A report on electronic data interchange edi in business environment

The explosion of interest in e-commerce over the last few years might lead some to believe that there was no e-commerce before the commercialisation of the internet in the second half of the s. In fact, online trading has been around for decades, at least in the business-to-business environment.

A report on electronic data interchange edi in business environment

What is EDI?

Electronic Data Interchange EDI is the electronic interchange of business information using a standardized format; a process which allows one company to send information to another company electronically rather than with paper.

Business entities conducting business electronically are called trading partners. Many business documents can be exchanged using EDI, but the two most common are purchase orders and invoices. At a minimum, EDI replaces the mail preparation and handling associated with traditional business communication.

However, the real power of EDI is that it standardizes the information communicated in business documents, which makes possible a "paperless" exchange.

The traditional invoice illustrates what this can mean. Most companies create invoices using a computer system, print a paper copy of the invoice and mail it to the customer.

Upon receipt, the customer frequently marks up the invoice and enters it into its own computer system. The entire process is nothing more than the transfer of information from the seller's computer to the customer's computer.

EDI makes it possible to minimize or even eliminate the manual steps involved in this transfer. The process improvements that EDI offers are significant and can be dramatic. For example, consider the difference between the traditional paper purchase order and its electronic counterpart: This process normally occurs overnight and can take less than an hour.

Buyer makes a buying decision, creates the purchase order and prints it. Buyer mails the purchase order to the supplier. Supplier receives the purchase order and enters it into the order entry system. Buyer calls supplier to determine if purchase order has been received, or supplier mails buyer an acknowledgment of the order.

A report on electronic data interchange edi in business environment

Buyer makes a buying decision, creates the purchase order but does not print it. EDI software creates an electronic version of the purchase order and transmits it automatically to the supplier. Supplier's order entry system receives the purchase order and updates the system immediately on receipt.

Supplier's order entry system creates an acknowledgment an transmits it back to confirm receipt.A retail entity uses electronic data interchange (EDI) in executing and recording most of its purchase transactions.

The entity's auditor recognized that the documentation of the transactions will be retained for only a short period of time. Electronic data interchange (EDI) is the concept of businesses electronically communicating information that was traditionally communicated on paper, such as purchase orders and invoices.

Technical standards for EDI exist to facilitate parties transacting such instruments without having to make special arrangements. Electronic Data Interchange (EDI) can streamline your business transaction process and eliminate the source of many potential errors. EDI service is available for customers of Alabama Power, Georgia Power, Gulf Power, and Mississippi Power.

The United Nations has developed a set of standards for EDI, known as EDIFACT (Electronic Data Interchange for Administration, Commerce and Transport). The standard is commonly used in Europe, but a different standard tends to be used in the US (an ANSI standard, known as EDI ASC X12).

EDI, or Electronic Data Interchange, is provided for business customers. Electronic Data Interchange (EDI) Messaging Security The various views in the security model reflect a different aspect and definition of security.

UP: What Is Electronic Data Interchange?