Added: 04/18/2006 |
The Benefits of Using Electronic Data InterchangeIn common usage, Electronic Data Interchange implies the usage of specific interchange means and methods, agreed upon by both international and national standards bodies for business transaction data transfer, where one application is generally the automated purchase of services and goods. In the era of such technologies as the World Wide Web, the Internet and XML services, Electronic Data Interchange is still used by the majority of electronic commerce transactions worldwide.
There exist two ways of transmitting the data. The most common way is to transmit it over the Value Added Network and deliver to a trading partner. As an alternative, one can transfer data directly, which is possible when a company is able to connect directly to its trading partner's computer, using a dial-up or dedicated line. Once the information is received by the trading partner, the Electronic Data Interchange systems automatically translate the EDI data. Electronic Data Interchange implementation is an automated process, which doesn't require any human intervention.
Using Electronic Data Interchange is associated with a number of operational, tactical and strategic advantages. First and foremost, EDI allows you to lower operating cost, since it replaces paper transactions with electronic transmissions, thus, enabling automatic document processing, reducing cost of business transactions and saving time. With the implementation of Electronic Data Interchange, you don't have to re-enter data, reducing thus the risk for human error. By using user identification and passwords through the transmission process, control and data security are maintained. EDI can also assist organizations in improving their inventory control; improve goods and services delivery by reducing delivery time and increasing reliability of meeting targets. By streamlining trading cycle between organizations, Electronic Data Interchange improves relations between trading partners.
With EDI, clients are provided today with more accurate information concerning the progress of their orders. Inventories are managed much better, suppliers receive more specification and wastage is minimized. Accurate and fast communications lead to improved management.
From the beginning, the EDI standards were designed as independent technologies, which can be transmitted using private networks and Internet protocols. However, it is necessary to differentiate between EDI documents and methods for their transmission. Some older transmission methods are currently replaced by such Internet Protocols as telnet, e-mail and FTP, though the standards for these media haven't emerged yet.
Contained by EDI documents is the same data that is found in paper documents, used for the same organizational function. However, Electronic Data Interchange is not restricted to business trade-related data, but can encompass such fields as transport, medicine, engineering and construction.
There exist three major sets of EDI standards, the only international standard of these being UN/EDIFACT, designed in accordance with the United Nations rules and dominant in all areas outside North America.
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