(EDI) is the use of computer and telecommunication technology to move data between or within organizations in a structured, computer retrievable data format that permits information to be transferred from a computer program in one location to a computer program in another location, without manual intervention
EDI is one of the most important subsets of electronic commerce —the use of computer and telecommunication technology to facilitate the information exchange between two parties in a commercial transaction.
Another form of electronic commerce is based on physical media interacting with computers and telecommunications processes. Examples of this third type are facsimile transmission (paper plus telecommunications) and processes that involve information captured by bar coding, optical character recognition, and radio frequency tagging.
BENEFITS OF EDI
EDI was developed to solve the problems inherent in paper-based transaction processing and in other forms of electronic communication. In solving these problems, EDI is a tool that enables organizations to reengineer information flows and business processes. Problems with the paper-based transaction system are:
Delays are caused primarily by two factors. Paper documents may take days to transport from one location to another. In addition, manual processing delays are caused by the need to key, file, retrieve, and compare data.
Labor costs. In non-EDI systems, manual processing is required for data keying, document storing and retrieving, sorting, matching, reconciling, envelope stuffing, stamping, signing, etc. While automated equipment can help with some of these processes, most managers will agree that labor costs for document processing represents a significant proportion of their overhead. In general, labor-based processes are much more expensive than non-labor-intensive operations involving computers and telecommunications.
Because information is keyed multiple times and documents are transported, stored, and retrieved by people, non-EDI systems tend to be error prone.
Uncertainty exists in two areas. First, paper transportation and other manual processing delays mean that the time the document is received is uncertain. Once a transaction is sent, the sender does not know when the transaction will be received nor when it will be processed. Second, the sender does not even know whether the transaction has been received at all nor whether the receiver agrees with what was sent in the transaction.
EXAMPLES OF EDI
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