ELECTRONIC DATA INTERCHANGE

WHAT IS EDI

EDI is a form of communication system that allows business applications in different organizations to exchange information using VANs and INTERNET to process business transaction.

ORIGIN OF EDI
Developed in the US in 1960s by a group of railroad companies. Father of EDI, Ed Guilbert developed 45 transaction sets for the transportation industry. In 1975, the first TDCC standard was published The system currently used is ANSI X12 based upon the TDCC syntax and format.

CHARACTERISTICS OF EDI
1. 2. 3. 4. 5. Well defined and standardized message formats B2B transactions Direct exchange of information Improve the present business relationships Used in industries

COMPONENTS OF EDI
Trade partners Common EDI standards Translation software Banks VANs services Modem Proprietary hardware and networking

EDI LAYERED ARCHITECTURE

EDI semantic layer EDI standard layer EDI transport layer Physical layer

EDI COMMUNICATION METHODS Value Added Network (VAN) Third Party Service Provider Customs Internet Gateway Direct Connect to the CBSA

HOW EDI WORKS

Business application Internal format conversion Business application Internal format conversion

EDI translator

EDI translator

EDI envelope Value added network

EDI envelope

Modem

Modem

Organisation A

Organisation B

BENEFITS OF EDI
Reduced paper based system Improved problem resolution and customer service Used as financial EDI in bank checks and EFT used in manufacturing, shipping, warehousing, utilities, pharmaceuticals, construction, petroleum, metals, food processing, banking, insurance, retailing, government, health care, and textiles among other industries

EDI IN ACTION
1. Purchase order
2. Purchase order confirmation

3. Booking request
4. Booking confirmation

Buyers computer

5. Advance ship notice

7. Receipt advice 8. invoice 9. payments

Sellers computer

6. status

Transport company computer

SECURIT Y ISSUES

Problems:
The paper checks and balances are not possible -Duplicated messages

Security measures :
-security policies -electronic "seals -use of proper encr yption methods -digital signatures -bio-metrics -audits that verify the accuracy of electronic records; -ef for ts to ensure that translation sof tware has been written correctly and not altered

COMPANIES USING EDI

About fifty thousand private -sector companies in the US Federal Express Eastman Kodak American Airlines Nike Staples NationsBank Prudential Insurance

FUTURE OF EDI
EDI is expected to grow with b2b e-commerce overall. In 2000 alone, b2b sales were estimated to be $3.3 trillion, with forecasts predicting an increase to $5.2 trillion by 2004, according to Corporate EFT Report. The use of EDI also is expected to grow along with international trade agreements like the North American Free Trade Agreement (NAFTA).