This document provides an overview of electronic data interchange (EDI). It discusses how EDI allows for the computer-to-computer exchange of standard business documents like purchase orders and invoices. It outlines the benefits of EDI, such as reduced costs, errors and time delays compared to paper-based systems. It also describes how EDI uses standards like ANSI X.12 and EDIFACT to facilitate information exchanges and how software is used to implement EDI between businesses.

1. Presentation on : E-business
Inter-organizations Management
Submitted to : Prof. Bhavna Submitted by: Richa gangwani
Sharma M.B.A (Marketing Management)
2nd Sem “B”

2. EDI
Electronic Data Interchange (EDI) is the computer-to-computer
exchange of business documents(bill of lading, customs documents,
inventory documents, shipping status documents and payment documents)
in a standard electronic format between business partners.
• Computer-to-computer– EDI replaces postal mail, fax and email. While
email is also an electronic approach, the documents exchanged via email
must still be handled by people rather than computers. Having people
involved slows down the processing of the documents and also introduces
errors. Instead, EDI documents can flow straight through to the appropriate
application on the receiver’s computer (e.g., the Order Management
System) and processing can begin immediately.

3. • Business documents – These are any of the documents that are typically
exchanged between businesses. The most common documents exchanged via
EDI are purchase orders, invoices and advance ship notices. But there are
many, many others such as bill of lading, customs documents, inventory
documents, shipping status documents and payment documents.
• Standard format– Because EDI documents must be processed by computers
rather than humans, a standard format must be used so that the computer will
be able to read and understand the documents. A standard format describes
what each piece of information is and in what format (e.g., integer, decimal) .
Without a standard format, each company would send documents using its
company-specific format and, much as an English-speaking person probably
doesn’t understand Japanese, the receiver’s computer system doesn’t
understand the company-specific format of the sender’s format.

4. • Business partners – The exchange of EDI documents is typically
between two different companies, referred to as business partners or
trading partners. For example, Company A may buy goods from Company
B. Company A sends orders to Company B. Company A and Company B
are business partners.

6. EDI Application in business
• Supplying and receiving goods for the company and allows more stream
lined and efficient operations for the administration.
• For the integration of business documents into your ERP or Internal
management System.
• EDI helps in the reduction of costs as compared with the processes such as
post, fax or mails

7. Benefits of EDI
• Time delays : Delays are caused primarily by two factors. Paper
documents may take days to transport from one location to another. In
addition, manual processing delays are caused by the need to key, file,
retrieve, and compare data.
• Labour costs : In general, labour-based processes are much more
expensive than non-labour-intensive operations involving computers and
telecommunications.
• Errors : Because information is keyed multiple times and documents are
transported, stored, and retrieved by people, non-EDI systems tend to be
error prone.

8. • Uncertainty : Uncertainty exists in two areas. First, paper transportation and
other manual processing delays mean that the time the document is received is
uncertain. Once a transaction is sent, the sender does not know when the
transaction will be received nor when it will be processed. Second, the sender
does not even know whether the transaction has been received at all nor whether
the receiver agrees with what was sent in the transaction
• High Inventories : Because of time delays and uncertainties in non EDI
processing, inventories are often higher than necessary. Lead times with paper
processing are long. In a manufacturing firm, it may be virtually impossible to
achieve a just-in-time inventory system with the time delays inherent in non-
EDI processing systems.
• Information Access : EDI permits user access to a vast amount of detailed
transaction data—in a non-EDI environment this is possible only with great
effort and time delay. Because EDI data is already in computer-retrievable form,
it is subject to automated processing and analysis. Such information helps one
retailer, for example, monitor sales of toys by model, colour, and customer zip
code. This enables the retailer to respond very quickly to changes in consumer
taste

9. Standardization And EDI
All software , hardware and networks must work together so
that information flows from one source to another. Today two
major EDI Standards exist:
• The American National Standards Institute (ANSI) X.12
Committee and the United Nations
• EDI for Administration, Commerce and Trade (EDIFACT)
standards for international usage.

10. ANSI X.12
The ANSI Chartered the Accredited Standards Committee in 1979 to
research and develop standards for business documents. The X.12
committee develops standards to facilitates EDI relating to such business
transaction as order placement and processing; shipping and receiving
invoicing, payment , and cash application processing for products and
services.
The X.12 transaction sets generally map a traditional paper document to an
electronic format that can move easily over telecommunication networks.
Each transaction format includes many data segments needed for the
business function as well as instructive information to ensure that the
telecommunication system routes the data correctly

11. EDIFACT
Developed by united Nations , EDIFACT is a family of
standards similar to ANSI X.12. EDIFACT is becoming
widely accepted as the foremost international EDI standard.
Today EDIFACT and ANSI are working toward compatibility.

12. EDI Standard Selection
The diversity among electronic standards leads to confusion. To
understand the situation , lets briefly trace the history of EDI.
1960 : Rail and transport industries begun to think about
standardizing documents and replacing paper-based methods of
communication. TDCC (Transportation data coordination
committee) was developed.
VICS for pharmaceuticals , UCS for food and groceries, and WINS
for ware housing.
Because most EDI information exchanges domestic and X.12 is
more widely used then EDIFACT in united states , U.S. Companies
doing business overseas must subscribe to EDIFACT.

13. Structure of EDI transaction
EDI structure are very broad and general because they have to meet the
needs of business. EDI messages, however share a common structure:
1. Transaction set is equivalent to a business document, such as a purchase
order. Each transaction set is mad up of data segments
2. Data segments are logical groups of data elements that together convey
information, such as invoice terms, shipping information, or purchase
order line
3. Data elements are individual fields. Such as purchase order number ,
quantity on order ,unit price.

14. EDI Software Implementation
EDI software has four layers :
1. Business application
2. Internal format conversion
3. EDI translator and
4. EDI envelop for document messaging
These four layers package the information and send it over the
value-added network to the target business, which then
reverses the process to obtain the original information.

15. 1. EDI business application layer
It creates a document- in this case, an invoice- in a software
application. This software Application then send the document to
an EDI translator, which automatically reformates The invoice
into the agreed-on EDI standards
Enter the information
in the EDI form
specified for that
particular business
transaction
EDI translator
software changes the
EDI form to fit the EDI
standard that the
target application can
understand
The translator wraps
the document in an
electronic envelope
“EDI package "that
has an ID for your
trading partner

16. 2. EDI translator Layer
Translator describes the relationship between the data elements in
the business application and the EDI standards. The translator ensures
that the data are converted into a format that the trading
partner can use
3. EDI communication Layer
The communication portion- which could be part of the translation
software or a separate application- dials the phone number for the
value added network service provider or other type of access
method being used

18. VANs (Value added networks)
VAN is a communication network that typically exchanges EDI
messages among trading partners. It also provides other services
including holding messages in “electronic mailboxes” interfacing with
other VANSs, and supporting many telecommunications modem and
transfer protocols.
Third party Value Added
Network (VAN)
Company
Financial
Institution
Manufacturi
ng Company
Transport
Company

19. Internet based EDI
The Internet appears to be a cheap, efficient, and ubiquitous channel for
transmitting Electronic Data Interchange (EDI) transactions. This paper
contrasts two strategies for implementing Internet-EDI systems.
For example :
• McKesson, Corp. treated its Internet-EDI system as a traditional
information systems development project while.
• Bank of America built its Internet-EDI system with a prototyping
approach.
• Wall mart
Internet-EDI applications could transform trading partners relationships
by reducing the import of EDI-capability as a competitive asset. This
Internet based EDI has begun to grow at significant rates over the past few
years, spurred in large part by the adoption of key Internet based EDI
technologies by companies.

20. Benefits of Internet Based EDI Internet based EDI can have a number of
benefits over using VANs. The reason is simple - VAN based EDI and other
"aggregators" of EDI data charge based on the amount of data that is used and
transmitted over their lines.
By employing Internet based EDI you establish a direct link to your trading
partners bypassing third parties and sending and receiving data directly. It was
this benefit, coupled with the low cost of using the Internet, that convinced
Wal-Mart to switch their entire supplier network to Internet based EDI. While
they are the only one to require use of Internet based EDI other retailers have
also made this option available. For businesses that rely on EDI for their
operations using Internet based EDI can save a great deal of money and provide
significant return on investment.

21. References
1. www.google.com
2. Book : Ravi Kalakota & Andrew B. Whinston

22. Question & Answers
Q1. what is the full form of EDI ?
a. Electronic data b. Electrical data
interchange interface
c. Electrical dial up d. None of the above
internet
Ans. (a)
Q2. which is the EDI Standard ?
a. ANSI X.12 b. EDIFACT
c. TDCC d. All of the above
Ans. (d)

23. Q3. which is the third layer of EDI implementation?
a. Business application b. EDI Translator
c. Internal Format d.EDI Envelop for
Conversion Document messaging
Ans. (b)
Q4. what is the full form of EDIFACT ?
a. EDI for admin, commercialization b. EDI for acquire ,communicate
& trade & taxation
c. EDI for administration, commerce d. None of the above.
& trade
Ans. (c)

24. Q5. what is not the application of EDI ?
a. Supplying & b. Maximizes Cost
receiving goods
c. Internal management d. None of the above
System
Ans. (b)
Q6. EDI is a computer to computer exchange of business document ?
a. True b. False
Ans. (a)

25. Thank you