ELECTRONIC DATA INTERCHANGE EDI

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ELECTRONIC DATA INTERCHANGE (EDI)
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OBJECTIVES (EDI)

• Define Electronic Data Interchange
• Give characteristics of EDI
• Discuss benefits of EDI, as well as barriers to
  its implementation
• Contrast common (ANSI) EDI with Internet EDI

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SUMMARY Electronic Data Interchange (EDI)

• Strategic Impact of EDI
• Definition of EDI
• Example of EDI
• Benefits of EDI
• Direct and Process
• Barriers to EDI Adoption
• EDI Implementation Model

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Strategic Impact of EDI

• Business processes can become more efficient
• Customer-supplier relationships may change
• more trust and collaboration
• Market structure changes

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Definition of EDI

• The direct computer-to-computer exchange of
  standard business transactions.
• Focus on trade data interchange
• Often use VANs (Value-added networks)
• Use of standards

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EDI Standards

• Companies speak precisely the same language
• Same codes in same places
• Proprietary codes --gt to standards (X.12,
  EDIFACT,X.400)
• Different computers can communicate with one
  another

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EDI Example - Before
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EDI Example - Before
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EDI Example - After
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EDI Example - After
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Types of EDI Benefits

• Direct
• Process
• require reengineering
• can only be realized with all trading partners
  are on EDI
• can revolutionize the way business is done

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Direct Benefits of EDI

• Eliminated/reduced paper work
• Greater accuracy
• Shorter lead times
• Less inventory costs
• More responsiveness to customer
• Reduced postage
• Easier product comparison

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Process Benefits of EDI

• No redundant clerical tasks
• Fewer steps to process business documents
• No redundant information exchanges
• Reengineered operations
• Promotes true partnerships

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Examples of EDI Benefits

• AIAG - Automakers save 200 per car
• A large computer manufacturer reduced purchase
  order cycle from 7 to 2 days
• A supermarket chain eliminated 600 invoice
  errors/day (6,000/day savings)
• The US Treasury plans to save 50 Million per
  year in postage
• Dofasco saves 70,000 annually sending 400 ship
  notices and chemistry reports over a secure
  extranet.

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Barriers to Adoption

• Trading partners not knowing benefits
• Hardware costs
• Interfacing translator, software costs
• Need for software modifications
• Network (VAN) service charges
• Costs and effort for trading partner conversion

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MAJOR EDI COSTS
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Trading Partner Concerns in EDI Implementation
Benefits
Costs
EDI
Trust
Dependency
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New EDI

• Goal is to produce standardization at the
  document processing level in the context of
  business work flow rather than at the document
  interchange level
• Requires bridge between business and programming
  languages
• Also focus on interactive query response

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Comparison of EDI Standards

• INTERNET STANDARDS
• SSL (Secure Sockets Layer)
• SET (Secure Electroic Transactions) - protocol
  proposed by Visa/MC for Net
• No transaction standards

• ANSI EDI STANDARDS
• Security provided by private networks
• EFT (Electronic Funds Transmission) - standard
  for wire payments between client and vendor
• Transactions sets (810-invoices850, 855- POs)

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Projected EDI Revenue
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Current Internet EDI Usage

• Much EDI traffic carried over private networks
• scalability
• reliability
• processing power
• in 1996 EDI Group study
• 85 of respondents using some form of EDI
• only 3-4 were using Internet EDI

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Changes on the Horizon

• S/MIME protocol which enables e-mail applications
  to verify transmission and receipt of EDI
  messages
• Products to map Web EDI transactions sent in
  multiple formats to legacy EDI applications
• New (but potentially competing) technologies
• XML
• OBI

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Products to Smooth EDI Wrinkles

• GEISs TradeWeb - an entry-level forms-based
  service with which subscribers can send and
  receive four basic EDI documents over the
  Internet using a standard Web browser for flat
  fee (50/mo)
• purchase order (PO), PO acknowledgement
• invoice, functional acknowledgement
• GEISs Trading Process Network for posting
  EDI-based forms on the Web

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Products to Smooth EDI Wrinkles (Light EDI)

• Other Vans with Internet Browser Interfaces
• http//www.simplix.com
• Simplex - 200 registration fee and 75/mo
• http//www.bid-search.com/cedis
• Creative EDI Solutions - 50 registration fee and
  service charge (min. 15 with 4 transactions)