Electronic Data Interchange INTRODUCTION Processing and managing information is a tedious and time-consuming process.

In a typical business environment, thousands of transactions happen in a day, managing this task is difficult and prone to human errors during data entry and it is also expensive. The solution to the above problem comes in the form of Electronic Data Interchange (EDI). What is EDI? EDI refers to the electronic interchange of data between computer systems. More precisely EDI is defined as The transfer of structured data for processing from computer to computer using agreed formats and protocols. Need of Networking Infrastructure EDI assumes availability of a wide area network to which organization can subscribe (Figure 1). All Organizations willing to join EDI services must subscribe to the common network. In addition, all organizations participating in a particular EDI services group should agree to a message format that they will use, and load appropriate EDI software on their computer systems. This software is responsible for providing translation services, EDI services and network services. When a senders computer system produces a message and passes it to the t ranslation service software, this translates the message into the common agreed structure and passes it to EDI service software. EDI service software executes necessary functions and procedures to send the message, track it in the network, and ensure that it reaches its destination.

Fig. 6.1.1: EDI Business cycle EDI services, in addition, may include procedures to ensure security functions, building and accounting functions and generate necessary logs for auditing purposes. Network access services are responsible for actually controlling the interaction with the network that transports messages from one site to another. The transport network provides a powerful electronic messaging service to support EDI services. Transport network uses a store and forward mechanism and messages are sent to mail boxes that are managed by the network service provider. The organization can send his message at any time independent of the recipients system status, i.e. whether or not it is ready for receiving. The recipient systems periodically check their mail boxes and transfer messages from network mail boxes to their own memory.

Processing of EDI Message Electronic Data Interchange Thus a transfer cycle is completed. The receiving computer applies necessary translator and convents the received message into a format understandable by its application software. The application software is programmed to recognize various messages and take necessary actions such as generating responses to receive messages and updating other databases. Features of EDI Traditionally, data transfer from one company to another is done through the paper documents, which have to be manually forwarded and entered to the destination computer. EDI has helped in the electronic exchange of structured business information, in standard formats, between computers. It has reduced data entry link, eliminates the need for a paper bases system and Improved business cycle times by providing an electronic link between companies. EDI is the electronic transfer of structured business documents in an organization internally among groups of departments or externally with its supplies, customers and subsidiaries. In EDI, the information transferred over a network will not have to be read, retyped or printed but it must have a predefined structure agreed between the two companys which send and receive data. The two companies or groups which exchanged information through EDI are called the Trading partners. The computers, which these trading partners use, need not be from the same manufacturers. Examples of current uses of EDI include information teller machines (ATMs) in banks where EDI is used for transferring and withdrawing funds between different bank accounts, airline reservation systems, stock exchange transactions and car reservation systems. Working of EDI Companies using EDI communicate with their Trading Partners, in one of the two ways: Exchange of data with several trading partners directly. Interaction with multiple companies through a central information clearing-house.

Typical EDI Configuration One to MAny

One to Many

In the latter case, all transactions take place through a third partys computer system, which then sends them to the appropriate receivers computer. This enables the sender to communicate with an unlimited number of trading partners without worrying about proprietary system audit trails, variable transmission speeds, and general computer compatibility. EDI works in the following manner Prior to any computer work, representatives of two companies interested in exchanging data electronically meet to specify the application in the EDI standard which they will important. The two companies exchange date electronically in the standard formats. Each company adds EDI programs to its computer to translate the company data into standard formats for transmission, and for the reverse translation in the data it receives.

The sender transmits the database formatted in EDI standards to the receiver who then translates the formatted message to a computer record to be processed and used internally. All transmission are checked both electronically and functionally and the protocol includes procedures for error detection and correction. Once a company has established standardized communications with another company, it is now in a position to communicate with any other company that is also using the EDI standards. The flow of information in EDI is as follows: Collection of data for its own operational or statistical requirements which is edited be added to its own database. Extraction of Pertinent information by the company from its database, summarized if necessary and constructed into EDI transaction sets, and finally it is transmitted to the company or organization requiring it for valid reasons. The frequency of preparing this information is determined by the operational requirements of each recipient. A communications link for transmission is established according to the standard communications protocol. The Receiver receives the information transmission, checks for its physical characteristics (parity check, character, transmission mode), requests for transmission if an error is detected in the physical characteristics of the transmission. Checking the functional characteristics of the data receiver and an acknowledgement sent to the original sender for receiving the transmission and to identify any errors detected.

To process the information received by the receiver according to its own internal procedures and timing requirement. EDI Components A typical EDI system converts generic EDI messages (in EDIFACT or any other EDI standard) format to RDBMS format and from RDBMS format to EDI format. RDBMS database contains the data to be translated into EDI format and where EDI data is to be converted (and written). EDI configuration programs do these translations. There are three main components of an EDI system: Application Service Translation Service Communication Service

Electronic Cheque A system that transfers money electronically from the buyer's current account to the seller's bank account An e-cheque is a type of electronic transfer that withdraws money directly from your bank account by direct debit. They are just like paper cheque's only they are electronic. Definition Of 'Credit Card' A card issued by a financial company giving the holder an option to borrow funds, usually at point of sale. Credit cards charge interest and are primarily used for short-term financing. Interest usually begins one month after a purchase is made and borrowing limits are pre-set according to the individual's credit rating. Smart Card A smart card is a plastic card about the size of a credit card, with an embedded micro chip that can be loaded with data, used for telephone calling, electronic cash payments, and other applications, and then periodically refreshed for additional use. Digital Signature A digital signature (not to be confused with a digital certificate) is an electronic signature that can be used to authenticate the identity of the sender of a message or the signer of a document, and possibly to ensure that the original content of the message or document that has been sent is unchanged. Digital signatures are easily transportable, cannot be imitated by someone else, and can be automatically time-stamped. The ability to ensure that the original signed message arrived means that the sender cannot easily repudiate it later. Web Page Definition: a web page is a document that's created in html that shows up on the internet when you type in or go to the web page's address. Website A website, also written as web site,[1] web site, or simply site,[2] is a set of related web pages served from a single web domain. A website is hosted on at least one web server, accessible via a network such as

the internet or a private local area network through an internet address known as a uniform resource locator. All publicly accessible websites collectively constitute the world wide web. Hypertext Hypertext is text displayed on a computer display or other electronic device with references (hyperlinks) to other text that the reader can immediately access, usually by a mouse click, key press sequence or by touching the screen. Apart from text, hypertext is sometimes used to describe tables, images and other presentational content forms with hyperlinks. Hypertext is the underlying concept defining the structure of the world wide web.[1] it enables an easy-to-use and flexible connection and sharing of information over the internet. Firewall a firewall is software or hardware-based network security system that controls the incoming and outgoing network traffic by analyzing the data packets and determining whether they should be allowed through or not, based on a rule set. A network's firewall builds a bridge between the internal network or computer it protects, upon securing that the other network is secure and trusted, usually an external (inter)network, such as the internet, that is not assumed to be secure and trusted.

1. THE TRADITIONAL DEFINITION OF EDI One of the more commonly accepted definitions of Electronic Data Interchange, or EDI, has been "the computer-to-computer transfer of information in a structured, pre-determined format." Traditionally, the focus of EDI activity has been on the replacement of pre-defined business forms, such as purchase orders and invoices, with similarly defined electronic forms. HOW EDI WORKS In it's simplest form, EDI is the electronic exchange of information between two business concerns (referred to in the EDI world as trading partners), in a specific predetermined format. The exchange occurs in basic units called messages, or transaction sets, which typically relate to standard business documents, such as Purchase Orders and Customer Invoices. Over time the business community has arrived at series of standardized transaction formats to cover a wide range of business communication needs. Each transaction set has an extensive set of data elements required for that business document, with specified formats and sequences for each data element. The various data elements are built up into segments, or logically related groups of data, such as vendor address (which would be made up of data elements for street, city, state, zip code, and country). All of the related segments for a transaction are then grouped together, and are preceded by a transaction header and followed by a transaction trailer record. If the transaction contains more than one transaction (many purchase orders sent to one vendor) several transaction groups would be preceded by another type of record, referred to as a functional group header, and would be followed by a function group trailer. TRADITIONAL IMPLEMENTATION OF EDI One of the first places that EDI was traditionally implemented was in the purchasing operations of a business. Before the implementation of EDI, a purchasing system would allow buyers to review their material requirements, and then create purchase orders, which would be printed out and mailed. The supplier would receive the purchase order, and manually enter it into their customer shipping system. The material would be shipped, and an invoice would be printed, which would then be mailed back to the supplier. In this simple example, even if the purchased materials were shipped and received on the same day the purchase order was received, the cycle time could be as much as a week, depending on the speed of the mail and the backlog at the supplier's order entry system. With the introduction of EDI, this scenario changed dramatically. Purchasing agents would still review their material requirements and create their purchase orders. But instead of printing them out and mailing them, the purchase orders would be transmitted directly to the suppliers over an electronic network. On the supplier's end, the transaction would be automatically received and posted. This new process could allow the shipment of material on the same day the purchase order was sent. As an added bonus, suppliers could send their shipping documentation electronically to the buyer in the form of a shipment notification, providing the buyer with accurate receiving documents prior to the actual arrival of the material. And the supplier gained an additional advantage as well, since now the invoice could be sent directly to the customer's accounts payable system, speeding payment to the supplier.

TRADITIONAL BENEFITS OF EDI Whether implementation of EDI was in the area of purchase orders, advanced shipment notification, or automatic invoicing, several immediate advantages could be realized by exchanging documents electronically. SPEED o o o o

Information moving between computers moves more rapidly, and with little or no human intervention. Sending an electronic message across the country takes minutes or less. Mailing the same document will usually take a minimum of one day. Courier services can reduce the time (while substantially increasing the cost) but at best can shorten the cycle to hours. o Facsimile transmissions work well for small documents, but for several hundred pages, it's not a feasible solution. ACCURACY Even when alternate means of document transfer are used they suffer from the major drawback of requiring re-entry into the customer order system, admitting the opportunity of keying errors. But information that passes directly between computers without having to be re-entered eliminates the chance of transcription error. There is almost no chance that the receiving computer will invert digits, or add an extra digit.

ECONOMY The cost of sending an electronic document is not a great deal more than regular first class postage. Add to that the reductions in cost afforded by eliminating the re-keying of data, human handling, routing, and delivery. The net result is a substantial reduction in the cost of a transaction.

THE DOWNSIDE OF TRADITIONAL EDI Although these benefits are compelling, and were repeated in boardrooms around the world, actual acceptance and implementation of EDI was far less prevalent than might be expected, because for all the acknowledged benefits, the technological complexity of EDI presented a number of major stumbling blocks. EXPENSE Computers, especially mainframes, and their business application systems were complex and expensive. Primarily serving the peripheral functions of a business, they were not regarded as being fully integrated into all business activities. Traditionally, the mainframe computing environment was viewed as an information repository. EDI required that information technology be extended beyond core functions. So while there were substantial savings to be gained from the use of EDI, the cost of re-designing and deploying software applications to integrate EDI into an existing portfolio of business applications was high enough to offset the anticipated advantages. NETWORKING COMPLEXITY The need for extensive telecommunications capability posed a second major barrier to widespread EDI implementation. Beyond the computer itself, a basic requirement of EDI is a means to transmit and receive information to and from a wide variety of customers or suppliers. This required a heavy investment in computer networks. Unlike the mail, to send electronic documents there must be a specific point-to-point electronic path for the document to take. So companies were either required to develop extensive, and expensive networks, or rely on intermittent point-to-point modem communication. ALTERNATIVES Because of the technological complexity and cost of implementation, cheaper alternatives short-circuited widespread utilization of EDI. To gain some of the advantages of EDI without the high price of computer hardware, software and networks, many innovative alternatives were developed. Overnight courier service, facsimile machines, and the ability to give customers limited access to mainframes through dumb terminals provided comfortable, quick, and reasonably priced alternatives to inviting a major alteration of business environments.

DIFFERENCE BETWEEN TRADITIONAL EDI AND WEB-BASED EDI

Traditional EDI - Old, pass electronic standard

EDI reality - Time tested and successfully works - Straight forward to implement - Cost of tools are getting cheaper e.g. EDIdEv Framework EDI - Can be implemented over the Internet - Less bandwidth - Once understood, quick to implement - Storage requirements are minimal - Information can still be transported on floppy disk - Status quo - Established global user base - Low business risk

Traditionally expensive

- Cryptic

- Established companies (Fortune 500) and governments

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Standards [edit] EDI provides a technical basis for commercial "conversations" between two entities, either internal or external. Note the perception that "EDI" constitutes the entire electronic data interchange paradigm, including the transmission, message flow, document format, and software used to interpret the documents. EDI standards describe the rigorous format of electronic documents. EDI is very useful in supply chains. The EDI standards were designed by the implementers, initially in the Automotive industry, to be independent of communication and software technologies. EDI can be transmitted using any methodology agreed to by the sender and recipient. This includes a variety of technologies, including modem (asynchronous and synchronous), FTP, email, HTTP, AS1, AS2, etc. It is important to differentiate between the EDI documents and the methods for transmitting them. When they compared the synchronous protocol 2400 bit/s modems, CLEO devices, and valueadded networksused to transmit EDI documents to transmitting via the Internet, some people equated the nonInternet technologies with EDI and predicted erroneously that EDI itself would be replaced along with the nonInternet technologies. These non-internet transmission methods are being replaced by Internet protocols such as FTP, telnet, and e-mail, but the EDI documents themselves still remain. As more trading partners use the Internet for transmission, standards have emerged. In 2002, the IETF published RFC 3335, offering a standardized, secure method of transferring EDI data via e-mail. On July 12, 2005, an IETF working group ratified RFC4130 for MIME-based HTTP EDIINT (a.k.a. AS2) transfers, and is preparing a similar RFC for FTP transfers (a.k.a. AS3). While some EDI transmission has moved to these newer protocols, the providers of the value-added networks remain active. EDI documents generally contain the same information that would normally be found in a paper document used for the same organizational function. For example an EDI 940 ship-from-warehouse order is used by a manufacturer to tell a warehouse to ship product to a retailer. It typically has a 'ship-to' address, a 'bill-to' address, and a list of product numbers (usually a UPC) and quantities. Another example is the set of messages between sellers and buyers, such as request for quotation (RFQ), bid in response to RFQ, purchase order, purchase order acknowledgment, shipping notice, receiving advice, invoice, and payment advice. However, EDI is not confined to just business data related to trade but encompasses all fields such as medicine (e.g., patient records and laboratory results), transport (e.g., container and modal information), engineering and construction, etc. In some cases, EDI will be used to create a new business information flow (that was not a paper flow before). This is the case in the Advanced Shipment Notification (856) which was designed to inform the receiver of a shipment, the goods to be received and how the goods are packaged. Some major sets of EDI standards: The UN-recommended UN/EDIFACT is the only international standard and is predominant outside of North America. The US standard ANSI ASC X12 (X12) is predominant in North America. The TRADACOMS standard developed by the ANA (Article Numbering Association now known as GS1) is predominant in the UK retail industry. The ODETTE standard used within the European automotive industry

All of these standards first appeared in the early to mid 1980s. The standards prescribe the formats, character sets, and data elements used in the exchange of business documents and forms. The complete X12 Document List includes all major business documents, including purchase orders (called "ORDERS" in UN/EDIFACT and an "850" in X12) and invoices (called "INVOIC" in UN/EDIFACT and an "810" in X12). The EDI standard prescribes mandatory and optional information for a particular document and gives the rules for the structure of the document. The standards are like building codes. Just as two kitchens can be built "to code" but look completely different, two EDI documents can follow the same standard and contain different sets of information. For example a food company may indicate a product's expiration date while a clothing manufacturer would choose to send color and size information.