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    Chapter 8: Electronic Data Interchange (EDI)

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    Yasir Ayaz
    This document defines electronic data interchange (EDI) and outlines its benefits. EDI allows structured data like orders and invoices to be electronically transferred between trading partners' computer systems, replacing paper-based processes. It provides benefits like shortened ordering times from 1-7 days to near instantaneous, lower costs by reducing paperwork and staff, elimination of errors from manual data entry, accurate invoicing through automatic order matching, and improved cash flow through faster payment settlement. While suitable for high-volume repeat transactions between organizations, some communications may not be appropriate for EDI.

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    Download as PPT, PDF, TXT or read online from Scribd

    Chapter 8: Electronic Data Interchange (EDI)

    Uploaded by

    Yasir Ayaz
    206 views15 pages
    This document defines electronic data interchange (EDI) and outlines its benefits. EDI allows structured data like orders and invoices to be electronically transferred between trading partners' computer systems, replacing paper-based processes. It provides benefits like shortened ordering times from 1-7 days to near instantaneous, lower costs by reducing paperwork and staff, elimination of errors from manual data entry, accurate invoicing through automatic order matching, and improved cash flow through faster payment settlement. While suitable for high-volume repeat transactions between organizations, some communications may not be appropriate for EDI.

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    Electronic Data Interchange

    Original Title

    Electronic Data Interchange

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    This document defines electronic data interchange (EDI) and outlines its benefits. EDI allows structured data like orders and invoices to be electronically transferred between trading partners' computer systems, replacing paper-based processes. It provides benefits like shortened ordering times from 1-7 days to near instantaneous, lower costs by reducing paperwork and staff, elimination of errors from manual data entry, accurate invoicing through automatic order matching, and improved cash flow through faster payment settlement. While suitable for high-volume repeat transactions between organizations, some communications may not be appropriate for EDI.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    206 views15 pages

    Chapter 8: Electronic Data Interchange (EDI)

    Uploaded by

    Yasir Ayaz
    This document defines electronic data interchange (EDI) and outlines its benefits. EDI allows structured data like orders and invoices to be electronically transferred between trading partners' computer systems, replacing paper-based processes. It provides benefits like shortened ordering times from 1-7 days to near instantaneous, lower costs by reducing paperwork and staff, elimination of errors from manual data entry, accurate invoicing through automatic order matching, and improved cash flow through faster payment settlement. While suitable for high-volume repeat transactions between organizations, some communications may not be appropriate for EDI.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 15

    Chapter 8: Electronic Data Interchange (EDI)

    1
    EDI trade cycle
    Search
    Pre-Sale
    Negotiate

    Order
    Execution
    Deliver EDI
    Invoice
    Settlement
    Payment

    After Sales After Sale

     Regular, repeat transactions between commercial


    trading partners
     Examples:
     Supermarkets replenishing stocks
     Vehicle assemblers purchasing components

    2
    EDI definition
     Summarised as:

    ‘Paperless Trading’

     Defined as:

    ‘The transfer of structured data,


    by agreed message standards,
    from one computer system to another,
    by electronic means.’
    International Data Exchange Association (IDEA)

    3
    EDI definition
    Structured data

     Standardised Document
     e.g. Order/Invoice

     Codes
     e.g. Product Code/Customer Code
     (preferably using a common standard)

     Values
     e.g. Quantity Ordered

    4
    EDI definition
    Structured data – an order
    ORDER
    ORDER

    From:
    From: Pens
    Pensand
    andThings
    Things
    123
    123 LondonRoad
    London Road
    Kendal
    Kendal
    Cumberland
    Cumberland
    Address Code: 6464326
    Address Code: 6464326
    To: J. Smiths and Sons
    To: J. Smiths and Sons
    Packaging Solutions
    Packaging Solutions
    257
    257Manchester
    ManchesterRoad
    Road
    Blackburn
    Blackburn
    Lancashire
    Lancashire
    Address Code: 1149646
    Address Code: 1149646
    Order Ref: AC6464
    Order Ref: AC6464
    Order Date: 15.03.2000
    Order Date: 15.03.2000
    Qty Description Product Code
    Qty Description Product Code

    1,600 Case: Executive Elite – Red PT-1073-R


    1,600 Case: Executive Elite – Red PT-1073-R
    1,200 Case: Executive Elite – Silver PT-1073-S
    1,200 Case: Executive Elite – Silver PT-1073-S
    end
    endofoforder
    order
      

    5
    EDI definition
    Agreed message standards

     Sectorial standards
    e.g. Odette

     National standards
    e.g. ANSI X12,

     International standards
    i.e. UN / EDIFACT (Electronic Data Interchange For
    Administration, Commerce and Transport)

    6
    EDI definition
    From one computer system to another

     EDI messages are (properly) sent:

     From one computer’s application,


    e.g. the customer’s Purchasing System.

     To a second computer’s application,


    e.g. the supplier's Order Processing System.

     There is no need read or re-key the data into a


    computer system.

    7
    EDI definition
    By electronic means

     Transmission by:

     data communications network

     or possibly physical transfer of:


    • magnetic tape or
    • floppy disc

    8
    Benefits of EDI
    Shortened ordering time
     a posted order …
     
    print  Customer
    envelope 
    post room 
     postal service
     supplier
     post room
    key-into order processing system Supplier
     
    … say 7 days between two large organisations

    an EDI order …
     
    Customer  EDI transmission  Supplier

     
    … one day, one hour, as quick as you like

    9
    Benefits of EDI
    Cutting costs

     Stationery
     Postage
     Staff:
     order entry
     invoice matching
     payment checking

     the principle saving is staff costs


    – staff savings can be very significant

    10
    Benefits of EDI
    Elimination of errors
     no keying errors
     (but no manual check for silly mistakes)

    Fast response
     immediate acknowledgement and status report
     (available but not always implemented)

    11
    Benefits of EDI
    Accurate invoicing
     automatic matching to orders
     elimination of queries and delays

    EDI payments
     rapid settlement
     automatic matching to invoices

    12
    Benefits of EDI
    Reduced stock holding
     Just-in-time for manufacture
     Quick response supply for retail
     Less (or no) cost of stock in hand
     Less (or no) warehousing costs
     Elimination of double handling of goods
     Less damage / deterioration of stock

    Cash flow
     quicker settlement = improved cash flow

    13
    Benefits of EDI
    Business opportunities
     Access to Customers that require EDI

    Customer lock-in
     Switching costs – setting-up an EDI system with a
    new supplier

    14
    Assignment
     List the transaction types that take place between
    trading partners that seem suitable for EDI
    implementation. Suggest some communications
    that would not be suitable for this technology.

    15

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