2. What is EDI ?
• EDI stands for Electronic Data Interchange.
• EDI is the exchange of structured business data in
electronic form direct from one computer system
to another.
• The data is transferred electronically between
two parties(Trading Partners), usually a supplier
and a customer.
• EDI makes it quick and easy for trading partners
to send each other information relating to their
everyday business transactions such as ordering,
shipping and invoicing.
3. The most common trading partner relationship is that of supplier and customer. Sometimes
there may be a different relationship, such as that of seller and buyer, payee and invoice, or
supplier and carrier. Each trading partner may play different roles during the business
process, as illustrated in the diagram below, or each role may be played by a different
partner.
4. EDI Document
• Invoice
• Purchase orders
• Shipping Requests
• Acknowledgement
• Business Correspondence letters
• Financial information letters
5. Working of EDI
• Each company has their own format of sending
these documents. Suppose we have two
companies A and B.
• Company A sends its purchase order (PO) to
company B. As the format of the document is
different for the Company B, it will manually read
the data from PO sent by Company A and creates
a Sales order (SO) from it in order to carry out
further processes.
• EDI provides the data exchange formats and
reduces the manual intervention in the process.
6.
7. Advantages of EDI
• Reduction in data entry errors.
• Shorter processing life cycle.
• Electronic form of data.
• Reduction in paperwork.
• Cost Effective.
• Standard Means of communication.
8. Disadvantages of EDI
• Expensive.
• Initial setup is time consuming .
• EDI standard changes.
• System electronic protection.
• Staff training cost.
• Proper backup.
• Limit your trading partners.
9. Steps in an EDI System
• A program generates a file that contains the
processed document.
• The document is converted into an agreed
standard format.
• The file containing the document is sent
electronically on the network.
• The trading partner receives the file.
• An acknowledgement document is generated
and sent to the originating organization.
10. EDI Standard
• To exchange documents with trading partners,
you must convert the data to and from EDI
Standard formats. EDI standards are the
requirements for the format and content of EDI
business documents.
• EDI standards determine the correct order and
location of the units of data in an EDI document.
All EDI transactions are defined by EDI standards.
• Two commonly used EDI standards are:
– EDI for Administration, Commerce, and Transport
(EDIFACT) - generic international.
– American National Standards Institute/Accredited
Standards Committee X12 (ANSI ASC X12) - generic.
11. EDIFACT
• EDIFACT is the international standard for EDI.
• The term stands for Electronic Data Interchange For
Administration, Commerce and Transport.
• The three major components of EDIFACT are a standard
syntax for structuring data, i-EDI (interactive EDI), and
standard messages to accommodate interaction among
various industries and countries.
• The EDIFACT standard was developed by the United
Nations. Further development of the standard is also
overseen by that organization’s Centre for Trade
Facilitation and Electronic Business. The standard is
sometimes seen as UN/EDIFACT.
12. ANSI ASC X12
• Developed by the American National Standards
Institute (ANSI) in 1979.
• Stands For Accredited Standards Committee X12
• it is a US standards body that is responsible for defining,
developing, maintaining and publishing the X12 EDI
standards, which help in driving business processes
nationally and globally.
• This committee is the globally favoured standards body
for setting the requirements of electronic business
document content and also influences international
forums by providing contents for message design
architecture as well as universal core component works.
• It also initiates reduction in costs and expands
organizational reaches along with enhancing business
processes.
