Section: BS in Information Technology - 4A

Day: Thursday
Time: 5:00-8:00
REVIEW OF PREVIOUS TOPIC
WHAT IS SYSTEM INTEGRATION
ARCHITECTURE?
WHAT IS MIDDLEWARE?
WHAT IS APPLICATION
INTEGRATION?
WHAT IS DATA MAPPING?
WHAT IS DATA ACCESS
INTEGRATION?
WHAT IS EDI?
• Electronic Data Interchange (EDI) is the automated, computer-to-computer
exchange of standard electronic business documents between business
partners over a secure, standardized connection.
• EDI, or Electronic Data Interchange, is a technology that helps trading partners
and organizations get more done, speed up logistics timelines and eliminate
manual errors by automating business-to-business (B2B) communications.
• EDI helps many organizations that produce, ship, purchase and sell goods or
provide care, from retailers and manufacturers to logistics firms, airlines,
healthcare providers, insurers and more.
EDI DEFINITION, PIECE BY PIECE
TO GIVE YOU A FULL SENSE OF WHAT EDI IS AND MEANS
COMPUTER-TO-COMPUTER
• EDI replaces manual B2B communications, such as postal mail, fax and email.
• Documents flow directly from the sender's computer application (e.g. a
logistics system) to the receiver's computer application (e.g., an order
management system).
TRADITIONAL MANUAL PROCESS
AUTOMATED EDI PROCESS
BUSINESS DOCUMENTS
• 1000s of standard business transaction documents can be sent
automatically using EDI.
• Some common examples include: purchase orders, invoices, shipping
statuses, customs information, inventory documents and payment
confirmations.
STANDARD EDI FORMATS
• EDI documents are processed by computers and use standard, computer-
friendly formats. Standards describe each piece of data and its format
(e.g., type of document, parties involved, actions to take, mmddyy).
• Standards eliminate company-to-company variations, allowing each
business partner's computer system to speak a common language.
• There are a variety of EDI standards for various industries, regions and use
cases - each with different versions, so EDI partners must use the same
standard and version
• Popular standards include: ANSI X12 in the U.S., UN/EDIFACT globally and
industry-specific standards, such as HIPAA
BUSINESS PARTNERS
• The exchange of EDI documents is typically between two different
organizations, referred to as business partners or trading partners.
• Example: Company A may buy goods from Company B. Company A sends
Purchase Orders to Company B, which sends Invoices and Shipment
Notices to Company A.
SECURE, STANDARDIZED CONNECTION
• EDI uses a range of secure protocols to facilitate the secure exchange of
EDI documents.
• Partners must use the same, agreed-upon protocol to exchange EDI files
or work with an intermediary who can facilitate exchanges if the partners
use different protocols.
• Some protocols require more EDI technology infrastructure than others,
but EDI software, such as ArcESB, now facilitates exchanges with minimal
investment.
• The protocols range from long-established technologies, such as FTP, to
web-based EDI via AS2, API-based systems, such as AS4, and other
options, such as mobile EDI.
SECURE, STANDARDIZED CONNECTION
AUTOMATION
• EDI messages can be sent automatically using pre-configured workflows.
• Businesses typically use EDI translators - either as software or via an EDI
service provider - to translate EDI documents for use in internal
applications, enabling automated processing.
• Processes can be extended to work with data integration and workflows
within an organization.
• Example: once a company receives an EDI Purchase Order, the logistics
system generates a task for warehouse staff to move goods from
inventory to shipping.
AUTOMATION
EDI VS. TRADITIONAL PAPER OR EMAIL
COMMUNICATIONS
• To illustrate the meaning of EDI, or electronic data interchange, let's
compare how a typical purchasing transaction would go between two
trading partners using traditional paper or email communications vs.
using EDI.
EDI VS. TRADITIONAL PAPER OR EMAIL COMMUNICATIONS
EDI VS. TRADITIONAL PAPER OR EMAIL COMMUNICATIONS
TRADITIONAL PROCESS
• The buyer either receives a notification in his system to place an order, or,
after querying the inventory, determines he needs to place an order.
• The buyer enters data onto the screen of a purchasing system to create
the PO, prints and mails it or emails it to the vendor.
• The vendor receives the PO, either days later or via email (along with a
long list of other communications) and manually enters it into the sales
order system.
• The vendor prints an invoice and encloses it with the shipment and/or
sends it separately by mail or email.
• The buyer manually enters the invoice into the accounts payable system.
TRADITIONAL PROCESS
• A paper system can add a week of back-and-forth shipping time to the
process. Both email and paper are susceptible to manual data entry
errors, lengthening order time.
EDI PROCESS
• The buyer's procurement system, which uses EDI, auto-generates and
sends an EDI-formatted PO when inventory reaches a pre-specified level.
• In minutes the vendor's sales order system, using EDI software, receives
the EDI PO.
• The supplier's system automatically notifies their shipping department to
send goods.
• Once the goods are packed and ready to ship, the shipping system
generates an Advanced Ship Notices (ASN) to send to the buyer's
receiving department
EDI PROCESS
• The vendor's ERP system then generates an EDI invoice to transmit to the
buyer's accounts payable system.
• The entire EDI process can be completed in an hour.
EDI PROCESS
WHY EDI & HOW CAN IT HELP YOUR BUSINESS?
• Businesses adopt EDI to enhance efficiency, improve communication and
accuracy of data exchanged, strengthen partnerships, and drive down
costs.
• It eliminates the need to re-key information, reduces error-prone data
entry and speeds up the process of exchanging business documents with
customers and other trading partners.
• As seen in the following example, common transactions such as (EDI 850)
Purchase Order and (EDI 810) Invoice, helps simplify and streamline the
entire transaction process.
EDI USE CASES: WHO CAN USE EDI?
• Uses of EDI The transmission of information between people can be
fraught with delays, errors, misinterpretations, and security breaches.
Electronic Data Interchange is the computer-to-computer exchange of
documents, offering a secure, encrypted alternative to paper processing
and supply chain tracking.
• No definition of EDI is complete without real-world applicability.
• Electronic Data Interchange is useful for a wide variety of functions
spanning many thousands of specific information exchanges.
MOST COMMON SCENARIOS WHERE EDI IS HELPFUL
Supply Chain (Retail, Manufacturing, Automotive)
• Purchasing
• Order fulfillment
• Shipping confirmations
• International orders
• Parts order fulfillments
Healthcare
• Exchanging patient health information
• Health insurance processing
• Prescription information exchanges
MOST COMMON SCENARIOS WHERE EDI IS HELPFUL
Logistics
• Scheduling shipments
• Tracking goods
Accounting
• Generating invoices
• Providing audit trails
Aviation
• Flight information exchanges
• Passenger name records (PNRs)
• International compliance and standardization
BENEFITS OF EDI
❖Faster Processing
• EDI can speed up business cycles by 61 percent
• EDI enables transactions in minutes instead of days or weeks spent on
postal mail or back-and-forth email communications
• Automating paper-based tasks frees up your staff for higher-value
tasks and provides them the tools to be more productive
• Quick processing of accurate business documents leads to fewer re-
worked orders, stock outs and cancellations
• Automating application data exchange across a supply chain ensures
critical data is sent on time and tracked in real time
• Shortening order processing and delivery helps organizations reduce
inventory
BENEFITS OF EDI
❖Lower Costs
• EDI reduces the transaction costs of paper, printing, reproduction,
storage, filing, postage and document retrieval, saving businesses
more than 35 percent on transaction costs
• For buyers that handle numerous transactions, using EDI can also
result in millions of dollars of annual savings due to early payment
discounts
• In some cases, EDI is just 1/20th the cost of manual order processing,
slashing costs by a factor of 20
• EDI also eliminates costly errors due to illegible faxes, lost orders or
incorrectly taken phone orders
BENEFITS OF EDI
❖More Accuracy, Fewer Errors
• EDI reduces error transactions by 30-40 percent
• EDI eliminates human errors from illegible handwriting, lost mail and
keying errors

❖Better Relationships
• Sellers benefit from improved cash flow and reduced order-to-cash
cycles
• In fact, EDI can reduce the order-to-cash cycle time by more than
20%, improving business partner transactions and relationships
• Reducing errors also saves partners valuable time and frustration
handling data disputes
BENEFITS OF EDI
❖Strategic Benefits
• EDI provides real-time visibility into transaction status, enabling faster
decision-making and better responsiveness to customer and market
demands, helping businesses adopt a demand-driven approach
• Product enhancements and delivery enjoy shorter lead times
• Streamlines the process of entering new territories, as EDI provides a
common worldwide business language
BENEFITS OF EDI
❖Environmental Benefits
• EDI promotes sustainability and reduces CO2 emissions by replacing
paper-based processes with electronic alternatives
• EDI increases operational efficiencies, leading to fewer errors and less
energy waste
ELECTRONIC DATA INTERCHANGE SOFTWARE
1. JSCAPE
2. GoAnywhere
3. Software AG
4. Cleo
5. Progress MOVEit (formerly Ipswitch)
6. 1 EDISource
7. Dell Boomi
8. Globalscape MFT
9. Thru Inc.
10.Oracle MFT
CONCLUSION
Various industries use EDI servers to automate the exchange of data that
includes health care records, invoices, etc. Electronic Data Interchange
can be done by using any protocol such as FTP/S, AS2, SFTP, etc.
Managed File Transfer providers like JSCAPE support all such non-
proprietary file transfer protocols.
REFERENCES:
• SYSTEM INTEGRATION & ARCHITECTURE, Mr. Mubashir Ali Lecturer(Dept. of
Computer Science) dr.mubashirali1@gmail.com
• https://www.arcesb.com/resources/edi/
• https://datatrans-inc.com/what-is-edi/
• https://en.wikipedia.org/wiki/Electronic_data_interchange
• https://www.softwaretestinghelp.com/edi-software/