Introduction to EDI(Electronic Data Interchange)

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Sivasubramaniam Arunachalam
September 09, 2011
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Introduction to EDI
(Electronic Data Interchange)

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Agenda
 Definition
 History
 Message Flow
 Before EDI
 After EDI
 Benefits
 Transmission Mediums
 Transmission Directions
 Transmission Protocols
 Implementation
 Message Formats

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EDI - Definition
 Business Documents
 Electronic Transmission
 Strtucted Data
 Trading Partner to Trading Partner
 Computer to Computer Communication
 Sequence of Messages
 Automate Standard Processes

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History
 Early 1960s
 TDCC
 Private Company Standards
 Private Industry Standards
 Inter Industry Standards (ANSI / ASC)

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History - Timeline
1968 - TDCC Formed
1975 - First EDI Standard
1978 - ANSI ASC Formed
1981 - Retail Grocery Industry
 Uniform Communication Standard Program (UCS)
1982 - Public Warehousing Industry
 Warehousing Industry Network Standards (WINS)
1983 - ANSI - First 5 American National Standards for EDI.
1988 - Auto Industry Action Group (AIAG)

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History – Timeline (Contd…)
 1988 - UN formed UN-JEDI
 Limitations of ANSI Standards
UN/EDIFACT
 Adoption & Popularity
Immediate Benefits
 Overseas Expansion
 Expense Control
 Elimination of Support for Multiple Formats

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Before EDI
Source : https://www.cybertext.com/books/primerprev/chapters/ch2.htm

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After EDI
Source : https://www.cybertext.com/books/primerprev/chapters/ch2.htm

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After EDI
Source : http://acs.lbl.gov/~johnston/EDM/Internet.and.RINS.3.fm8.html

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Benefits
 Post office cost
 People cost
 Error cost
Buyer Benefits
 Lower Inventory Levels
 Quick Order Acknowledgement
 Matching and Re-Keying PO and Invoice
Supplier/Seller Benefits
 No problems and delays caused by order entry errors (50)
 Personnel Reductions (70)
 Inventory Reductions
 Improved Cash Flow

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Benefits - Need for Speed
 Seconds instead of Days
 Never put it any Basket for Collection
 Receiver side data is immediately ready for processing
 Different parties process the electronic document
 Low Business Cycle times (competitive edge in any business)

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Benefits - Need for Accuracy
 Electronic data is usually derived from a database
 Data has been subject to prior validation
 Large Size and delivery failure never matters here.
 Even it fails, re-transmission is possible

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Benefits - Cost Savings and Avoidance
 Human handling
 Mailroom Sorting, Circulation, Clerical document preparation
 Data entry at multiple stages
 Paper and it's Transmission Costs
 Paper Cost, Envelopes , Mailing Materials , Courier services
 Telephone calls to confirm
 Paper storage space and it's protection
 Low Error Rates and Low Handling of Error Rates
 Labor to monitor, search and solve the error
 Inventory Reduction
 Low Stock Levels

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Benefits - Improved Operational Efficiency
 For Customers
 Quicker Delivery of Products (competition)
 Better Customer service
 Distributors performance
 Vendor side
 Track Supplier Performance Level
 Track Supplier Stock Level
 Transportation Carrier Performance

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Benefits - Improved Operational Efficiency (Contd…)
 Precise Planning and Execution
 Improved Cash Flow
 Immediate payment
 No Currency Conversion Factors
 Net Discounts
 Audit trials and status tracking

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Transmission Medium - Types
 P2P
 Dial up Line
 Leased Line
VAN
VPN
Web / Mobile

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P2P – Dial Up
 Dial-up line is established just like a normal telephone call
 Sending party makes the call to Receiver & transmits the data
 Batch/Bulk Processing
 Cheaper when the amount of data is low and sporadic

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P2P - Leased Line
 Dedicated Line and expensive
 Amount of transactions is high
 Fairly constant throughout the day
 No dial delay
 No need to batch transactions

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VAN (Value Added Network)
 P2P scheduling problem to trading partners
 Store and Forward Mailbox Service
 Most widely used
 Routing, Storing and Delivering EDI messages
 Delivery Reports

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VAN – How it works
 Trading Partners chooses EDI VAN Provider
 EDI VAN Provider provides mail box for send & receive
 Sender Connects to VAN and sends its EDI
 Sender then disconnects from the service
 Recipient can connect to the network and receive those
transactions from their mailbox

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VAN – Other Features
 Acknowledgements
 To Sender (Messages have been sent successfully)
 To Receiver (New EDI message has arrived in their mailbox)
 Data Backup/Recovery,
 Document Mapping
 Audit trail of all EDI transactions
 Tracking / Recording the trail of a message (on demand)

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VPN
 Public Telecommunications Networks (internet)
 Private Data Communications
 Intranet and extranet(VPN Server to another VPN Server)
 Client/Server model
 Clients -> authenticate, encryption, creating tunnels and managing sessions
 Lower Costs compared to Leased Lines

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Web / Mobile
 Web
 Users will use Web Browsers
 Pre-populated Form
 Security depends on the internet technologies (HTTPS and AS2)
Mobile
 Recent development concentrates on mobiles
 At Least to check the status of the transaction
 Many Challenges (different screen size & different platforms)

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Protocols
 HTTP / HTTPS
 POP3 / SMTP
 SFTP
 OFTP / OFTP2
 WebDAV (Web folders or web share)
 X.400
 EDIINT
AS1
AS2
AS3
AS4

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Protocols – OFTP2
(ODETTE File Transfer Protocol)
• Message encryption and signatures support
• Signed receipts
• Message compression and integrity
• Session authentication
• Session encryption (TLS)
• File restart
• Push / pull operation
• Peer-to-peer or indirect communications
• File compression
•Operates over TCP/IP, X.25/ISDN, native X.25

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OFTP2 vs AS2
• OFTP2 – Push & Pull
• AS 2 - Push

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Transmission Directions
 Inbound
 Outbound
 EDI that tells a warehouse to perform an shipment
 Outbound for Manufacturer
 Inbound for Warehouse computer system

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Transmission Directions – Inbound Processing
P2P, VAN or AS* to EDI Application (Mail Bag)
 Validation of Party
 Authentication
 Authorization
 Valid message
 Structure of the file vs EDI standards
 Individual fields vs standads (ex. PO)
 Create non EDI doc for back end ERP or database or queue
 Conversion / Tranformation to properitry format (Ex: IDoc)
 Can be done by Standard mappings (XSLT or Custom Mapping modules)

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Transmission Directions – Outbound Processing
 Read data from DB (or) From back-end ERP (or) Queue
 Validate message format & individual fields in the given file
 Use Mapper and create EDI Message
 Validate EDI Message
 Send to Trading Partner
 Audit Creation and Interpretation (Depends on the EDI type)
 Technical Acks
 Business Acks

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Transmission Directions - Inbound & Outbound
Source: http://www.vsiapparel.com/edi_inbound.htm

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Transmission Directions - Inbound & Outbound
Source: http://www.sysmaker.com/infopro/edi.htm

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Example Transactions
 Purchase Orders
 Invoices
 Shipping Notices
 Export/Import Information
 Carrier-to carrier waybills
 Funds Transfers
 Design Specifications
 Health Insurance Claims

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Stats…
 2008 Aberdeen report (POs)
 34% - North America.
 36% - EMEA
 41% - APAC
 Average paper requisition to order costs a company
 $37.45 - North America
 $42.90 - EMEA
 $23.90 - APAC
 EDI requisition to order costs are reduced to
 $23.83 -> North America
 $34.05 -> EMEA
 $14.78 -> APAC

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EDI - Implementation
 Step 1 - Organize
 Step 2 - Review
 Step 3 - Develop
 Step 4 - Integrate
 Step 5 - Map
 Step 6 - Pilot
 Step 7 - Deploy

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EDI – Message Formats
 ANSI ASC X12
 cXML
 ebXML
 UBL
Tradacoms
 EDIFACT
 RosettaNet
 CIDX
 PIDX

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CEFIC – Chemical
 EANCOM – Retail
 EDIBDB – Construction
 EDIFICE – High Tech Industry
 EDIFURN – Furniture
 EDIGAS – Gas
 EDILEKTRO - Electro
 EDILIBE – Books
 EDITEC - Sanitary
 EDITEX – Fashion
EDI – Message Formats (Contd…)

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EDI – Message Formats (Contd…)
 EDIFOR/EDITRANS - Transports & Logistics
 EDIWHEEL - Wheels & Tyres
 ETIS – Telecommunication
 STAR - Standards for Technology in Automotive Retail
 SPEC2000 - Airline Industry
 FORTRAS - Transports & Logistics

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EDI – Sample Business Flow
Source: http://sap-idoc2edi-consulting.com/images/Blog24/GIS%20XI%20SAP%20Overview.jpg

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SAP NW PI – B2B Flow

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EDI – Challenges
 Customers
 Committees
 Solution Providers & Partners

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References
http://en.wikipedia.org/wiki/Electronic_data_interchange
http://www.edibasics.co.uk/
http://e.d.i.tripod.com/edi_history.htm
http://www.123edi.com/
http://www.electronic-cash-news.com/2010/concise-timeline-
and-history-of-electronic-data-interchange-edi/
http://rogerclarke.com/EC/EDIIntro.html

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References
http://www.edimatrix.demon.co.uk/history.htm
http://archive.ifla.org/VI/5/reports/rep4/rep4.htm
http://www.covalentworks.com/what-is-edi.asp
http://en.wikipedia.org/wiki/OFTP
https://www.cybertext.com/books/primerprev/chapters/ch2.htm

Introduction to EDI(Electronic Data Interchange)

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