Introduction To EDI - What is EDI? - EDI History - EDI Benefits - EDI Status - EDI System Approach - Migration to Open EDI Copyright@1999. Jerry Gao, Ph.D

- What is EDI? EDI - the inter-organization exchange of well-defined business transactions in standardized electronic form directly between computer applications. Style: Business-To-Business EDI - provides a collection of standard message formats to exchange data between organizations’ computers via any electronic service. EDI covers: - traditional business facets: inquires, planning, purchasing, acknowledgments, pricing, order status, scheduling, test results, shipping and receiving, invoices, payments, and financial and business reporting. Additional standards: interchange of data relating to security, administrative data, trading partner information, specifications, contracts, distribution.. Copyright@1999. Jerry Gao, Ph.D

- What is EDI? EDI’s goals: - Enable easy and inexpensive communication of structured information throughout the corporate community. - Reduce the amount of data capture and transcription. Applications: - EDI has been used in a number of specific industry groups: - automotive, retail, chemical, electronics, - metals, electronics, electrical, petroleum, - paper and office product sections. - The overall penetration of EDI has been relatively limited. < 1% of potential business in the U.S.A in 1993. Copyright@1999. Jerry Gao, Ph.D

- What is EDI? The key aspects of EDI are as follows: -The utilization of an electronic transmission medium (normally a VAN) rather than the transfer of physical storage media such as paper, magnetic tapes, and disks. - Use of structured, formatted messages based upon agreed standards. - Relatively fast delivery of electronic documents from sender to receiver. (generally implying receipt within hours or minutes) - Direct communication between applications (rather than just between systems) Copyright@1999. Jerry Gao, Ph.D

EDI Process Architecture Internal files Internal files Purchasing application Purchasing application Application file Application file EDI System C o m u n i c a t C o m u n i c a t EDI System Application link Application link Fixed-length file Fixed-length file EDI standard file Translator Translator Copyright@1999. Jerry Gao, Ph.D

EDI VAN Transaction TO/FROM all trading partners & VAN control reports Mailbox Transaction files for all trading partners PARTNER 1 Trading Company Mailbox TRADING COMPANY Protocol Partner 2 Mailbox PARTNER 2 Transaction files FROM all trading partners & VAN control reports Partner 3 Mailbox PARTNER 3 Copyright@1999. Jerry Gao, Ph.D

- EDI’s Benefits: - Automating existing business procedures in - inventory management, transport and distribution - administration, and cash management - Cost saving in - document preparation, postage, and handling of mainstream transactions - reduced errors and exceptions handling - dispatch of applications for approval by a regulatory authority or other reporting function - Faster handling of transactions results in increased cash flow. - Improve customer services - Enhance the business process and operations Copyright@1999. Jerry Gao, Ph.D

- EDI History: - Electronic transmission started during 1960s. - Initially in the road and rail transport industries. - In 1968, the United States Transportation Data Coordinating Committee (TDCC) was formed to coordinate the development of translation rules among existing four sets of industry-specific standards. - Later, the X12 standards of the American National Standards Institute (ANSI) gradually extended and replaced those created by the TDCC. - At the same time, the U.K. Department of Customer s and Excise was developing stands for documents used in international trade. These extended by the United Nations Economic Commission for Europe (UNECE) as GTDI (General-purpose Trade Data Interchange) - A United Nations Joint European and North American working party (UN-JEDI) addressed the harmonization between the two sets of standardized documents. They developed EDI for administration, Commerce, and Transport (EIFACT) document translation standards. - Today, EDI messages are coded in a standard data format based on X12 and EDIFACT specifications. Copyright@1999. Jerry Gao, Ph.D

- EDI’s Status: - EDI technology have matured. - EDI has been growing in the past, although the penetration is still low. - In spite of its moderate success, EDI has failed to gain total acceptance and become ubiquitous in industry. - Although EDI technology works well, until now this technology has been relatively expansive to implement. Year Companies using EDI Penetration (against 5 million potential)(%) 1987 1,000 0.02 1989 5,500 0.11 1990 12,000 0.24 1991 21,000 0.42 1993 58,500 1.16 1995 80,000 1.60 1996 100,000 2.00 Copyright@1999. Jerry Gao, Ph.D

- EDI Roll-out Cost: - EDI Roll-out cost facts: - Reaching a legal agreement between the parties regarding responsibilities and dispute settlement. (This may involve expensive lawyers) - Building and installing the EDI system - Modifying and interfacing with the existing computer system - Obtaining network services - Testing and installation cost - Reengineering internal processes with the goal of taking full advantages of the technology. - Training cost Copyright@1999. Jerry Gao, Ph.D

- EDI System Approach: There are several ways to set up EDI. - A dedicated PC link to the EDI network. - A group of computers via modems linking to the EDI network - A dedicated server link to the EDI network Communication link could be: - dial-up phone line (such as ISDN line or switched digital services) - a dedicated link to the network’s local hub point. Required software: - Application software - Message translator - Routing manager - Communication handler Copyright@1999. Jerry Gao, Ph.D

- Migration to Open EDI: The Internet and the transition to Open EDI will change the economics of EDI by reducing setup and rollout costs. Migration groups: - A nonuser becoming a private network/VAN user. - A current EDI user who wishes to make a transition to Open EDI. - A non-EDI user who can make a direct transition to Open EDI. - EDI transactions across the Internet in two ways: Email and FTP The benefits: - Reduction of the cost of transferring EDI messages - Increase the performance - Supporting E-Commerce - Increase the interoperability of networks increasing the usability of EDI. The problems and challenges: - Security issues - Many companies using EDI based on VANs. Not all VANs have connections to Internet. Copyright@1999. Jerry Gao, Ph.D