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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.
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
HISTORY OF EDI ….• At about the same time, the U.K. Department of Customs and Excise was developing its own standards for documents used in international trade, called Tradacoms. These were later extended by (UNECE)The United Economic Commission for Europe, and came to known as the GTDI(Guidelines On Trade Data Exchange), and were gradually accepted by some 2,000 British exporting organizations.
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
DISADVANTAGES OF EDI…..• High Dependence on the participation of trading partners• Costly for smaller companies• Difficult to agree on standard to be used
VALUE ADDED NETWORK (VAN) A private network used by acompany primarily for routing, storing anddelivering electronic data interchange(EDI) messages. A value-added network(VAN) also provides other services such asmessage encryption, retransmission andsupport. VANs may be operated by largecompanies for efficient supply chainmanagement with their suppliers, or byindustry consortiums and telecom providers.
VAN ModelRetailer A Wholesaler ARetailer B Wholesaler B Value-added NetworkRetailer C Wholesaler CRetailer D Wholesaler D
Who Needs EDI or a VAN?Companies still need…• Assistance with formatting problems• Authentication of customers
FEATURES OF EDI• It has reduced data entry link, eliminates the need for a paper bases system and improved business cycle times by providing an electronic link between companies.• Exchange of data with several trading partners directly.
• Interaction with multiple companies through a central information clearing house.• Example: Currently uses of EDI include information teller machines (ATMs) in banks where EDI is used for transferring and withdrawing funds between different bank accounts, airline reservation systems, stock exchange transactions and car reservation systems.
FEATURES OF VAN• Receives electronic messages and forwards them onto the recipient.• Low cost start-up• EDI translation and mapping services with Cyber Link
• Security exceeds industry standards to protect data throughout VAN.• Detailed billing.• Value Added Network protects against duplicate transmissions and will alert or discard duplicate transmissions as required.
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.
EDI VIA INTERNET….• Communication of EDI messages via the Internet.• EDI data is passed between trading partners using Internet protocols.• Protocols such as file transfer protocol (FTP), secure file transfer protocol (SFTP) and AS2 (applicability statement 2)
EMAIL….• ELECTRONIC DATA INTERCHANGE VIA EMAIL .• DEMANDS SMALL INVESTMENT AND SOME IT KNOWLEDGE .
IMPLEMENTING EDI SYSTEM....• COMPANY CAN PURCHASE EDI PRODUCT… Business / companies can purchase all EDI product. Product purchase is usually the most cost effective, long term solution for implementing an EDI system.
• COMPANY CAN DEVELOP THEIR OWN EDI SOFTWARE…. This option is time consuming and quite expensive. There is also risk involved in developing new software.
• COMPANY CAN USE EDI SERVICE BUREAU… With this option company sends its business transactions to the service bureau which performs the EDI service at its location. Since fees for this service is quite expensive, services bureaus are only recommended as short term solution.
CASE STUDY : Sahara life Insurance• The Company Sahara Life Insurance is Sahara India Parivar’s venture. Launched with an initial paidup capital of Rs. 157 crore.• http://www.saharalife.com/• The Need: To cut down on paper work in the company. To cut down processing time. To record every incoming paper from policy holders.
EDI FACT• 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).
EDI FACT• 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
Things you may want to remember . . . (for the test)• EDI – Electronic Data Interchange• VAN – Value-Added Network• EDIFACT – international set of EDI standards• In the near future EDI will be vital for business domestically and abroad