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The purpose of this assignment is to research about Electronic data interchange and needs to discuss about development, advantages and disadvantages and future of EDI (electronic data interchange)

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Introduction

1.0 Introduction The purpose of this assignment is to research about Electronic data interchange and needs to discuss about development, advantages and disadvantages and future of EDI (electronic data interchange) Electronic data interchange refers to exchange of business information between computer systems by network such as Internet etc. In modern days increasingly competitive, fast-paced business environment, electronic supply chain management is an area of intense focus, as leading companies everywhere strive to work more efficiently with their suppliers. Although traditional electronic data interchange (EDI) is well established in certain industries, in many sectors it has been extremely difficult to get a high level of supplier compliance, because of the expense and problems associated with EDI implementation (1) As I see today's business environment, I would like to say electronic data interchange is crucial components because business environment requires organisations to participate in the drive towards electronic business. (1) Electronic data interchange is a component, which exchanges structured data, sent in a form that allows for automatic processing with no manual intervention between two computers or two companies (1) The use of translation software means that EDI can take place with no restrictions on the hardware and software and it enables firms to be linked with one another in the most cost effective way (1) Electronic data interchange works by providing a collection of standard message formats and element dictionary in a simple way for businesses to exchange data via any electronic messaging service. (2) EDI: Electronic Data Interchange is the computer-to-computer exchange of business documents in a standardized format. Standard formats ensure that different companies can exchange business data without having to modify their computer systems. For pure EDI, "computer-to-computer" means "original-application-program to processing-application-program". (3) It is a kind of technique to exchange commercially oriented data in a structured electronic format. (4) An example of EDI, Company 1 buys widgets from company 2. In a non-IDE environment, company 1s purchasing system prints a purchase order, which is posted or faxed to company 2. ...read more.

Middle

(16) To allow different trading partners to work together it is necessary to define a consistent format for the data that is to be moved, and allow that format to be used by everyone without regard to the type of business they undertake (whether they are bankers, insurance agents, manufacturers, retailers etc.). (16) The most important development to-date has been the creation of EDIFACT (Electronic Data interchange for Administration, Commerce and Transportation - or Trade). This single standard has emerged as being the only true multi-industry/multi-national standard that is being embraced throughout the world reducing and simplifying paper based trading, advancing the use of information technology throughout the trading cycle and developing and promoting paperless trading or, EDI as it is more commonly known. (16) 9.0 Types of EDI processing EDI processing messages are generally divided into three main categories which are batch, fast batch, and interactive. Each one has differentiated processing by their expected turnaround times, which is the time between a request transaction and its corresponding reply transaction. (17) * Batch processing is measured in days * Fast batch processing in minutes * Interactive processing in seconds (17) Each processing type can also be differentiated based on the number of transactions in the message or file such as a follows (17) * Batch processing having the most transactions * Fast batch processing having an intermediate number * Interactive processing having one or only a few transactions (17) As I understand, batch and fast batch processing have easy managing because the batches are run in sequence. Interactive processing has more difficult managing because transactions must be processed at the same time, as soon as they arrive. (17) The communications used for transmitting batch and fast batch files usually consists of file transfer capabilities over facilities with significant delays, such as asynchronous dial-up connections or store-and-forward VANs. (170 Interactive messages cannot use these methods because the delays introduced are excessive. Typically, interactive processing uses TCP/IP socket communications, sometimes over leased lines or the Internet. ...read more.

Conclusion

for example Save Money The cost of paper and paper processing is incredibly high compared to a properly implemented EDI program. Processing a paper purchase order costs the company would be a lot of money. Processing an EDI purchase order reduces the cost to not as much as paper End Repetition If your trading partner wants a copy of a document, instead of calling you they simply check their mailbox. This results in a great timesaving from not having to copy and fax/mail copies of business documents. Save Time EDI also saves time over paper processing since the transfer of information from computer to computer is automatic. Improve Customer Service The quick transfer of business documents and marked decrease in errors allow you to do business faster and more efficient. The disadvantages of EDI are too many standards, changing standards, EDI is too expensive and limit your trading partners Too Many Standards There are too many standards bodies developing standard documents formats for EDI. For example the company may be following the X12 standard format, while your trading partner follows the EDIFACT standard format. Changing Standards Each year, most standards bodies publish revisions to the standards. This poses a problem to EDI users. You may be using one version of the standard while your trading partners are still using older versions. EDI is Too Expensive Some companies are only doing business with others who use EDI. If a company wants to do business with these organizations, they have to implement an EDI program. This expense may be very costly for small companies. Limit Your Trading Partners Some large companies tend to stop doing business with companies who don't obey with EDI. Electronic data interchange covers so many parts, which are as follows * Planning * Purchasing * Acknowledgment * Pricing * Order status * Scheduling * Test results, * Shipping and receiving * Invoices * Payments * Financial reporting * Education information In addition standards cover interchange of data relating to security, administrative data, trading partner information, specifications, contracts, production data and distribution and sales activities. ...read more.

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