Electronic Data Interchange (EDI)

Defination 

Electronic Data Interchange (EDI) may be most easily understood as the replacement of paper-based purchase orders with electronic equivalents. It is actually much broader in its application than the procurement process, and its impacts are far greater than mere automation. EDI offers the prospect of easy and cheap communication of structured information throughout the corporate community, and is capable of facilitating much closer integration among hitherto remote organisations. 

A more careful defination of EDI is 'the exchange of documents in standardised electronic form, between organisations, in an automated manner, directly from a computer application in one organisation to an application in another'. 

Architecture for EDI 

EDI can be compared and contrasted with electronic mail (email). Email enables free-format, textual messages to be electronically transmitted from one person to another. EDI, on the other hand, supports structured business messages (those which are expressed in hard-copy, pre-printed forms or business documents), and transmits them electronically between computer applications, rather than between people. 

The essential elements of EDI are: 

- the use of an electronic transmission medium (originally a value-added network, but increasingly the open, public internet) rather than the despatch of physical storage media such as magnetic tapes and disks; 

- the use of structured, formatted messages based on agreed standards (such that messages can be translated, interpreted and checked for compliance with an explicit set of rules); 

- relatively fast delivery of electronic documents from sender to receiver (generally implying receipt within hours, or even minutes); and 

- direct communication between applications (rather than merely between computers). 

An Overview of EDI Standards 

EDI STANDARDS 

Electronic Data Interchange is intended to handle all aspects of business transactions such as ordering, acknowledgements, pricing, status, scheduling, shipping, receiving, invoices, payments, and financial reporting. One of the principal aims of EDI has been to develop electronic surrogates for the myriad of paper forms used in commercial transactions such as purchase orders, bills of lading, and invoices. Since the early 1970's, efforts have been underway to develop standardized data formats for business transactions. 

This chapter will describe the two main EDI standards that are currently used in North America and Europe; the ASC X12 group of standards supported by the American National Standards Institute (ANSI) and the EDIFACT standards supported by the United Nations Economic Commission for Europe (UN/ECE). 

The authors acknowledge that this chapter includes a great deal of terminology and reaches a level of detail that may not be of interest to all readers. It is included as a primer for those interested in learning more about the specifies of EDI standards and their components. 

To be cont........