I
n this chapter, we discuss the concepts of an efficient EDI implementation. We learn that the basic kits needed for this are the common EDI standards, translation software, trading partners etc. Through EDI standards can vary from application to application, they all have a common structure, made up of a transaction set, consisting of data segment which in a transaction set, consisting of data segment which in a transaction set, consisting of data segment which in turn are made up of data elements. We also note that in a normal EDI, there are four layers through which the data from a business application has to traverse, before it can go to the next application. We also discuss a few issues about the cost of EDI implementation – the fixed costs, the maintenance fees, VAN charges etc. Then we have a brief discussion of Value Added Networks (VAN)s, their pricing structure etc.,EDI implementation starts with an agreement between a company and its trading partner. An efficient EDI system requires that the data be input only once, and the system manages the rest. In other words, the data moves without much intervention to the trading partner’s application, with no additional steps to slow the process. To achieve this, both parties exchange messages based on a structured format-that is, for each type of message a standard format has been agreed on by the exchanging parties. These messages are exchanged by means of electronic transfer between autonomous computer application systems of the involved trading partners.
EDI relies on the use of standards for the structure and interpretation of electronic business transactions. The basic kit necessary for EDI implementation includes the following:
Common EDI standards dictate syntax and standardize on the business language. EDI standards basically specify transaction sets – complete sets of business documents. Translation software sends messages between trading partners, integrates data into and
from existing computer applications, and translates among EDI message standards.
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Chapter 7 - EDI Implementation, Value-Added Networks
Trading partners are a firm’s customers and suppliers with whom business is conducted. Banks facilitate payment and remittance.
EDI Value -Added Network services ( VANs). A VAN is a third-party service provider that manages data communications networks for businesses that exchange electronic data with other businesses.
Proprietary hardware and networking if it is a hub company. Hubs, also called sponsors, are large companies, very active in EDI, that facilitate their business partner’s use of EDI. An important feature of EDI is that software evaluates and processes structured messages. The information system then proceeds to act upon the message. The requested goods are shipped to the buyer, or information is forwarded to other in-house computer applications.
The generation of messages might also be done automatically. In EDI, it is quite common to find a chain of automated actions and reactions because they are easy to implement. Human intervention can be minimized and is often limited to the overall management of the operations.
7.1
STRUCTURE OF EDI TRANSACTIONS
EDI standards are very broad and general because they have to meet the needs of all businesses. EDI messages, however, share a common structure
1. Transaction set is equivalent to a business document, such as a purchase order. Each transaction set is made up of data segments.
2. Data segments are logical groups of data elements that together convey information, such as invoice terms, shipping information, or purchase order line.
3. Data elements are individual fields, such as purchase order number, quantity on order, unit price.
The Concept and theory of EDI has evolved from the transmission of data in “ fixed-length” proprietary formats to the transmission of data in “ variable length” standard formats. Without these standard formats, industry utilization of computer-to-computer communication technology would be encumbered by the use of different formats and data contents.
7.2
EDI SOFTWARE IMPLEMENTATION
EDI software has four layers, as shown in business application, internal format conversion, EDI translator, and EDI envelope for document messaging. These four layers package the information and send it over
the value-added network to the target business, which then reverses the process to obtain the original information.
7.2.1 EDI Business Application Layer
The first step in the EDI process creates a document – in this case, an invoice – in a software application. This software application then sends the document to an EDI translator, which automatically reformats the invoice into the agreed- on EDI standard. If these two pieces of software are from different vendors, it is very important that the document preparation application seamlessly integrate with the EDI translation software.
If both the EDI translator and business application are on the same type of computer, the data will move faster and more easily from one to another. The translator creates and wraps the document in an electronic envelope “ EDI package” that has a mailbox ID for the company’s trading partners. The EDI wrapper software can be a module to the translator, a programming tool to write a different communications protocols, or a separate application.
Private value added network (VAN) or Public Internet
Modem Modem
Company A Company B