31224142 electronic data interchange

7/29/2019 31224142 Electronic Data Interchange

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What is EDI?

EDI is the electronic exchange of business documents

between the computer systems of business partners,using a standard format over a communicationnetwork.


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EDI - Electronic Data Interchange EDI provides business process integration across

companies by exchanging business documents such aspurchase orders, invoices, and shipment notices in

electronic form, using industry standard formats.Previously fax machines or traditional mail was used toexchange documents .Mailing and faxing are still used inbusiness, but EDI is a much quicker way to do the samething.


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Cont.

EDI is a collection of standards, formats and file layout.

Currently there are multiple EDI standards around theworld:

X12 standard and its subsets (i.e. UCS,VICS) HIPAA USA only based standard for healthcare

transactions. It is a subset of the ANSI X12 standard setwith additional healthcare specific transactions.

EDIFACT European Standards for electronic commerce. TRADACOMS UK based EDI standard currently in

declining use.


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COMPONENTS OF EDI EDI Standards

EDI Software's

Communication of EDI massages


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EDI STANDARDS One-to-one communication

Exchange of information should be independent of

Softwares.

Extract data from business applications to transfer it into astandard format (universally acceptable)

Transportation industry was first and then retail.


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EDI Software's Consists of computer instructions that translate the

information from unstructured, computer specific formatto the structured EDI format and then communicate theEDI massages.

Functions:- Data conversionData formatting

Available for:- mainframe computers, mini computers,micro computers

Software:- X-400, X-435


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COMMUNICATION Of EDI

MASSAGES Electronically exchange of EDI documents over comm.

Networks

Documents stored in user mail boxes on the networks EDIserver

VAN: A VAN is a third party service that transmits andstores data in the electronic mail-box until it is picked upby the appropriate party. Since the EDI message containsaddressing information, the VAN routes message to themail-box of the recipient.


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Purchasing

Receiving

AccountsPayable Accounts

Receivable

Billing

Shipping

Order

Management

Manufacturing

Carrier

Shipment Notice

Supplier

Bank

Customer

Bank

Remittance Advice

Payment Data

Account Information

EFT

Account Information

Shipment

Status

Bill of

Lading

Customer

Vendor

Order Acknowledgement

Quote

Typical Business document exchanged by business partners

Request for Quote

Purchase Order

Purchase Order

Change


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SETTING UP EDI

Whether you use a service based solution or in-house software,youll need to format the data to your trading partnersspecifications. The process of formatting is called mapping.

EDI guidelines are not universal. The map created forCompany As invoice cannot be copied and used for CompanyBs invoice as Company B has its own criteria. Youll need an

implementation guide for every trading partner.


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Cont. Setting up communication: One of the most important

aspects of EDI is selecting how the data is going to getfrom one place to the other, such as through a VAN orusing a direct connection.


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Parts of the EDI system

.

Application

Program

Vendor Customer

Application

Program

Translator Translator

Value - Added

Network

EDI message EDI message

Business

document Business

document


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Parts of the EDI System

Trade Partners : The trading partners can be any combination oforganization or business types.

Application program : APs are responsible for generating andprocessing data in business documents

Business document : A business document is a legal document thatdefines the transaction conducted between trading partners.

Translator : The translator is responsible for mapping applicationdata to the EDI standard format.

EDI Message : The standards EDIFACT /ANSIX12 defined variousEDI messages that govern the rules , format, and content of data in atransaction.

Value-Added Network :The VAN provides a mailbox on the networkto each trading partner. This mail box is polled periodically formessages. The application software does not have to be connected orrunning at the time of message exchange.


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Why should I use EDI?

EDI and other similar technologies save a companymoney by providing an alternative to or replacinginformation flows that require a great deal of humaninteraction and materials such as paper documents,

meetings, faxes, etc. Even when paper documents aremaintained in parallel with EDI exchange, e.g. printedshipping manifests, electronic exchange and the use ofdata from that exchange reduces the handling costs of

sorting, distributing, organizing, and searching paperdocuments. EDI and similar technologies allow acompany to take advantage of the benefits of storing andmanipulating data electronically without the cost of

manual entry.


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Benefits of EDI include:

Reduced cycle time Better inventory management Increased productivity

Reduced costs Improved accuracy Improved business relationships Enhanced customer service Increased sales Minimized paper use and storage Increased cash flow


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Differences between ANSIX12 / EDIFACT

EDIFACT calls business documents messages andrepresents them by a name such as ORDERS for a purchaseorder, whereas ANSIX12 calls them transactions andrepresents them by a number such as 850 for a purchase

order.

EDIFACT uses the same segment in multiple places, whereas ANSI has a specific use for each segment.

EDIFACT has additional segments that apply tointernational trade.

Conditional fields in EDIFACT are the same as optionalfields in ANSIX12.


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How do I implement EDI? Contact the Uniform Code Council to obtain

introductory material, including a membershipapplication.

The Council will then send you your CommunicationIdentification Number, a Technical Manual, andprovide other support services.

This Communication Identification Number is uniqueto your company, and identifies you to your tradingpartners.


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CONT.. Contact trading partners and determine what

transaction sets they are using and what level.

Determine how you will process EDI. You have twochoices, depending on your budget, your technicalcapabilities and the amount of EDI traffic:

EDI service bureau

Internal EDI


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CASE STUDY: How to Survive EDITwo owners of a start-up explain how they were able to meet their largest

customer's EDI demands.

Even before Jody Kozlow Gardner and Cherie Serota knew what it was,they dreaded electronic data interchange (EDI). Belly Basics, their New YorkCity maternity-clothing start-up, counted Federated Department storesamong its largest customers, and last winter the scuttlebutt was thatFederated was mandating EDI soon. "We had just started shipping productand weren't ready to change our operations," Serota says. "It was happeningso fast." In February Federated told suppliers to be EDI-ready by August.

Ignoring EDI and dropping the customer wasn't an option for the $1.5-million company, which owes 25% of its sales to Federated stores. "Whateverit took, we had to do it," says Serota. EDI requires suppliers to receivecomputerized purchase orders from the retailer and return invoices in theretailer's chosen electronic format. Belly Basics' old modemless PC wasn't upto the task. So Serota and Gardner sought the most cost-effective solution.


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First the partners reread Federated's letter. Their panicsubsided a bit. They realized that being small gave them anadvantage. Their line was limited to about 20 items, sochanges such as computerizing inventory items wouldn'ttake much time. And since the company had been puttingUPC bar codes on its products from the start, it had alreadymet one EDI mandate.

The biggest challenge was the electronic order processing.The partners had two options: process the orders in-houseby purchasing a $10,000 software package and betterhardware, or hire a third-party service firm. Outsourcing

won. "If 100% of our business were with Federated stores,

we might bring EDI in-house," Gardner says. "But for twopurchase orders a month, it's much better to go with aservice."


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Gardner gathered several names from her fulfillment warehouse

and her Bloomingdale's EDI contact. She also talked to othercompanies in the same shoes. "One hadn't even done anything

yet, and that was a relief," she says. "I was panicking, thinking thewhole world was on EDI, and that's not the case."

Prices were comparable at the half dozen service companiesGardner called. She looked for the service that could make theprocess as painless as possible and explain it without jargon, andfinally chose Intercoastal Data, in Carrollton, Ga. At a cost ofabout $40 an order -- about $1,000 a year for Belly Basics --Intercostal processes purchase orders sent directly fromFederated and faxes them to Belly Basics the same day. BellyBasics forwards the orders to its Long Island warehouse, as italways has. When Intercoastal receives an invoice from BellyBasics, the company sends it and a shipping notice back toFederated in the required electronic format.


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In the end Belly Basics met Federated's deadline,which had been extended by several months for allsuppliers. Says Gardner, "The whole thing sounded alot scarier than it is."


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Thank you


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Diff forms of payment system

Digital cashDigital credit cards

Digital checking

Digital accumulating balance payment sysOnline stored value systems