(EDI) is a system which allows document information to be communicated

between businesses, government’s structures and other entities. It is a set of

standards which creates a cohesive system within which all parties are able
to electronically exchange data information within a set of protocols.

Although it can be considered that EDI consists of only the actual conveyance
of the document, it is also seen as the implementation of the operating
systems whereby EDI can be put into practice. EDI is the data format of most
electronic commerce transitions in the world. There are other competing
conveyance portals such as XML services, Internet and World Wide Web;
however, EDI remains the dominant data format.

The EDI standards describe structures that represent documents such as an

invoice or shipping order for a company. EDI sets up a system whereby
businesses and other entities with non compatible operating systems are
able to communicate on the same “page”, so to speak. EDI provides
applications whereby a more efficient and environmentally friendly network is
created between communication partners. It allows a homogenous viewing of
all documents put through the system.

However, its potential is not just in creating automated system networks - as

in for automatic re-ordering. It enables companies to exchange information at
a speedier rate, and ensure greater security of delivery. Moreover, it creates
a greater ability for businesses to become more efficient and streamlined.

As EDI is a non-internet based information exchange system, it was assumed

that it would disappear when the Internet became more entrenched in
society and business. However, EDI has survived, and is used by many
industries. EDI establishes a firm connection between businesses that does
not necessarily rely on Internet options. However, it can be used over the
open Internet, as is increasingly occurring. Electronic transmission began in
the 1960s within the transport industries. This change also required a parallel
standardization of documentation. A committee was formed to coordinate the
development of translation rules among four existing sets of industry-specific
standards.

At about the same time, the United Kingdom was also developing its own
standards for documents called Tradacoms. These were later extended by
the United Nations Economic Commission for Europe, and were eventually
accepted by about 2000 export organizations. Problems arose when these
two differing organizations of information attempted to exchange information
during trade. These information sets were largely incompatible, and required
a working party to begin to create a range of documents that were able to be
internationally understood and transmittable. Currently, EDI is used by
thousands of companies throughout the world, including companies in USA,
UK, Australia, New Zealand and Singapore. It is because of the advantages of
reduced human interference and increased speed of processing that the EDI
system is favored by many corporations.

Adjuncts

EDI creates a system whereby companies, governments, and entities that

work on different computer systems to exchange information efficiently. EDI
is a standardized format of relevant data which can be transmitted from one
computer system to another with minimal human intervention. It is widely
used and industry to transmit what would have formerly been sent as a
document, through the post. By utilizing EDI, the communication partners are
able to send a range of documents electronically, which provides and
increased efficiency rate as well as reduced paper expenditure. There are
currently hundreds of “documents” that can be exchanged electronically
between multiple trading partners.

The Internet has allowed for an increased flow of these exchanges, rather
than those allowed through closed computer systems. EDI is a popular and
efficient way to send and receive documents that would otherwise be
spending wasted days on the road in the back of a delivery van. However,
there is Value Added Network (VAN) used in this situation, and it is similar to
a post office. It is a middle man ‘warehouse’ where EDI documents can be
storage until the receiver is ready for them. This ensures that important
documents do not bounce back to the sender, or get lost in the tray.

Although VAN is used by many companies, and in particular the healthcare

industry, many EDI’s are being sent over the internet. However, as VAN’s
provide a myriad of other services such as retransmission of the document,
provision of third party audit information, and acting as a gateway for
different transmission methods, handling telecommunications support etc.,
they are quite popular within vicarious industries. Increasingly, EDI
documents are being embedded into other transmission vehicles such as
XML, which is being seen as one way to reduce costs. Although EDI originated
in its current form in the United States, its’ origins can be seen throughout
international co-operative operations which require standardized manifests
and instructions.

EDI Elements

Variables

EDI sounds similar to electronic mail (email), but is actually quite different.
While email allow for free unstructured test messages to be sent from one
computer to another (or multiple) computers, EDI supports structured
business messages to be transmitted between partners. Previously these
would have been hard copy documents or printed business documents. So
rather than having documents pass from person to person, they go from
computer to computer. Essentially, EDI is made of four elements. Firstly, EDI
are based on the use of an electronic transmission medium, such as a VAN,
but now increasingly on the open Internet. This is opposed to the physical
storage mediums of magnetic tapes and computer disks.

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Secondly, EDI’s use structured formatted messages that are based on agreed
standards - in this way the messages can be read by any system that
understands the rules they are governed by. However, this is not always as
simple as it seems, as there are also the provision of EDI translation software
packages. These are required to set up an interface between the company
computer and the EDI sent/received document. EDI provides a relatively fast
delivery of electronic documents from sender to receiver. And lastly, EDI
provides direct communication between applications, rather than between
computers. EDI requires some degree of technology infrastructure.

This includes data management and networking capabilities, data processing,

the efficient capture of data into electronic form, the processing and
retention of data, controlled access to it, and efficient and reliable data
transmission between remote sites. Although it is possible for communication
partners who use EDI to be directly linked to one another, it is most likely
preferable to use a third party service provider. The EDI system creates a
protocol by which businesses and governments alike are able to swiftly
exchange information with a unified code system to recreate documents that
are sent electronically.

Overview

EDI provides a safe, easy and paper free exchange of information between
businesses, companies and governments using protocols that allow different
systems to understand each other. EDI opens up communication between
applications, thereby eliminating the human element, which can be not only
prone to error, but also time consuming. So rather that putting documents
into an envelope, finding a stamp, addressing the envelope and sending it
through the post, what EDI does is eliminate this process and replace it
electronically. However, EDI is only considered to be the standardized format
of the transmitted message. EDI itself is a highly regulated protocol which
allows the message to be sent between entities that may not work on the
same system.

The EDI consists of many symbols and words that can be read with a
“solution” and thereby be a document that is understood by both entities.
The advantages of EDI have been proposed as being the reduction of
unnecessary re-captures of data, and the automation of existing processes. It
is used world wide by over 30,000 Corporations and Businesses to conduct
business transactions electronically. Not only does it provide increased
efficiency due to limited human interference, but it allows for international
protocols to be recognized, and thereby stream line corporation
communications.

Although the fullest range of business documents have not been devised
which can cater to the international needs, they are in the process of
production. Industries such as inventory management, transport and
distribution, administration and cash management can all benefit through the
use of this system. It directly reduces the amount of data capture and
transcription, which generally reduces the incidence of errors, handling time
and incidence of delays, which are critical to businesses. It is these delays
which can often make or break business ventures. However, with EDI, these
can either be eliminated or heavily reduced.