchange Proprietary data networks EDI refers to networks in which multiple parties have agreed to follow a standard for exchanging data electronically.

EDI Benefits
Lowering costs

Increasing accuracy Quality in purchasing goods


Manual keying is reduced Errors are reduced Order cycle has been speed up

EDI Limitations
Data formats The software for matching the fields are so costly

Maintenance cost is also too high Hard to get all trading partners to use EDI
Only large firms which are sophisticated technologically can afford EDI development cost. Once establish links, difficult to change the suppliers.

CommerceNet
To deal with the limitations, this consortium(association) has formed to

Allow companies that have never done business electronically


Helps such companies to establish and maintain a relationship between suppliers and customers electronically Develops agreements on standards for proposals, bids, price lists and other transactions.

CommerceNet
Main idea:
If some company X to put request for proposals in the morning and receive bids for respondents all over the world by evening The next morning it could send an electronic purchase order to the winner Examples: AT &T, Lotus and Novell

Proprietary Networks
The companies which can not rely on Public infrastructure have developed their own proprietary networks

Examples:
Federal Express, United Parcel for package delivery United and American Airlines for their reservations systems Frito-Lay for distribution and decision support Allegiance for supplying its customers They have to bear designing, implementing and operating costs.

Proprietary Networks
The companies which can not rely on Public infrastructure have developed their own proprietary networks

Examples:
Federal Express, United Parcel for package delivery United and American Airlines for their reservations systems Frito-Lay for distribution and decision support Allegiance for supplying its customers They have to bear designing, implementing and operating costs.

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