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Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) is the electronic exchange of business data, orders, invoices, bills of lading, inventory, and various types of certificates or exchange between organizations in standardized formats. EDI is also within individual organizations for the transfer of data between different divisions or departments, including finance, purchasing and shipping. If the focus of the Centers for EDI payments, especially between banks and firms, the long-term financial EDI (Fedi) is sometimes used. Together with the digital currency, e-catalogs, intranet and extranet, EDI is an important element of e-commerce in general.

Two characteristics of other types of EDI for the exchange of information. First, only the EDI business-to-business transactions, individual consumers are not directly related to the EDI purchase of goods or services. Second, the EDI transactions between computers or databases, not individuals. Therefore, people sending e-mails or share files over a network is not as EDI.

While the concept of e-commerce is not widespread attention until 1990, large companies were using EDI since 1960. The railway was one of the first to EDI, followed by the other operators in the transport sector. By the early 1980s, EDI has been used by companies in different sectors. Earlier, in company with the EDI information to another on magnetic tape by mail or courier, the numerous incidents with long lead times and the possibility of a band for browsing damage. During 1980, telecommunications has emerged as a privileged instrument for the transmission of information via EDI.

With the new millennium, the EDI has been widely used in many industries including manufacturing, finance and retail. Some large retailers, including Target and Sears, to require that providers of EDI to business with them. In addition, the Federal Acquisition Streamlining Act of 1994 (FASA), all entities within the government of the United States to use EDI.

Methods of communication.

After the identification of trading, the entry into TPAs with them and buy the necessary hardware and software, a means of communication to choose. EDI can be point to point, where organizations to communicate directly with each other on a private network, via the Internet (also known as Open-EDI), and most of the value added network (van), the third value added network services.

VANS are the networks that are exclusively for EDI. Not only that work, such as telephone lines, providing for the transfer of information, but also the storage areas, such as e-mail boxes in which data received by a party may be held until it is in the recipient. VANS are able to translations for small organizations that need to be expensive to do at home with your software. Businesses need more than a van, because their partners to more than one. However, in early 2000, most VANS can communicate with each other.

In addition to translation, vans offer a variety of other services, including data backup, the preparation of reports, technical assistance, training and issuance of orders, if the data is not correct between the parties. Depending on the needs of all the services offered by a van may not be from a particular undertaking. VANS differ in how the free enterprise. Some high implementation or payment instructions, followed by a low monthly fee, or vice versa. The fees are often based on the number of documents or evidence of a given transmission system operator. For example, a provider of EDI to its customers pay a monthly fee of $ 17.50 by phone, followed by a fee of 30 cents per 1024 characters (characters per kilo ok / char) transferred. In addition, rates may vary depending on phone operators and the time of the day, when the transactions are carried out. It is less expensive for companies, the operations of off-peak or night hours.

In the early 2000s, although many companies still VANS, the Internet plays an increasingly important role in EDI. E 'possible for companies to EDI files and transmit them to the system of another computer over the Internet, e-mail or FTP (File Transfer Protocol). Since this is an open network and access is not very expensive, the use of the Internet for EDI is more cost effective for companies with limited resources. It has the potential to give them access to large firms, which continue to large, traditional EDI systems. The low costs associated with EDI open also means that more businesses to participate. This is important because the amount of value for the participants often increases with the number. However, this is a dilemma for large companies that have invested a considerable sum of money in traditional EDI systems. In addition, Internet Service Provider (ISP) is not usually the type of EDI-specific services provided by vans.

While the automobile industry and retail have experienced with EDI to open a po 'di tempo, the effort does not lead to widespread adoption by small suppliers, which are usually characterized by cumbersome regulations, such as installing software on – site. EDI integration in e-marketplace is an approach that held more potential. In March 2000 an e-marketplace called WorldWide Retail Exchange (WWRE) was founded. It enables suppliers and distributors in various industries, including retail goods, food and grocery markets, through the World Wide Web After a year of operation, 53 were members WWRE dealer with an annual turnover of $ 722 billion. Major retailers, including Kmart, Rite Aid, Best Buy and Target, designed to create a Web-to-EDI WWRE translation, it would be easier for smaller suppliers to do business with them. In this agreement, the retailer orders sent to a data center, which translated into a language that can be read using a web browser like Internet Explorer or Netscape Navigator. Suppliers will be informed of the Po and allowed to react. This is a real break with EDI, as the orders are manually by the supplier.

In addition to Internet, Intranet (Private Internet) and extranet ( "links" between the intranet and Internet) has also demonstrated the potential for EDI. According to the International Handbook of Electronic Commerce, "The extranet allows multiple virtual organizations behind firewall. For example, suppliers, traders, entrepreneurs, customers and third-party trust outside the organization can be used on an extranet. The Internet is used to provide access for the public, the intranet is used for internal business processes, extranet connection between these two extremes. Extranets are where most of the business. They facilitate trade via the Internet at a very low cost and enable companies to receive one-to-one relationships with their customers, employees and other members. "

Communication standards.

As mentioned earlier, if companies are using EDI for the exchange of information, translation software is an important part of the process. While EDI, information is usually in and out of one of several languages, including ANSI X12 and EDIFACT. These languages are more flexible standards developed by individual companies for their use.

Thanks to its reliability and flexibility, ANSI X12 was the most commonly used standard in North America of the 2000s. Also known as ASC X12, ANSI X12, the American National Standards Institute (ANSI), which manages and coordinates the efforts of industry standards within the United States. In addition to the prevelance of North America, this rule was also in Australia and New Zealand.

Created in 1987 in collaboration with the United Nations Electronic Data Interchange for the management of trade and transport (EDIFACT) standard, the best aspects of ANSI X12 and a standard known as the United Nations Trade Data Interchange (UNTDI ). Why is it so universal, EDIFACT is suitable for use in international EDI. Although EDIFACT has become increasingly popular in the early 2000, which lacked the comprehensiveness of the ANSI X12.

In addition to ANSI X12 and EDIFACT and other EDI standards is also available, including guidelines for the EDI global retail (Gedi) in North America for international trade, food industry uniform standard of communication (UCS), voluntary Inter – Industry Commerce Standards (VISCA), retailers of goods, Warehouse Information Network Standard (WINS), the public software house; TRADACOMS, created by the Article Numbering Association and retailers in the United Kingdom, and Nachi Adopted by the National Automated Clearing House Association and the operations in the banking sector. For companies with open EDI, a language called XML (Extensible Markup Language), similar in certain aspects of HTML (Hypertext Markup Language), allows users to share information in a universal standard, but the nature of the EDI system requires frequent and independent of the software program in which it was originally created.

As Edi Works

While EDI, information is provided by a participant in the system and translated into a standard format using special translation software. E 'and then sent to another participant, translated from the format in a standard format for the recipient and the recipient system. For example, EDI, allows participants to transfer information between their respective systems, although the use of different, incompatible platforms.

Before the use of EDI, usually in specific agreements with their trading partners (the so-called trading partner agreements or TPAs). These contracts are often unclear what types of information as the parties and there. Dal momento che l'apertura e la cessazione TPAs è costoso e richiede tempo, EDI tradizionale non è sempre l'ideale per le aziende che spesso cambiare fornitori, o di società, spesso in rapporti con i fornitori temporaneo o di altre società.

Why EDI?

EDI comes in when repetitive manual tasks necessary for a business, Electronic Data Interchange simply delete it by automating the process and the elimination of bureaucracy item.

It increases the accuracy by eliminating data re-entry and data quality is determined by the contract product codes, prices and location codes in advance.

Electronic Data Interchange and cement customer / supplier partnerships by reducing supply chain costs associated with manual processing.

EDI-capable suppliers are less expensive and easier to handle.

Benefits of EDI

Companies use EDI to exchange information for a number of reasons, in particular, greater efficiency and cost savings. For example, EDI transactions can occur more quickly and with fewer errors than the traditional paper form. It reduces the amount of stock, the company through investment in production of close links with the actual demand, so that for the "just-in-time. Through the elimination of forms, EDI, also reduces the cost of shipping and the cost and space considerations, the registration document storage. Some companies have dramatically improved their business processes, such as shorten delivery times from days to hours. But others still loves EDI experience. In Planet IT, Procter & Gamble, a leading producer of packaged products, reported that it found errors in more than 30 percent of orders electronically, although this is mainly due to human error.

Although many companies do not view EDI as a strategic weapon, it can be used as one. After the ability to communicate EDI is a marketing tool, because it is an attractive supplier to retailers and other companies, products and services. In a situation where several suppliers offer similar products that are approved EDI may be an important differential diagnosis. EDI can also be used to create links between businesses, the advantages over its competitors in several respects, including the ability to have the lowest market prices and the best customer service. Such alliances may also lead to new or innovative services.

Five main benefits of Electronic Data Interchange (EDI)

The advantage of electronic commerce is well documented. Here are five reasons why the companies that use EDI.

One advantage: Remove Document Re-keying

With the manual removal of key documents such as orders, invoices, shipping notices and thank your company can benefit significantly from:

Reduced labor costs

Elimination of human error

Faster processing document

Instant document retrieval

Remove the dependency post

Two advantages: Eliminating Paper

Paper-based trade relations are a few disadvantages compared with their equivalent system of electronic commerce:

Paper consumption expenditures and the printer

Costs of record keeping

Lost Documents

Shipping

Advantage Three: Reduce the time of detention and stock

E-commerce documents can be much faster than their paper counterparts, so the timing for delivery may be reduced.

Through the use of EDI for forecasting and planning, companies are able to give us warning of the planned orders and to plan their production and inventories accordingly.

Shipping company to receive advanced notices or confirmations to know in advance what is going on, and attention, so that the lack of alternative sources of supply can be purchased.

The integration of electronic documents that can be processed much faster, again reducing the volume, and an acceleration of payments.

Four advantage: Increasing the quality of trade relations

Electronic trade documents are printed when a lot easier to read copies, fax, or in a multi-part stationery for impact printers.

Careful documentation to ensure proper delivery.

The batches of electronic documents are usually numbered, so that the lack of documents that can be easily identified, the company is not to wade through the stacks of paper.

Five advantages: competitive advantage

How Electronic Data Interchange (EDI) makes you attractive to the customers' perspective, and there are in their eyes, less expensive and more efficient to treat the market as a competitor on paper, the costs are lower, because you need less staff to manage orders, deliveries and payments.

It is no coincidence that the major UK retailers to all EDI for purchase orders and invoices – they know that they receive the benefits and costs that can be stored.

The disadvantages of EDI

With significant costs associated with the implementation and operation of EDI systems. This is due to the fact that the solutions to the market must be adapted to a company and its needs the staff must be trained. In addition, a pilot project or a parallel operation is often necessary. The result is that small and medium enterprises, in particular, EDI, and to avoid the traditional forms of data transmission.

Furthermore, the processes of a company must make significant changes to EDI as soon as possible. For example, a product usually before a bill is the post. But when used in EDI, the invoice would arrive before the goods were delivered. Consequently, processes must be adjusted so that invoices can be processed by the company before the goods have arrived.

Security issues

The card checks and balances that are used in the world are not possible with EDI. Although rare, the possibility that data being intercepted and stolen or altered in transit there. Messages can also be intentionally or by mistake twice. This can lead to excessive waste of resources and damaged relationships between trading partners. For these and other reasons, companies take measures to ensure the accuracy and security, including measures that the authorities, which in some subjects, the means to verify that messages were sent intact (electronic "seal" ), the use of proper encryption, digital signature or bio-metric (the use of human characteristics such as fingerprints or voice) to verify the identity of the sender and recipient verification, that the accuracy of the records electronic equipment to ensure that the translation software is written correctly and can not be changed, and so forth.

Past, Present and Future of EDI

EDI seriously started about 20 years and is now used by over 20,000 UK companies.

It is more commonly used by the British retail sector, usually in food, food, construction and do-it-yourself, publishing, paper and department store sectors.

EDI can also be used to support the activities of supply chains in a wide range of other sectors, from automotive electronics manufacturers, pharmaceutical and supply of Inland Revenue. There are no obstacles for the use of Electronic Data Interchange in each sector.

The extension was by major customers insist that the provider of electronic data interchange (EDI) to reduce overhead costs, thereby helping to improve the ongoing competitiveness of its enterprises.

Widespread throughout Europe, North America and the rest of the world, the EDI is actively promoted by European governments, with the rules of the United Nations EDI to facilitate cross-border trade.

EDI is expected that with the Business-to-business e-commerce in general, a sector that has grown rapidly in the 2000s. In 2000 alone, business-to-business sales estimated at $ 3.3 trillion, with forecasts predict an increase of $ 5.2 trillion in 2004, according to the report Corporate EFT. The Gartner Group has a turnover in this sector even higher, reaching $ 7.29 billion by 2004. The use of EDI is also expected that, together with international trade agreements, such as the North American Free Trade Agreement (NAFTA).

According to the Corporate EFT report, in the early 2000s the lines between EDI and other Internet channels, including the hybrid EDI / Internet to electronic trading networks, Internet e-marketplaces, extranets, Internet and business-to-business private eMarket Links -were beginning to blur, and were on a variety of channels, transactions with suppliers, according to the nature of their business goals.

In an article Planet IT, David Yockelson like a snapshot of EDI in the early 2000, as well as a look toward the future: "VANS have not disappeared, but the needs of businesses and their trading partners have changed radically. Internet-based transport, will be broader and more robust and real-time information, the connections are just some of the points that connect to the will of the majority of business listings. Moreover, the language in which the basic data Movement has suddenly XML, despite the presence of decades old standard EDI. VANS are not dead. EDI is not out any time soon. and XML, but incredibly exciting, as an application and the neutralization of the data standard, still in its infancy. "

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