Presented a paper in a National conference in Kalaivani College of Technology, Coimbatore.

1. Presented by
R.Prabhu
[ KGISL Institute of Technology]

2. WHAT IS ELECTRONIC DATA
INTERCHANGE?
 A Definition From Book:
 EDI is computer-to-computer communication using a
standard data format to exchange business information
between companies.
 Ex:
 Consider the Postal System

3.  A Definition From Net:
 (EDI) is about doing business and carrying out transactions
with your trading partners electronically.
 EDI covers most things that are traditionally done using
paper-based communication.

4. 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
 It was not until the 1970’s, when work began for national EDI
standards.
• reduced labor-intensive tasks such as data-entry;
• allowed the sender of data to control the exchange including receipt
confirmation of by the other party

5. Retailer A
Retailer C
Retailer B
Retailer D
Wholesaler A
Wholesaler B
Wholesaler C
Wholesaler D

6. How EDI works??
1. a user places an order (i.e., a document) into the computer.
2. The order goes through an interface program. The
application edits the order and relays it to the intermediate
EDI files.
3. The purchase order is changed to the EDI standard format
the application can decipher.
4. The translation program can function with several
programs, allowing the receiver’s system to interpret the
order. The modem relays the order through a value added
network.
5. The network proceeds to take the order. From the EDI
format it is changed back into the sender’s original format.
 Finally this allows the receiver to read the document.

7. EDI USERS AND TYPES OF
ACTIVITIES
Who Uses EDI? (From Book)
 Companies of all types and sizes are able to utilize EDI.
 Ex. Some large corporations specify EDI :
 Use as the communication method of choice
 Federal Government
 Automakers
 suppliers to send all purchase orders and invoices electronically
 Industry
 banking
 healthcare
 retailing
 travel
 Manufacturing
 insurance
 Government

8. Where Is Uses EDI?
 Sample EDI application areas
 EX:
 Purchasing
 Inventory
 Billing
 Distribution
 Price notification
 Financial
 Freight rate notifications
 Sales & cash management

9. Types of EDI Activity
 Currently EDI is primarily used for:
 Purchase orders
 Bills of lading
 Invoices
 Healthcare claims
 Financial exchanges

10. 10
Document Transaction
Little Envelope Functional Group
Big Envelope Interchange
Postal Service VAN
Courier Delivery Point-to-Point
Human Audit Machine Audit
PAPER vs EDI

11. Establishing Electronic
Connections
 In addition to a standard data format, it is mandatory that
the companies’ computers are able to “talk” to one
another.
 This sounds simple but it can be complex. EDI entails the
use of special translation and communications software.
 When connecting computers, companies must consider the
communications method and protocol that will be used to
transmit information, as well as security and business
recovery.

12.  Protocol: A set of standards for exchanging information
between two computer systems or two computer devices.
 Communications protocol: A list of communications
parameters (settings) and standards that govern the
transfer of information between computers using
telecommunications. Both computers must have the same
settings and follow the same standards to avoid errors.
 Communications program: An application program that
turns your computer into a terminal for transmitting data
to and receiving data from distant computers through the
telephone system

13. INTERNATIONAL
CONSIDERATIONS
 Standards
 Communication Connectivity
 Advantages and Disadvantages of EDI

14. Communication Connectivity
 When dealing with international communications, there are
numerous concerns other than the obvious language and
cultural barriers
 In some countries, telephone lines are government regulated
and are not as efficient as in the United States.
 When the government runs the show, acquiring permission
from telecommunications authorities for equipment connection
often causes delays.
 Another concern is the level of data security available and the
right of ownership during transmission.

15. Standards
 EDI is not used only in the United States or North
America.
 Data format standardization efforts are taking place in the
United States (ANSI) and internationally (ISO).
 Until there is one common standard base, EDI
implementation must be flexible enough to handle
multiple standards for the same type of document

16. 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

17. Disadvantages
High Dependence on the participation of trading
partners
Costly for smaller companies
Difficult to agree on standard to be used