electronic data interchange (edi) course · trade (edifact) 23 types of business ... format to ansi...

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E-Commerce The delivery of information, products

and services, or payments via telephone lines, computer networks or any other means – [Kim & Moon, 1998]

All electrically mediated information exchanges between an organization and its external stakeholders – [Chaffey, 2006]

2

E-Business Involves E-buying, E-selling . It also refers to servicing customers and

collaborating with business partners. (Chesher et al. 2003)

E-Marketing- Wider in scope than Internet marketing as it refers to both digital media and web, e-mail, wireless media, Intranet, Extranets and mobile systems

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The World of The World of Electronic Commerce Electronic Commerce

EC

TechData

EI EBB

EDI

CE E-mail

JIT VMI

InterNetBarcoding

FAX

EC

4

MODULE 1 OBJECTIVES

At the completion of this module, you will be able to:– Define EDI– Explain EDI Terminology– Describe the background of EDI– Explain some benefits of EDI

5

ELECTRONIC DATA INTERCHANGE

Module 1

• Definitions• Background• Benefits

6


EDI is the computer-to-computer exchange of routine business documents (data) in a standard format between companies.

COMPANY A COMPANY B

TRANSACTION DATA

7

VALUE ADDED NETWORK (VAN)

Post Office

Seller

Buyer

8

EDI

Trading partners are companies that do business via EDI.

TRADING PARTNER

9

EDI

Purchase Order (PO)

PO

Purchaser

A transaction set refers to a type of electronic document.

TRANSACTION SET

10

PAPER DOCUMENT INTERCHANGE

Computer

Post Office

PO

Purchaser

Computer

Data Entry

Invoice

11


Computer

VAN

Purchaser

Computer

Data Entry

Invoice

PO

12

EC is Cross Functional

Implementation

Accounting

Order Processing

Account Executives

Infomation Systems

Shipping

EDI has an impact on all departmentsEDI has an impact on all departments

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Considerations for System Design

• Determine Requirements

• Determine Readiness

• Select Participants

EDI

System

Implementation

14

Support areas

Accounting

Order Processing

Transportation

Technical AreasElectronic Commerce

Information Systems

Liaison Areas

Implementation

Marketing

Sales

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QuestionsQuestions??

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Module 2

Components

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MODULE 2 OBJECTIVES

At the completion of this module, you will be able to:– List the four major components of

an EDI system– Recall the terms VAN, ANSI X-

12,and their meaning– Recall reasons why companies

are doing EDI

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EDI ComponentsEDI Components

HardwareStandards

EDI

Software Communications

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EDI

PO

PO

Purchaser

Transaction set refers to a type of electronic document

Transaction SetTransaction Set

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WITH STANDARDIZATION

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Components

ELECTRONIC DATAINTERCHANGE

STANDARDS

ANSIX12

UN/EDIFACT

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Other Standards

Transportation Data Coordinating Committee (TDCC)

Uniform Communications Standard (UCS)

Warehouse Information Network (WINS)

Voluntary Inter-Industry Communication Standard (VICS)

EDI for Administration, Commerce, and Trade (EDIFACT)

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TYPES OF BUSINESS TRANSACTIONS VIA EDI

PurchaseOrders44%

Invoices24%

Other15%

Shipping Note14%

Credit/Debit

3%

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A Standard LanguageA Standard Language

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How EDI Works !How EDI Works !

quoteThe APL Group664 danbury CtWilson, ct

RFQ # 1234 06/07/951 WIDGET #56782 dz gizmos

ST* 843 12345

NTE**ShipCompleteN1 *SE* The Apl Grp Inc...

N3 *664 DANBURY

Converts Internal Data Format to ANSI X12 (outbound)

Converts ANSI X12 Standard format to Internal Format (inbound)

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HardwareStandards

EDI


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EDI SoftwareEDI Software

X12

Database

1. Document Support

2. Mapping

3. Standards Support

4. Translation Communications

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HardwareStandards

EDI


29

Hardware Hardware

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HardwareStandards

EDI


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Value Added Network (VAN)Value Added Network (VAN)

U.S. Post OfficeBuyer

Seller

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Point-to-Point: Point-to-Point: EDI Without a VANEDI Without a VAN

Buyer

1

2

3

4

A

B

C

D

Supplier

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Value Added Network (VAN):Value Added Network (VAN):

1

2

3

4

A

B

C

D

Buyer Supplier

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Interconnect StrategyInterconnect Strategy

GE VAN

AT&T VAN

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---EDI Process------Integrated Systems---

BusinessManagement System

BusinessManagement System

Accounting

Receiving

Manufacturing

Purchasing

EDIShipping

Accounting

Sales/OrderProcessing

Order Processing

Purchase Order

Purchase Order Acknowledgment

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Data integration Issues

Networking Users

Part List Partner’s Part List

Cross-referencing

EDI Software

Database

Integrated Applications

Database

New Data

Bridge Between Applications

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EC GROWTH

*Source: EDI Forum

Number of RegisteredEDI Users.

Average Annual Growth ~ 45%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

45,000

.

88 89 90 91 92 93

40,000

94

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Perc

ent

Perc

ent Customer/supplierCustomer/supplier

requirementrequirement

Cost savingsCost savings

Data accuracy/error reductionData accuracy/error reduction

Quick access to dataQuick access to data

In 1996, EDI grew substantially due to customer / major supplier In 1996, EDI grew substantially due to customer / major supplier requirements or requests. EDI is an element used to streamlinerequirements or requests. EDI is an element used to streamline business processes.business processes.

Why do Companies use EDI?Why do Companies use EDI?

0%

10%

20%

30%

40%

50%

60%

1992 1993 1994 1995 1996

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EDI USERS

Government Health care Retail Grocery TransportationPolicy

Insurance

Manufacturing

AutomotivePetroleumElectronicsChemicalBanks

Construction

Advertising

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Manufacturing Focus

EDI

EFT

Internet(IT)

VMI

Bar-CodeERS

JIT

BPR

Maximum benefits are obtained when EDI is coupled with BUSINESS PROCESS CHANGE

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EDI BENEFITS

More Accurate Records and Decision-making Information

Lower Data Entry Costs

Increased Business Opportunities

Reduced Inventory

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EDI BENEFITS

Better Cash Management

Decreased Mailing Costs Greater Customer Satisfaction

Reduction In Order Time

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Bar-Code

45

EDI and Business Processes

EDI

EFT

Internet(IT)

VMI

Bar-CodeBar-CodeERS

JIT

BPR

Maximum benefits are obtained when EDI is coupled

with BUSINESS PROCESS CHANGE

46

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Module 3

EDI Translation

48

Module 3 Objectives

At the completion of this module, you will be able to:

– Relate the paper document components to EDI transaction set

– Recall the sections of an EDI transaction set

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ANSI ASC X12 Standard

Purchase Order

Facilitates electronic interchange of business documents

Purchase Order

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Transaction Set Composition

File = Transaction Set

Record = Data Segment

Field = Data Elements

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Vendor:

Date: Purchase Order #

PURCHASE ORDER

Ship To:

Quantity Description Price Amount

ABC SuppliesP.O. Box 180Baltimore, MD 21239

12/31/92

Cleveland ECRC2415 Woodland AvenueCleveland, OH 44115

4001

2 Legal Pads LP8X11 $8.00/DZ $16.00

Paper Vs. EDI Document

ST*850*0001^BEG*00*NE*4001**921231^

N1*VN*ABC Supplies^N3*P.O.Box 180^N4*Baltimore*MD*21239^N1*ST*Cleveland ECRC^N3*2415 Woodland Avenue^N4*Cleveland, OH 44115^PO1*1*2*DZ*8.00**VP*LP8X11^CTT*1^SE*11*0001

Paper Document = EDI Transaction Set

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Envelopes

Address Information

Date and TimeStamp

Information Receipt

Information Routing

Audit and VersionControl

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Envelope Elements

Identification Information

Batch C

ontrol

Informatio

nAddressing

Information

54

Trading Partner Enveloping Issues

• Envelope Identiffers

• Addressing codes

• Types of control numbers

• Control number sequence

• Version of standards

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Envelope StructureISA

IEA

InterchangeInterchange

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Cleveland ECRC [electronic address]

ABC Company[electronic address]

Envelope = Interchange

ISA*05*0000000000*01*PASSWORD01*01*SENDERIDENTIFIC*01*ReceiveidentifI*950919*1503*U*00304*123456789*1*T*|^

GS...ST...

. .SE...GE...

IEA*1*123456789^

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Folder = Functional Group

GS*PO*CECRC01*DISC*950919*1426*0001*X*003050^

ST*850*1001...

SE*17*1001GE*1*0001

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ISA

IEA

GS

GE

Envelope Structure


GS...ST...

. .SE...GE...

IEA*1*123456789^

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ISA

IEA

GS

GE

ST

SE

ST*850*0001^BEG*00*NE*4001**921231^

N1*VN*ABC Supplies^N3*P.O.Box 180^N4*Baltimore*MD*21239^N1*ST*Cleveland ECRC^N3*2415 Woodland Avenue^N4*Cleveland *OH* 44115^PO1*1*2*DZ*8.00**VP*LP8X11^CTT*1^SE*11*0001

Transaction Set

Transaction Set

60Transaction Set 850

Document = Transaction Set

Document


ST*850*0001^BEG*00*NE*4001**921231^

N1*VN*ABC Supplies^N3*P.O.Box 180^N4*Baltimore*MD*21239^N1*ST*Cleveland ECRC^N3*2415 Woodland Avenue^N4*Cleveland, OH 44115^PO1*1*2*DZ*8.00**VP*LP8X11^CTT*1^SE*11*0001

Vendor:


PURCHASE ORDERShip To:

Quantity Description Price Amount

ABC SuppliesP.O. Box 180Baltimore, MD 21239

12/31/92


4001

2 Legal Pads LP8X11 $8.00/DZ $16.00

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Data Segment

Vendor:


PURCHASE ORDERShip To:

Quantity Description Price Amount2 Legal Pads LP8X11 $8.00/DZ $16.00

PO1*1*2*DZ*8.00**VP*LP8X11^

Line Item = Data Segment

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N1*VN*ABC Supplies^

4001

Vendor:


PURCHASE ORDER

Ship To:ABC SuppliesP.O. Box 180Baltimore, MD 21239

12/31/92


4001

Data Elements

63


N1*VN*ABC Supplies^

Code = Qualifier

Separator = Element Delimiter

Data Segment Delimiter

64

Summary

ISA

IEA

GS

GE

ST

SE


GS...ST...

. .SE...GE...

IEA*1*123456789^

Communications Protocol

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Module 3 Summary

– The paper business document and its components can be compared with the EDI transaction set.

– EDI enveloping can be compared functionally to postal envelopes.

– EDI Software translates business documents into a standard format for transmission

66

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Organizational Issues in EC/EDI Implementation

Move From

Paper IntensiveNon - Integrated

AutomatedIntegrated

• Mind Sets• Cultural Change• Conveying Key Messages• Building a Case for Action• Bottom Up Support• Selecting EC Technologies • Linking EC Technologies to Business Results

68


Two Key Messages:– Here is where we are and why we

can’t stay here.– This is the company we must become.

People must buy-in!People must buy-in!

•Supplier/Customer Mandate•Increased Competition•Globlization of the Marketplace•Reduce Costs

69


Elements of an effective case for action:– Business context– Problem– Marketplace demands– Diagnosis– Cost of no action

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Increased competition and a rapidly changing business environment have forced the implementation of technology in businesses of every size.

Implementing Electronic Commerce can position your company to compete with a wide range of competitors.

A small business has the advantage of skipping layers of management when implementing electronic commerce. Execution can happen quickly, risk free, and at a low cost.


71


How to bring people into the change process.“Start with reality. Get all the facts out. Give people the rationale for change, laying it out in the clearest, most dramatic terms.

When everybody gets the same facts, they’ll generally come to the same conclusions.”

J. Welch, CEO of General Electric

“To inaugurate large-scale change, you may have to create the burning platform. You have to give people a reason to do something differently. Scaring people isn’t the answer. You have to appeal to them. The more they understand why you want to change, the easier it is to commit to it.”

L. Bossidy, CEO of Allied-Signal

Fortune Magazine, Dec 13, 1993

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The cost of integration in the absence of a cultural change actually are higher. This is true because a new technical system has been introduced within the old culture.

– The organization retains redundant processes.– Non concurrent processes slow the cycle.– Hand-offs further slow the process.– Creates an environment for error.– Rework is a characteristic.

These findings are especially pertinent today These findings are especially pertinent today because of the need to lower costs, the because of the need to lower costs, the requirements to be flexible and the ability to take requirements to be flexible and the ability to take advantage of the opportunities. advantage of the opportunities.

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1st tier

Virtual Enterprise

Electronic Communication(EC) Vision for the Future

Prime Contractor

Vendor

Vendor

2nd tier

Vendor

1st tier

Prime Contractor

3,000 Pound Gorilla

1st tier

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