e Chapter 9: EDI – the nuts and bolts

c
o
m
m
e
r
electronic
commerce


c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 1

 EDI standards
e
c
The need for a Common Format
Customer Supplier

o Best
Bread

m
Super
Food
Freshest
Fruit

m
Save on
Food
Mighty

e
Meat
Sava
Store

r
Very
electronic Veg
commerce


c strategy
technologies
 Three customers
 Four suppliers
e
and
applications  Twelve formats or one standard
E-Commerce ©David Whiteley/McGraw-Hill, 2000 2
 EDI standards
e
c  The need for a common format …

o … EDI provides a standard for data interchange

that is:
m
m Ready formulated;

 Comprehensive;

e 

Independent of hardware and software;
Independent of special interest.
r
electronic
commerce


c strategy
technologies
 EDI standards provide a common language for the
interchange of standard transactions.
e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 3

 Evolution of EDI standards
e
c  Three stages:

o  Early applications/common formats

m  Sector and national EDI standards

m
e
 The international EDI standard

r
electronic
commerce


c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 4

 e Early applications/common formats

c  Developed by organisations that had to process data

from a large number of customer organisations.

o  Standard set by data recipients and the customers

m conformed to it.

m  Examples:
 BACS:
e System of electronic payments (from user organisations).
 LACES:
r
electronic
commerce Freight Clearance System (at LHR).
  World Meteorological Office (WMO) System:

c strategy
technologies
System for exchange of weather information and weather
reports.

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 5

 Sector and national EDI standards
e
c  Application independent interchange standards,
formulated by industry sector and / or national

o standards bodies.

m  Examples:

m
 ODETTE:
An EDI format developed for, and widely used in, the European

e
motor industry.
 TRADACOMS:

r
electronic A UK EDI standard for general trade developed by the ANA
commerce (Article Numbering Association).


c strategy
 ANSI X12:
technologies Developed as an American national standard by ANSI with the
aim of replacing the various sector standards.
e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 6

 The international EDI standard
e
c  To meet the requirements of international and cross
sector trade …

o … EDIFACT was developed, under the auspices of

m the United Nations (UN), as a universal standard for

commercial EDI.

m  EDIFACT:
e  Electronic Data Interchange for Administration,

r
electronic Commerce and Transport
commerce
 Started in Europe in mid 1980s


c strategy
technologies
 Accepted by US (ANSI) to supersede X12
 Promoted as the world EDI standard
e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 7

 The EDIFACT standard
e
c EDIFACT interchange structure:
 Each document (order, invoice, etc.) is a Message.
o  Several messages are sent as an Interchange.

m  Messages are made up of Data Segments,

eg. Order Date or Buyers Name and Address.
m  Data segment consists of a Tag and Data Items:

e  The tag identifies the data segment.

r
electronic
commerce  Data items are codes, values and qualifiers.


c strategy
technologies
 See next slide for diagram.
e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 8

 The EDIFACT standard
e
c
EDIFACT interchange structure (diagram):

o Interchange

m I’change Message Message Message I’change

m Header Trailer

e Message
Header
Data Data Data Message

r
electronic Segment Segment Segment Trailer
commerce


c strategy
technologies
Data Data Data
Element Element Element

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 9

 The EDIFACT standard
e
c
Example EDIFACT interchange:
UNB+UNOA:1+6464:xx+1141:xx+ Interchange

o BEN0273'
Header

m UNH+000001+ORDERS:2:932:UN' Message 1

Data segments
Header

m
BGM+220+AC6464' •
DTM+4:20000315:102' •
NAD+BY+6464326::91' •

e NAD+SU+1149646::91'
UNS+D'
•
•

r
electronic LIN+1++PT-1073-R:VP' •
commerce QTY+21:1600' •
 LIN+2++PT-1073-S:VP' •

c strategy
technologies
QTY+21:1200'
UNT+13+000001'
•
Trailer

e
and UNH Message 2
applications . . .
. . .
UNT
E-Commerce ©David Whiteley/McGraw-Hill, 2000 10
 The EDIFACT standard
e
c Interchange header:

o • UNB Interchange header

m
UNB+UNOA:1+6464:xx+1141:xx+BEN0273
Control Agency UNOA i.e. UN Level

m A
Version 2
e Sender Code
Code Qualifier
6464

r
electronic
commerce Recipient Code 1141149
 Code Qualifier

c strategy
technologies
Date of Transmission
Time of Transmission
20000305
1233
e
and
applications Control Reference BEN0273
E-Commerce ©David Whiteley/McGraw-Hill, 2000 11
 The EDIFACT standard
e Order message:
c
o • UNH
UNH+000001+ORDERS:2:911:UN'
Message Header

m Message Number 000001

m Message Type
Version
ORDERS
2

e Release
Control Agency
932
UN

r
electronic
commerce
 • BGM Beginning of Message

c strategy
technologies
BGM+220+AC6464'
Message Name Code 220 i.e. order

e
and
applications Document Number AC6464 i.e. order
number
E-Commerce ©David Whiteley/McGraw-Hill, 2000 12
 The EDIFACT standard
e Order message:
c • DTM
o
Date/Time/Period

DTM+4:20000305:102'

m Qualifier 4 i.e. order date

20000305
m
Date
Format qualifier 102 i.e. century date

e • NAD Name and address

r
electronic NAD+BY+6464326::91'
commerce

NAD+SU+1149646::91'

c strategy
technologies
Party qualifier BY
SU
i.e. buyer
i.e. supplier

e
and
applications Address code 6464326 and 1149646
Code list agency 91 i.e. user defined
E-Commerce ©David Whiteley/McGraw-Hill, 2000 13
 The EDIFACT standard
e Order message:
c
o • UNS
UNS+D'
Section control

m Section identification D i.e. detail

m
segment

e • Separates order header from order lines

r
electronic
commerce


c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 14

 The EDIFACT standard
e Order message:
c • LIN
o
Line item
LIN+1++PT-1073-R:VP'

m
LIN+2++PT-1073-S:VP'
Line item number 1 and 2

m
Item number PT-1073-R and PT-1073-
S

e Item line number

• number
VP i.e. vendor part

r
electronic
commerce

QTY Quantity

c strategy
technologies
QTY+21:1600'
QTY+21:1200'

e
and
applications Quantity qualifier 21 i.e. ordered
• quantity
Line item and quantities in pairs
Quantity
E-Commerce ©David Whiteley/McGraw-Hill, 2000 1600 and 1200 15
 The EDIFACT standard
e Order message:
c
o • UNT
UNT+11+000001'
Message trailer

m Count control 11 i.e. eleven segments

m Message number 000001

e • Message number matches message header

r
electronic
commerce


c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 16

 The EDIFACT standard
e Interchange trailer:
c
o • UNZ
UNZ+1+BEN0273
Interchange trailer

m Control count 1 i.e. one message

m Control reference BEN0273

e • Control reference matches interchange header

r
electronic
commerce


c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 17

 The EDIFACT standard
e
c The Order Decoded:
The order identification is:

o  Order Number AC6464

 Order Date 15.03.2000
m From Pens and Things:

m
 Customer Address Code: 6464326
To Packaging Solutions:

e  Supplier Address Code 1149646

For ‘Executive Elite’ gift cases in red and silver:

r
electronic
commerce Qty Product
  Line 1 (Red Cases) 1,600PT-1073-R
c strategy
technologies  Line 1 (Silver Cases) 1,200PT-1073-S

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 18

 Coding standards
e
c  Codes:
 Usable as Keys
o  Facilitate sorting

m  Cut down on transmission

 Save on storage

m
e
 For EDI (and data processing), keys are to be used
in preference to text data/descriptions

r
electronic
commerce
  Codes must be recognised and accepted by all
c strategy
technologies
parties to a trading exchange.

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 19

 Coding standards
e
c EAN/UPC codes
 Standard codes for grocery and general retail:

o  Coded as Bar Codes on products

 Used in order processing / stock control

m  Used in EDI messages.

m  EAN European Article Number

13 digit – 2 digit country code
e  UPC Universal Product Code (American)
r
electronic
commerce 12 digit – 1 digit country code


c strategy
technologies  Administered by National Article Numbering
Associations (ANA)
e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 20

 Coding standards
e
c Code: ccmmmmmxxxxxC

o cc Country e.g.:
- UK = 50,
m mmmmm
- Netherlands = 67
manufacturer prefix no.
m xxxxx item reference

e
C check digit

r Examples:
electronic
commerce

Baked beans, 420g tin: 50 00157 00171 9

c strategy
technologies
Cream of tomato soup, 300g tin:
Baked beans, 250g tin:
50 00157 00207 5
50 00157 00023 1

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 21

 Coding standards
e
c
EAN code – checkdigit calculation

o Code: 500015700171
5 x 1 = 5
m 0
0
x
x
3
1
= 0
= 0
m 0
1
x
x
3
1
= 0
= 1
e 5 x 3 = 15

r
electronic 7 x 1 = 7
commerce 0 x 3 = 0


c strategy 0 x 1 = 0 Sum = 41
technologies 1 x 3 = 3 Checkdigit = 50 - 41 = 9

e
and EAN code =
applications
7 x 1 = 7
5000157001719
1 x 3 = 3
E-Commerce ©David Whiteley/McGraw-Hill, 2000 22
 Coding standards
e
c  EAN code – used in EDI

o LIN+1++5000157001719:EN'

m  EAN codes can also be used for address point

m codes, eg:

e  The delivery point:

r
electronic e.g. the goods are sent to a warehouse
commerce


c strategy
technologies
 The invoice point:
e.g. the invoice is sent to head office.
e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 23

 EDI communications
e
c EDI communications can be:
 A magnetic tape or diskette posted or despatched

o by courier.

m  A direct data communications link.

m  A value added data service (VADS),

e
also known as a value added network (VAN).

r
electronic
commerce
 The Internet.


c strategy
technologies
The VADS has tended to be the preferred option
(and the Internet, in this context, is another VADS)
e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 24

 EDI VADS
e
c  Postboxes and mailboxes
(Post and Forward Network)
o
m
 The postbox:
where outgoing messages are placed.

m  The mailbox
e where incoming messages can be picked up.

r
electronic
commerce


c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 25

 EDI VADS - example
e
c Steps 1 and 2
 Sava Store establish a link with the VADS
o  Sava Store send an EDI Interchange

m Customer VADS Supplier

m
postbox Best
mailbox Bread
postbox
Super mailbox
Food

e Save on postbox
postbox
mailbox
Freshest
Fruit

r
electronic Food mailbox
commerce postbox Mighty
 mailbox Meat

c strategy
technologies
Sava
Store
postbox
mailbox
postbox Very

e
and
mailbox Veg
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 26

 EDI VADS - example
e
c Steps 3
 Sava Store establish a link with the VADS
o  Sava Store send an EDI Interchange

m Customer VADS

postbox
Supplier

Best

m Super
Food
postbox
mailbox
mailbox Bread

e Save on postbox
postbox
mailbox
Freshest
Fruit

r
electronic Food mailbox
commerce postbox Mighty
 mailbox Meat

c strategy
technologies
Sava
Store
postbox
mailbox
postbox Very

e
and mailbox Veg
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 27

 EDI VADS - example
e
c Steps 1 and 2
 Best Bread establish a link with the VADS
o  Best Bread retrieves its orders

m Customer VADS Supplier

m
postbox Best
mailbox Bread
postbox
Super mailbox

e
Food
postbox Freshest
mailbox Fruit

r
electronic Save on postbox
Food mailbox
commerce
postbox Mighty
 mailbox Meat

c strategy
technologies
Sava
Store
postbox
mailbox
postbox Very

e
and
mailbox Veg
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 28

 EDI VADS - example
e
c The overall VADS network

o
Customer VADS Supplier

postbox Best

m
mailbox Bread
postbox
Super mailbox
Food

m
postbox Freshest
mailbox Fruit
Save on postbox

e
Food mailbox
postbox Mighty
mailbox Meat

r
electronic Sava postbox
Store mailbox
commerce
postbox Very
 mailbox Veg

c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 29

 EDI VADS
e
c Time Independence
 Sending and receipt are asynchronous.
o  Say:

m
 Sava Store transmits at the end of its overnight
processing run.

m  Best Bread pick up their orders next morning.

e Protocol Independence

r
electronic  Each user can use its own protocol
commerce
 Say:


c strategy
technologies
 Sava Store might have a fixed link using X400.
 Best Bread could use a dial up link.
e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 30

 EDI VADS
e
c Further VADS facilities:
 Trading Community:
o  Inter-network Connections:

m  International Connections:
 Privacy, Security and Reliability:

m  Message Storage and Logging:

e
 Message Validation:
 Local Access:

r
electronic
commerce  Charges:
  Software and Consultancy:
c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 31

 EDI implementation
e
c EDI software

o Pens and
Things
Packaging
Solutions

m
m Production
Control
Order
Processing
e System System

r
electronic
commerce


c strategy VADS
EDI Software EDI Software
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 32

 EDI implementation
e
c EDI software – basic functions:
 Coding transactions into the EDI Standard.

o  Interfacing with the VADS.

m EDI software – additional functions:

 Trading partner database.

m  Support of multiple EDI Standards.

 Facilities for formatting application data to and from the EDI

e Standard.
 Fax or e-Mail transmission to non EDI users.

r
electronic
commerce  Interfacing with a variety of EDI VADS.
  Encryption the EDI Message.

c strategy
technologies
 Automatic acknowledgement.
 Message tracking and an audit trail.

e
and
applications  Direct input and printed output of EDI transactions.

E-Commerce ©David Whiteley/McGraw-Hill, 2000 33

 EDI implementation
e
c  For full integration of the business application and the
EDI Software there needs to be an interface to transfer

o data from the business application to the EDI software

and visa versa.

m  For example, to send an order

m  The supplier record has an EDI indicator.

e
 Order for EDI suppliers are not printed;
 EDI orders are formatted onto a flat file;

r
electronic  The flat file is input to the EDI software, formatted
commerce

into the required EDI standard and posted into the

c strategy
technologies
VADS.

e
and
applications  The reverse process is used for incoming EDI messages
– arguably they need to be validated.
E-Commerce ©David Whiteley/McGraw-Hill, 2000 34
 EDI implementation
e
c  EDI operation:

o  A big difference between electronic transactions

m
and their paper equivalents is that with electronic
transactions there is no paperwork to fall back on

m should anything go wrong - all incoming

transactions need to be secured.

e  Frequency of operation needs to meet the

r
electronic
commerce requirements of the business cycle – it can be daily,
 hourly or as required.
c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 35

 EDI implementation
e
c  EDI alternatives:

o  Large organisation need their own EDI set-up –

m
small companies might:

m  Make use of a free-standing, PC EDI facility.

e  Making use of an EDI clearing house using:

r
electronic
commerce
• Post or Fax.
 • Internet access.
c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 36

 EDI agreements
e
c  To achieve a successful, electronically controlled
supply chain, businesses need to agree:

o  The nature of the business that is to be done

m electronically.

m  The technical details of how it is to be

undertaken.
e
r
electronic  The procedures for resolving any disputes that
commerce
arise.


c strategy
technologies  The appropriate way to document these details is

e
and
applications an EDI Interchange Agreement.

E-Commerce ©David Whiteley/McGraw-Hill, 2000 37

 EDI agreements
e
c  Legal Framework:
 Most business law relates to paper based

o trading and how that law should apply to the less

tangible form of an electronic message is not

m always clear.

m ‘For EDI to be a successful alternative to paper

trading, it is essential that messages are accorded
e a comparable legal value as their paper equivalent
when the functions effected in an electronic
r
electronic
commerce environment are similar to those effected in a paper
 environment, and where all appropriate measures

c strategy
technologies
have been taken to secure and store the data.’
(EU-IA)
e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 38

 EDI agreements
e
c  Legal (and related) aspects:
 The point in its transmission and processing at which a

o message will be deemed to be legally binding

 The timescale for processing EDI massages.

m  The time that message will be retained.

 The procedure for settling any disputes.

m  The legal jurisdiction for settling disputes.

e  Technical aspects:
 The coding systems for identifying entities.

r
electronic
commerce  The EDI standard that is to be employed.
  The network that is to be used.

c strategy
technologies

e
and  Model agreements are available from various organisations.
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 39

 EDI privacy and security
e
c  Reliable procedures (data processing standards).

o  Controls in the EDI Standards

m  Controls in the Transmission Protocol.

m
e
 Protection against Tampering (e.g. digital signature)

r
electronic
commerce  Privacy of Message (e.g. encryption).


c strategy
technologies  Non-repudiation (e.g. message acknowledgement

e
and
applications or ‘trusted third party’).

E-Commerce ©David Whiteley/McGraw-Hill, 2000 40

 EDI privacy and security
e
c Apps Digital Signatures Applicati

o
Encryption
System on
EDI System

m
EDI Checks EDI
Soft- Soft-
Comms Protocol Comms
ware ware

m
Checks
EDI

e
Acknowledgement (phy.)
EDI

r
electronic Acknowledgement (logical)
commerce


c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 41

 Nuts, bolts and the tool kit
e
c TradingPartner EDI TradingPartner

o
Interchange Agreement

m Application
System
Application
System

m
e EDI Software
VADS
EDI Software

r
electronic EDI Standards EDI Standards
commerce


c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 42

 EDI – further developments
e
c
o  e-Procurement systems are being developed using
XML formatted messages in place of traditional

m EDI.

m
e
r
electronic
commerce


c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 43

 Chapter 9 – Exercise 1
e
c  Using the EDIFACT standard information on the
web page, format an invoice message for
o Packaging Solutions to invoice Pens and Things for
the goods requested in the order shown at Figure
m 8.2.

m  (EDI Information is yet to be set up)

e
r
electronic
commerce


c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 44

 Chapter 9 – Exercise 2
e
c  Draw up an Interchange Agreement to cover the
exchange of orders and invoices between
o Packaging Solutions and Pens and Things. You
may use model agreements obtained from the web
m (or elsewhere) but the agreement must be fully
tailored to the needs of these two organisations.
m Keep the agreement short; one page should suffice.

e
r
electronic
commerce


c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 45

 Chapter 9 – Exercise 3
e
c  Draw up a plan for the implementation of EDI at
Pens and Things. The plan is initially for the
o interchange of orders with Packaging Solutions but
should take account of possible future
m developments. The plan should be no more than
two pages long; state any assumptions you have
m made.

e
r
electronic
commerce


c strategy
technologies

e
and
applications

E-Commerce ©David Whiteley/McGraw-Hill, 2000 46