1. Electronic Data Interchange Systems

2. Contents Electronic Data Interchange Systems EDI Standards
Traditional versus Internet EDI
Process of Electronic Data Exchange
Advantages of EDI
Disadvantages of EDI

3. Electronic Data Interchange Systems
Chapter
Electronic Data Interchange Systems
An Electronic Data Interchange (EDI) system provides for electronic communication of data between businesses.
Types of data sent include
Purchase order data
Shipping data
Invoice data
Product description data
Price list data
Insurance data
© 2001 Business & Information Systems 2/e

4. Electronic Data Interchange
Figure : Suppliers, manufacturers, and retailers cooperate in some of the most successful applications of EDI.
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5. EDI Standards
EDI standards are formats for EDI documents that specify what information goes where within an EDI document. These bodies include American National Standards Institute (ANSI X12 standards) and International bodies.
There are two types of EDI standards:
Proprietary standard - EDI standard developed for a specific company or industry. This is also called a non-public or private standard.
Public standard - EDI standard developed for use across one or more industries
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6. Traditional versus Internet EDI
Chapter
Traditional versus Internet EDI
An EDI system, like all IOSs, requires a data communications link between businesses.
Internet EDI systems require special software to send encrypted standardized data.
EDI data is generally input directly into the system upon receipt.
© 2001 Business & Information Systems 2/e

7. PAPER DOCUMENT INTERCHANGEPO
Data Entry
Computer
Computer
Post Office
Old way of doing business involves paper document interchange
Problems with this process:
Time to process a paper document
Time to send paper document through mail
Mailing costs
Time to re-enter data several times
Increased opportunity for errors due to re-entry of data
Time to file and manage document storage
Space required for document storage
There are many disadvantages (and some advantages) to the traditional paper document interchange process.
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Purchaser
Invoice

8. ELECTRONIC DATA INTERCHANGEPO
Data Entry
Computer
Computer
VAN
Electronic interchange between the computer and an electronic post office eliminates these problems
Information is exchanged via electronic post office or VAN
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_______________________________________________________________
Purchaser
Invoice
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9. Process of Electronic Data Exchange
How does EDI work?
Supplier’s proposal sent electronically to purchasing organization.
Electronic contract approved over network.
Supplier manufactures and packages goods, attaching shipping data recorded on a bar code.
Quantities shipped and prices entered in system and flowed to invoicing program; invoices transmitted to purchasing organization

10. Electronic Data Interchange

11. Process of Electronic Data Exchange
Manufacturer ships order.
Shipment notice EDI transaction sent (not shown)
Purchasing organization receives packages, scans bar code, and compares data to invoices actual items received.
Payment approval transferred electronically.
Bank transfers funds from purchaser to supplier’s account using electronic fund transfer (EFT).
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12. Advantages of EDI Worldwide connectivity
Emergence of standards and guidelines
Greater reliability of information technology
Globalization of organizations
Need for timely, reliable data exchange in response to rapidly changing markets
Lower operating costs
-Saves time and money
Less Errors = More Accuracy
-No data entry, so less human error

13. Increased Productivity More efficient personnel and faster throughput
Faster trading cycle
Streamlined processes for improved trading relationships
Lowering Operating Cost - EDI replaces paper transactions with electronic transmissions, saving time and reduced cost of business transaction and enabling the automatic processing of documents. Reduced Error and Increases Business Information Accuracy - With the implementation of EDI, there is no need for re-entering data, thus, reducing the risk for human error. Each re-entry of data is a potential source of error. Increase Productivity - Making personnel more efficient and it improves business capabilities by speeding up throughput.  
Faster Trading Cycle - EDI allows faster and streamlining trading cycle between organizations  leading to improved relationships between trading partners.
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14. Disadvantages of EDI Organizational participation
Low speed
Poor security
Organizational participation
Technical problems must be solved
Can be expensive for small businesses to implement.
There are various standard document formats for EDI that can cause problems with cross compatibility.
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15. THANKS
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