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EDI(Electronic Data Interchange)

EDI(Electronic Data Interchange)
 
Traditional way of EDI

EDI is an electronic exchange of business documents in a standard computer processable universally accepted format between the trading partners. It is different from e-mail/file sharing on network as both the trading partners have to agree on a common format of business documents that is to be send as data files over electronic message device. Once the data which is entered in desirable format it can be easily computed to and fro.
 

Reorder level: Ordering after a certain level/limit eg: barcode
The repeated keying of identical information in the traditional paper based systems creates a number of problems such as increased time, low accuracy, high labor charges, increased uncertainty. EDI maintains common electronic format for business document such as purchase order, request for quotation, invoice etc. These are called electronic transaction sets. The communication occurs between computer and computer with less human efforts and less errors.

ERP(Enterprise Resource Planning)
Business application should be computerized.

JIT(Just In Time)
EDI enabled JIT.
 
Components of EDI
·         EDI standard/rules
·         EDI software: converts data into EDI messages as per the EDI standards
·         Communication method/Transaction sets: sends messages from one computer to another.
 
The challenge is to integrate the business application with EDI standards through a proper generation of EDI transaction set using an EDI translator. EDI standards are the data standards that lay down the syntax and semantics of being exchanged. The transportation industry in US was the first one to develop the standards and then it was taken over by retail industry. The grocery segment came up with UCS(Uniform Communication Standard).
In Europe, TDI(Tree Data Interchange) was developed for warehousing and DISH(Data Interchange for Shipping) in shipping. Then there was development in American National Standard Institute(ANSI X12). Similarly UN came up with UN/EDIFACT EDI For Administration Commerce Transport introduced in 1987 by UN and these are one of the internationally acknowledged standards.

Advantages of EDI
·         Cost savings
·         Speed
·         Accuracy
·         Security
·         System integration
·         Just In Time support

EDI Standards
EDI requires companies to agree on standards
·         Compatible hardware and software
·         Agreed upon electronic form format

Established EDI standards
·         Automotive Industry Action Group(AIAG)
·         X.12 de facto
 

 

 
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