Electronic Data Interchanged

Topics: Supply chain management, Internet, Supply chain Pages: 17 (5353 words) Published: February 6, 2013
Electronic Data Interchange
* Electronic data interchange (EDI) is the structured transmission of data between organizations by electronic means, which is used to transfer electronic documents or business data from one computer system to another computer system, i.e. from one trading partner to another trading partner without human intervention. It is more than mere e-mail; for instance, organizations might replace bills of lading and even cheques with appropriate EDI messages. It also refers specifically to a family of standards. * Electronic data interchange (EDI) is the software or system used by companies to exchange information, files and documents. EDI has replaced the fax machine and mailing list when it comes to information sharing. Using EDI, sharing of data is much quicker and cost effective. * The computer-to-computer interchange of strictly formatted messages that represent documents other than monetary instruments. EDI implies a sequence of messages between two parties, either of whom may serve as originator or recipient. The formatted data representing the documents may be transmitted from originator to recipient via telecommunications or physically transported on electronic storage media.

Advantages of EDI
* EDI provides cost savings by reducing paper and eliminating paper processing. * Time savings and eliminating repetition are other benefits from the reduction in paper processing. * Documents can be transferred more quickly and processing errors can be decreased allowing business to be done more efficiently. * More efficient processing will likely lead to improved customer service which will ultimately expand the customer base.

Disadvantages of EDI
* Contrasted to XML, which is not strictly standardized, many consider EDI to have too many standards. * There are various standards bodies that have developed 'standard document formats' for EDI which can cause problems with cross compatibility. * These standards bodies also push standards revisions annually which could cause problems if you have a more recent version of a document than a business partner. * EDI systems are extremely expensive making it difficult for small businesses to implement. * Many large organizations will only work with others who utilize EDI. This may limit the business small companies are able to do with such organizations and limit trading partners. Significance

EDI assumes availability of a wide area network to which organization can subscribe. All Organizations willing to join EDI services must subscribe to the common network. In addition, all organizations participating in a particular EDI services group should agree to a message format that they will use, and load appropriate EDI software on their computer systems. This software is responsible for providing translation services, EDI services and network services. When a sender's computer system produces a message and passes it to the translation service software, this translates the message into the common agreed structure and passes it to EDI service software. EDI service software executes necessary functions and procedures to send the message, track it in the network, and ensure that it reaches its destination. EDI services, in addition, may include procedures to ensure security functions, building and accounting functions and generate necessary logs for auditing purposes. Network access services are responsible for actually controlling the interaction with the network that transports messages from one site to another. The transport network provides a powerful electronic messaging service to support EDI services. Transport network uses a "store and forward mechanism" and messages are sent to "mail boxes" that are managed by the network service provider. The organization can send his message at any time independent of the recipient's system status, i.e. whether or not it is ready for receiving. The recipient systems periodically check...
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