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ELECTRONIC DATA INTERCHANGE

Presented By: Shreya Sood MBA-IB

Electronic Data Interchange: EDI


Definition
It is direct electronic transmission , computer to computer of standard business forms such as purchase orders , advance, shipping notices , invoices and the like between two organisations

Objective

The basic documents for transaction of business will be taken only once by one agency and other agencies will take the information from that agency, electronically, avoiding the need to either physically take the document from one office to another or keying in the data again and again involving the attendant problems of manual labor and errors creeping in at each stage of data entry

Key Elements of EDI


Electronic Transmission

Standard Business Documents

Predefined Format

Business Application

Trading Partner

EDI Applications
Application for trade permits Order placement and invoicing EDI Applications Bidding for export quotas

Bill payment and collection with banks


Submission of claims to insurance companies

Filing of corporate Returns

Benefits of EDI
Reduction of Employee Hours involved in creation and handling of paper documents Reduction in cost of fund transfer Reduction in cost of storage space No mailing cost

Cost Savings

Forwarding of documents through a computer network is faster than mail

Speed

Accuracy

Minimizes the need for rekeying information No mail is lost Communication is easily verifiable

Benefits of EDI
Information is less susceptible to interception and falsification

Security

System Integration

Software can be interfaced with internal systems

Just-in-time Support

Only necessary items are shipped by the vendor and arrive directly at the manufacturing or assembly line

Disadvantages of EDI

Difficult to agree on standard to be used

High Dependence on the participation of trading partners

Costly for smaller companies

How to subscribe to EDI?

Large companies purchase hardware and software

Medium and small companies seek third party service like VAN(Value Added Networking)

Figure: Suppliers, manufacturers, and retailers cooperate in some of the most successful applications of EDI.
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EDI Process
Suppliers proposal sent electronically to purchasing organization Supplier manufactures and packages goods attaching shipping data recorded on a bar code Quantities shipped and prices entered in system and flowed to invoicing program

Electronic contract approved over network

Purchasing organization receives packages, scans bar code and compares data to invoices actual items received

Shipment notice EDI transaction sent

Manufacturer ships order

Invoices transmitted to purchasing organization

Payment approval transferred electronically

Bank transfers funds from purchaser to suppliers account using EFT

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EDI Standards
Automotive Industry Action Group(AIAG)

X.12 de facto umbrella standard in US and Cannada

Electronic Data Interchange for Administration, Commerce and Transport(EDIFACT). The EDIFACT syntax is published as the ISO-9735 standard
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Product Identification(Bar Coding )system

Bar Coding
Efficient The data which Involves Data transferred technology for is to be read on development of transferring data to computer product such as a unique code encoded on a application by its product number in form physical product means of an number is of bar and or a shipment of optical reading encoded using a spaces for each products to a device or Bar Code product for its computer scanner. symbology identification. application

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Benefits
Easy availability of sales information to schedule production and stock levels, and minimise stock-out risks

Helps manufacturers and exporters to be in tune with the overseas markets

Benefits to manufacturers

Accurate and fast assessment of the products acceptance/failure

Effective control tool for internal operations, inventory and warehouse arrangement 14

Benefits
Benefits to Consumers

Helps avoid human errors

Lets them know that they are receiving the right product at right price.
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Status in India
Indian institute of Packaging(IIP) has taken the initiative to introduce the concept in association with FIEO,FICCI,ASSOCHAM,CII,EPCs

IIP has obtained membership of the International Article Numbering Association(EAN) in order to introduce system in the country

EAN, India acting as national numbering association allocates individual organisation code numbers to each organisation .

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Implementation of EDI by DGFT


DGFT(Directorate General of Foreign Trade )
Regulatory and facilitatory body which regulates and facilitates Indias foreign trade through foreign trade policy. Headquarters in Delhi and Zonal Offices at Mumbai, Calcutta and Chennai .

Introduction of Computers

Computerization in DGFT was started way back in 1987. Zonal offices were computerized first and then the system was replicated to other smaller offices.

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Recent EDI initiatives in DGFT


EDI initiatives
Request for obtaining authorizations relating to A web-based Advance License, online system of EPCG License and filling DEPB are to be import/export filed on the DGFT application is also website in place www.dgft.gov.in with a digital signature and payment of license fee with EFT

A single consolidated Aayat Niryaat Form has been devised for different categories of application

All EDI Applications are processed within one working day

Bringing all the community partners dealing with international trade on a EDI enabled platform.

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Recent EDI initiatives in DGFT


DGFT with Trade and Industry Programme has been developed to enable the applicant to file the application for Advance Licenses electronically All processing statuses are also communicated electronically

DGFT with Customs

The Indian Customs EDI System (ICES) now operational in 19 major Customs Stations envisages electronic filing and capturing of declarations regarding goods. Members of the trade, importers, exporters, airlines, shipping lines etc., are required to file their declarations i.e., Bills of Entry, Shipping Bills, Import and Export General Manifests electronically, either from their respective office premises (for those who have established connectivity either through NICNET or any other Value Added Network service provider), or through the Service Centres established for this purpose

DGFT with Banks

Exchange Following Documents License details Bank Realisation TR Challan Import-Exporter Profile

DGFT with EPCs

Following Documents are exchanged RCMC details Defaulter List

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EDI in customs
Customs to Port Trusts/Airport Authority Customs to Customs Customs to EPCs Customs to RBI/Banks Customs to Importers/Exporters Customs to Custom House Agents Customs to Shipping Lines/Airlines

EDI in customs case

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ICENET & ICES


ICENET(Indian Customs and Excise Network)
Proposed to be set up between EC/EDI gateway and custom nodes. The network would cater to all traffic between gateway and nodes , which would primarily be related to transactions, as well as inter node data.

ICES Version 2

Biggest project involving the total redesign of the Indian Customs EDI system. The work involves the entire lifecycle of the software design and development.

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Future Scenario
It should be possible to create a few or even a single message/document for the entire process

of transaction in the course of foreign trade. Once VSAT connectivity is established with all Customs / Excise formations in India, all modvat verifications, end use certificate, rewarehousing certificate for transfer bonds, TRA's could be made immediately. Above all there would be uniformity in assessment decision all over India.
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Future Scenario
Once Evidence act and other laws of the land recognise EDI

transactions and provide for the same by fast settlement of disputes, it should be possible to do away with requirements for paper documentation, i.e., there would be no necessity to submit invoices, packing list, B/L etc in paper. Records need only be kept at the offices of Importers / Exporters / CHA's for a minimum period, for verification by concerned authorities, if required. examination of cargo in a routine manner, the facility of Green Channel would apply to almost 80% of cases of regular Importers with a clean tract record.

Since EDI is based on trust, there would be no need for

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Thank you.......

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