Electronic Data Interchange

Electronic Data Interchange (EDI) is a system which allows document information to be communicated between businesses, government’s structures and other entities. It is a set of standards which creates a cohesive system within which all parties are able to electronically exchange data information within a set of protocols.

Although it can be considered that EDI consists of only the actual conveyance of the document, it is also seen as the implementation of the operating systems whereby EDI can be put into practice. EDI is the data format of most electronic commerce transitions in the world. There are other competing conveyance portals such as XML services, Internet and World Wide Web; however, EDI remains the dominant data format.

The EDI standards describe structures that represent documents such as an invoice or shipping order for a company. EDI sets up a system whereby businesses and other entities with non compatible operating systems are able to communicate on the same “page”, so to speak. EDI provides applications whereby a more efficient and environmentally friendly network is created between communication partners. It allows a homogenous viewing of all documents put through the system.

However, its potential is not just in creating automated system networks – as in for automatic re-ordering. It enables companies to exchange information at a speedier rate, and ensure greater security of delivery. Moreover, it creates a greater ability for businesses to become more efficient and streamlined.

As EDI is a non-internet based information exchange system, it was assumed that it would disappear when the Internet became more entrenched in society and business. However, EDI has survived, and is used by many industries. EDI establishes a firm connection between businesses that does not necessarily rely on Internet options. However, it can be used over the open Internet, as is increasingly occurring. Electronic transmission began in the 1960s within the transport industries. This change also required a parallel standardization of documentation. A committee was formed to coordinate the development of translation rules among four existing sets of industry-specific standards.

At about the same time, the United Kingdom was also developing its own standards for documents called Tradacoms. These were later extended by the United Nations Economic Commission for Europe, and were eventually accepted by about 2000 export organizations. Problems arose when these two differing organizations of information attempted to exchange information during trade. These information sets were largely incompatible, and required a working party to begin to create a range of documents that were able to be internationally understood and transmittable. Currently, EDI is used by thousands of companies throughout the world, including companies in USA, UK, Australia, New Zealand and Singapore. It is because of the advantages of reduced human interference and increased speed of processing that the EDI system is favored by many corporations.

Adjuncts

EDI creates a system whereby companies, governments, and entities that work on different computer systems to exchange information efficiently. EDI is a standardized format of relevant data which can be transmitted from one computer system to another with minimal human intervention. It is widely used and industry to transmit what would have formerly been sent as a document, through the post. By utilizing EDI, the communication partners are able to send a range of documents electronically, which provides and increased efficiency rate as well as reduced paper expenditure. There are currently hundreds of “documents” that can be exchanged electronically between multiple trading partners.

The Internet has allowed for an increased flow of these exchanges, rather than those allowed through closed computer systems. EDI is a popular and efficient way to send and receive documents that would otherwise be spending wasted days on the road in the back of a delivery van. However, there is Value Added Network (VAN) used in this situation, and it is similar to a post office. It is a middle man ‘warehouse’ where EDI documents can be storage until the receiver is ready for them. This ensures that important documents do not bounce back to the sender, or get lost in the tray.

Although VAN is used by many companies, and in particular the healthcare industry, many EDI’s are being sent over the internet. However, as VAN’s provide a myriad of other services such as retransmission of the document, provision of third party audit information, and acting as a gateway for different transmission methods, handling telecommunications support etc., they are quite popular within vicarious industries. Increasingly, EDI documents are being embedded into other transmission vehicles such as XML, which is being seen as one way to reduce costs. Although EDI originated in its current form in the United States, its’ origins can be seen throughout international co-operative operations which require standardized manifests and instructions.