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Electronic Data Interchange (EDI) PowerPoint PPT Presentation

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Electronic Data Interchange (EDI). Rebecca Fouts Laura Frye Laura Gray Matt Muller Ariana Pelayo. Introduction to EDI…. What is EDI?

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Electronic Data Interchange (EDI)

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Electronic Data Interchange(EDI)

Rebecca Fouts

Laura Frye

Laura Gray

Matt Muller

Ariana Pelayo

Introduction to EDI…

  • What is EDI?

    • Electronic Data Interchange is the computer-to-computer exchange of business data and documents between companies using standard formats recognized both nationally and internationally.

    • The information used in EDI is organized according to a specified format set by both companies participating in the data exchange.


History of EDI

  • The general idea behind EDI was originated by a group of railroad companies in the mid-1960’s, in the United States.

  • Much of the early work on EDI was driven by the industry sectors for:

    • transportation

    • pharmaceuticals

    • groceries

    • automobiles

    • banking


History of EDI

  • It was not until the 1970’s, when work began for national EDI standards.

  • Both client and vendors input their requirements to create a set of standard data formats that

    • were hardware independent;

    • were unambiguous and could be used by all trading partners;

    • reduced labor-intensive tasks such as data-entry;

    • allowed the sender of data to control the exchange including receipt confirmation of by the other party


Advantages of EDI

  • Lower operating costs

    • Saves time and money

  • Less Errors = More Accuracy

    • No data entry, so less human error

  • Increased Productivity

    • More efficient personnel and faster throughput

  • Faster trading cycle

    • Streamlined processes for improved trading relationships



  • High Dependence on the participation of trading partners

  • Costly for smaller companies

  • Difficult to agree on standard to be used


Retailer A

Wholesaler A

Retailer B

Wholesaler B

Retailer C

Wholesaler C

Wholesaler D

Retailer D

Original Model

Retailer A

Wholesaler A

Retailer B

Wholesaler B

Retailer C

Wholesaler C

Wholesaler D

Retailer D

Value-Added Network (VAN)

  • communications networks supplied and managed by third-party companies that facilitate electronic data interchange, Web services and transaction delivery by providing extra networking services

VAN Model

Retailer A

Wholesaler A

Retailer B

Wholesaler B

Value-added Network

Retailer C

Wholesaler C

Retailer D

Wholesaler D

Web Services

  • Applications that use a universal language to send data and instructions to one another, with no translation required

  • Uses the Internet, so most of the connection problems are eliminated

  • http://www.computerworld.com/softwaretopics/software/appdev/story/0,10801,64099,00.html



  • XML


Example of XML

<?xml version=”1.0” standalone=”yes”?>



<Customer><Name>Company Name</Name>

<Address>Address, City, State, Zip</Address>

<Customer Number>101</Customer Number></Customer>


<Item><Product Number> 25</Product Number>


<Item><Product Number> 30</Product Number>






Direct Routing

Retailer A

Wholesaler A

Retailer B

Wholesaler B

Retailer C

Wholesaler C

Wholesaler D

Retailer D

Who Needs EDI or a VAN?

Companies still need…

  • Assistance with formatting problems

  • Authentication of customers

    EDI Standards…

ANSI X12 Standard

  • Accredited Standards Committee (ASC) X12 was created in 1979 by the American National Standards Institute.

  • It is a not-for-profit membership.

    • Members meet three times each year to develop, maintain and build on the EDI standards.

  • Its purpose:

    • To standardize the EDI formatting and exchanges between companies in order to make the transfers less time consuming, due to differences in formatting and information presentation.


Example of ASC X12

Note: Linefeeds and "(Continued)" notes inserted for clarity

ISA*00* *00* *01*123454321 *01(Continued) *012341234 *031016*2359*U*00401*987600111*0*P*: \GS*RA*123454321*012341234*031016*2359*987600111*X*004010 \ST*820*987600111 \BPR*C*77.77*C*ACH*CTX*01*234056789*DA*0099109999*(Continued) *123454321*01*045678099*DA*1008973899*031016 \TRN*1*0310162359 \REF*AA*EDI6 \N1*PR*WHIZCO OF AMERICA INC \N3*55 MEGAPLEASANT ROAD*SUITE 999 \N4*SUPERVILLE*NY*10954 \N1*PE*YOWZACO \ENT*1 \RMR*AP*1111111111111111*PO*11.11 \RMR*AP*2222222222222222*PO*22.22 \RMR*AP*4444444444444444*PO*44.44 \DTM*055*031016 \SE*000000014*987600111 \GE*1*987600111 \IEA*1*987600111\


ASC X12 Standard

  • These standards have been updated 5 times since their creation in 1979,

    • They are updated to include new facets in the business world, or update any information that has become obsolete.

  • As the standards evolved, subcommittees were added to ASC X12.

    • In 1986 X12F was added for the Financial Industry

    • In 1989 X12M was added for the Warehousing sets

    • In 1991 X12N was formed for the B2B Insurance and Healthcare needs.



  • ASC X12 is looking to integrate with XML.

    • 1999 the first summit was held to draft policies and procedures to create XML in ASC

    • 2002 the second summit was held to further develop ASC/XML bonds.


  • Currently there are more than 300 X12 transaction sets in XML format for B2B transactions.

    • They are used in the insurance, franchises, automotive, finance, communication, and merchandising industries.


UCS History and Background

  • UCS = Uniform Commercial Standard

  • Subset of ANSI ASC X12

  • Foundation for creation from the Transportation industry

  • Grocery and Retail-oriented Industry – 1976

  • Sponsorship and Funding

    • Manufacturers

    • Retailers

    • Wholesalers

    • Brokers


UCS Development (3 phases)

  • 1st – Feasibility Study (Spring 1980)

  • 2nd – Development of message and communication standards (August 1980)

  • 3rd – Validity test of message and communication standards

  • By late 1982, UCS standards released for general use by industry members


UCS Implementation Guidelines

  • Data Administration

  • Ordering

  • Logistics

  • Financial

  • Business Support


UCS Communication Standard

  • Design

  • Objective

    • Provide for the communication of EDI data

    • Identify alternative communication methods

    • Specify the communication standard for industry use

    • Provide operational guidelines for using the standard


UCS Internet Standards

  • Design

  • E-commerce Transport Communication Guidelines


UCS Example (Kroger, Co.)

  • Kroger Co. uses EDI for:

    • Invoice processing

    • Remittance advice

    • Purchase order processing

    • Vendor replenishment and managed inventory

    • Advanced ship notice

    • Product transfer and resale report

    • Documenting price changes

    • Promotional announcement processing

    • Item maintenance


Item Maintenance (Kroger, Co.)

  • UCS 888 transaction

    • Receive detail finished good product information for new products or changes in the existing product specifications from suppliers

  • Benefits

    • Increased accuracy

    • Improved timeliness

    • Reduced operating expenses



  • Electronic Data Interchange for Administration, Commerce, and Transport is the international set of EDI standards

  • Became a UN standard in 1987

  • Maintenance and further development is the responsibility of the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT)



  • Includes syntax rules and implementation guidelines, message design guidelines, data elements, code sets, and other definitions

  • Used for business-to-business (B2B) communication rather than business-to-consumer (B2C)

  • Allows multi-country and multi-industry exchange

  • Europe adopted EDIFACT early and has a large installed base indicating its continued use

Statistical Journal of the UN Economic Commission for Europe, 2002

Example of EDIFACT

UNB+IATB:1+1APPC+LHPPC+940101:0950+1’ UNH+1+PAORES:93:1:IA’ MSG+1:45’ IFT+3+?*XYZCOMPANY AVAILABILITY?*’ ERC+A7V:1:AMD’ IFT+3+NO MORE FLIGHTS’ ODI’ TVL+240493:1000::1220+FRA+JFK+DL+400+C’ PDI++C:3+Y::3+F::1’ APD+74C:0:::6++++++1A’ TVL+240493:1740::2030+JFK+MIA+DL+081+C' PDI++C:4’ APD+EM2:0:1630::6+++++++DA’ UNT+13+1’ UNZ+1+1’


Things you may want to remember . . . (for the test)

  • EDI – Electronic Data Interchange

  • VAN – Value-Added Network

  • ASC X12 is moving towards integration with XML formatting

  • EDIFACT – international set of EDI standards

  • In the near future EDI will be vital for business domestically and abroad

Sources of Information

  • http://www.x12.org

  • http://www.edi-guide.com

  • http://www.gotedi.com/

  • http://www.phharval.com/edi/whatisedi/edibasics.html

  • http://www.computerworld.com

  • http://aspalliance.com/487

  • http://cleo.com/university/tech-terms/EDI_X12.asp

  • http://www.uc-council.org/ean_ucc_system/


  • http://edi.kroger.com/edi/homepage_edi.htm

  • Statistical Journal of the UN Economic Commission for Europe, 2002

  • Professor Byron Marshall, Ph.D.

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