From the book Introduction to Computer by Peter Norton
What is EDI?
The full form of EDI is Electronics Interchange which process business documents between companies and exchange such documents between computers of the companies.
What are the advantages of EDI?
Electronics Data Interchange process of business transaction is faster and less expensive as compared to paper documents exchanges.
Electronics Data Interchange of business documents is popular in business houses for the following advantages:
• Faster business transaction.
• Less chance of errors in computer based documents as compared to manual handing of data.
• Requires less man days to process large volume of business documents.
• Maintain efficient inventory level due to faster transactions.
• Better utilization of warehouse space reducing storage cost in business.
• Faster purchase order issue according to minimum stock level of store items minimize out of stock problems of essential materials for the business.
• Reduces logistic costs for delivery of the finished products within schedule program.
However,data security is the important issue in business houses for exchanging documents through EDI. Data and documents are secured by using passwords, encryption and used ID.
EDI is a form of E-Commerce is a standard format for exchanging electronic data. Electronic Data Interchange is the interchanging of standard formatted data between computer application systems of trading partners with minimal manual intervention.
Tangible Benefits of EDI-
1. IDI is time saving system which transfer business information frame one computer to another automatically and reduces errors quickly.
2. EDI is a cost saving system that allow minimum cost transaction to its business partners and also produces acknowledgement at the receiving of data.
3. EDI handles all paper work such as (maintaining data, filing cabinets) since it takes all transactions in paper form and also reduce the postal charges.
4. EDI check Data Entry errors, improve business services.
5. It builds a bridge among manufacturers, retailers, suppliers.
6. EDI has also linked with international trade which left the long standing trade restrictions.
IT is the structured transmission of data between organizations by electronic means. It 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.
Architecture of EDI-
The architecture of EDI is divided into four layers-
1. Application Layer
2. Standards translation Layer
3. Transport Layer
4. Physical Network Infrastructure Layer
1. Application Layer-
The first layer of EDI defines the business applications that are used by EDI. This layer of EDI translates business application into request for quotes, purchase orders, acknowledgement and invoices. For every company this layer is specific and also for the software that company uses.
The application layer also called the semantic layer. The Semantic layer describes the
Business application that is driving EDI. For a procurement application, this translates into request for quotes, price purchase orders, acknowledgements, and invoice.
This layer is specific to a company, and the software it uses. i.e. the user interface and content visible on the screen are tailored or customized to local environment.
By the semantic layer of the EDI the companies form are change into more specific format and then it may be send to various partners of the company have a several software applications to handle all forms aspects. To achieve all above activities the company must follow the EDI standard ex. of EDI standards are X12, ANSI, EDIFACT etc. If the sender and receivers of company want to exchange some files then requires a compatible standards of Electronic Data Interchange.
The Sender who want to send a data use a software application with EDI and exchange data in EDI format so that at the receivers end the receiver can read it. The EDI standards are very important in exchange of data because at sending end a sender manipulate data by EDI as in receiving end data is manipulated by EDI.
2. Standard Layer-
This layer of EDI architecture defines the structures of the business form and some content which are related with the application layer. This layer of EDI has no mean without application layer so we can say that EDI applications and standard layer are interlinked.
3. Transport Layer-
EDI transport layer is a non electronic way of sending the business form from one company to another company. This non electronic way may be registered mail, postal services or private career, telecommunications, fax etc. Now a days the transportation method is more complex with compare to e-mail.
4. physical Layer-
The physical layer of EDI also called the infrastructure layer. This layer defined the component communication path for EDI data transaction. What are the structure of e-commerce supported EDI in which information can be build and what are the communication established over which EDI data transfer from one customer to another customers.
EDI involves exchanging data between in-house applications and applications at other companies; comprehensive middleware architecture often includes it. EDI can be formally defined as the transfer of structured data, by agreed message standards, from one computer system to another without human intervention.
EDI might be considered "middleware", it also shares characteristics with applications in their own right. Although it lies between applications like other middleware, the applications to one side of it do not belong to your company! The whole point of EDI is to enable your company to communicate with other applications that are:
1. Always on the distal end of some long-distance link, and
2. Always "black boxes" from the viewpoint of your own network and applications.
The whole point of EDI is to make data exchange possible with applications whose nature you cannot know, and whose behavior you cannot control. This makes EDI a special case of middleware, one better treated as an application (a suite of applications) unto itself. EDI is a critical ingredient of modern global commerce. An EDI department isolated from other corporate computer applications by a data boundary, and properly layered, insures maximum flexibility and reliability. Data exchange with other companies takes many forms, from the format of the data itself, to the protocols used to exchange it, and the networks over which it travels. There is no reason a single EDI department cannot be a central hub controlling and auditing all data exchange into and out of even reasonably large companies. Consolidating data communications in this way insures consistency from both technical and business viewpoints. 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.". It distinguishes mere electronic communication or data exchange, specifying that "in EDI, the usual processing of received messages is by computer only. Human intervention in the processing of a received message is typically intended only for error conditions, for quality review, and for special situations. For example, the transmission of binary or textual data is not EDI as defined here unless the data are treated as one or more data elements of an EDI message and are not normally intended for human interpretation as part of online data processing.
EDI and international Trade-
International or cross border date uses EDI for increasing performance among companies in International trade. The EDI provides various trade efficiency which give sine fast, simple, less expensive transactions. In traditional trade the international trade take materials almost instantaneously will likely mean shorter new product development cycles and possibly an increased level of innovations. Regulators are also taking an interest as foreign financial institutions are increases able to solicit domestic residents.
Thanks and Regards
Dharmendra Kumar Singh
District Data Manager