Electronic data interchange (EDI) is the structured transmission of data between organizations such as documents or business data from one computer system to another computer system electronically. The transmission is done from one business organization to another similar organization without human intervention. EDI can be used to describe the technology by which business documents (such as orders, invoices, shipping contracts, etc) are transmitted electronically. Under this concept, a file is copied to a diskette and loaded into another computer or transmitted over Internet or Intranet. A more precise definition implies direct computer-to-computer communication of business transactions in a standard format where each computer understands the meaning of each field without human assistance. EDI began in the early 1970s when the transportation industry (i.e. ocean, trucking and rail) formed the Transportation Data Coordinating Committee (TDCC). The TDCC is a non-profit organization in Washington DC and organizes data standards, formats codes, and protocols for the transportation of business documents. The first TDCC standard, composed of 45 transaction sets, was published in 1975. ASC X12 was introduced in 1979 and had the standards on those developed by the TDCC. Computer technology was not very developed that time and the majority of computers were mainframe computers running proprietary operating systems. There were numerous modem standards and most protocols for transmitting files were supplier specific. Even sending tapes was not easily accomplished because some used the 8 bit character encoding (EBCDIC system) to store alphanumeric data and some used ASCII. The basic reasons for the introduction of EDI include low cost, reduction in paper dependency, improved customer service, reduction in mistakes and improved competitiveness. Since the emergence of the Internet, EDI has received a great deal of research attention, especially with respect to its applications in logistics and supply-chain management such as the online procurement.
Electronic Data Interchange:
Electronic data interchange (EDI) is about doing business and carrying out transactions with trading partners electronically. In details, EDI is computer-to-computer communication using a standard data format to exchange business information between companies. EDI covers most things that are traditionally done using paper-based communication. For example, consider the Postal System.
Fig: Example of EDI
There are generally agreed to be three types of EDI system. These are:
(1) Batch EDI:
This is the most commonly used EDI system by organizations to communicate effectively to each other. It uses a point-to-point communications link. This method is ideal for regular transfer of documents of a similar type. It relies on only a minimal amount of initiation on the part of the operator. This system is ideal when there are high quantities of repetitive information and the business case relies on a reduction in volume.
(2) Event-driven EDI:
Event-driven EDI takes the idea of Batch EDI a step further and integrate it with the other processes involved in the commercial business. It starts a detailed cascade effect which initiates and automates other processes as a result of the request from a customer. For example, a factory can refer to the information from EDI and thereafter design production schedules. This type EDI system can truly said to be customer-driven as bottle-necks in information flow are reduced.
(3) Interactive EDI:
One of the most exciting developments of EDI is that of interactive EDI conversation (IEDI). Messages take the form of a whole series of pairs of conversational messages which allow a person with an EDI...