EDI Electronic Data Interchange is used by organizations for transactions that occur on a regular basis according to a per-determined format. It involves exchange of electronic business documents, i.e., purchase orders, invoices etc. EDI transactions are carried through special EDI software. This technology was popularly used before the introduction of e-commerce by different trading partners on private electronic networks. Key features of EDI Electronic Data Interchange include:
No paper work
No human intervention
Exchange of information takes place in seconds
EDI documents are formatted using published standards. Two popular EDI standards are - ANSI (American National Standards Institute) X12 standard and EDIFACT (United Nations Standard of Electronic Data Interchange for Administration, Commerce and Transport).
No paper work
No human intervention
Exchange of information takes place in seconds
EDI documents are formatted using published standards. Two popular EDI standards are - ANSI (American National Standards Institute) X12 standard and EDIFACT (United Nations Standard of Electronic Data Interchange for Administration, Commerce and Transport).
EDI Example
Assume E-Pens (a manufacturing company of pens and ballpoints) reviews sales and orders on monthly
basis to make forecast of its sales for the coming month. Sales forecast is compared with the stocks of raw material and other components and a production plan is devised. This monthly plan needs to be flexible so that materials could be ordered at short notice if these are not available in the store. For instance, packaging material should only be ordered for just in time (JIT) delivery, so that E-Pens can cut down on its stock of packaging and reduce the inventory cost. On the other hand, packaging supplier also wants to improve its processing of orders, particularly urgent orders. Before using EDI Electronic Data Interchange technology, the order used to be generated in the following format:
From:
E-Pens
---------
To: ABC & C0.
--------------------
Order Ref:AC8484
Order Date:15.3.2006
Qty Description Product Code
1500 Superior –Red PC-1075-R
1300 Superior – Silver PC-1075-S
-End of Order-
After both E-Pens and its supplier start using EDI system, any amendment of the schedule on the production control system reviews the materials requirements and the order is automatically generated. In case the above paper order is to be generated using EDI Electronic Data Interchange software, the order data is coded and structured into a common and generally accepted format. The order would be written as follows in EDIFACT.
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