ELECTRONIC DATA

INTERCHANGE

Pankaj Thapa
pankajkeith@gmail.co
m

Meaning
Electronic Data Interchange (EDI) refers to the
structured transmission of data between
organizations by electronic means.
A way to exchange transcripts (and other
important data) without paper.
The National Institute of Standards and Technology
in a 1996 publication defines Electronic Data
Interchange as "the computer-to-computer
interchange of strictly formatted messages that
represent documents other than monetary
instruments.
EDI can be transmitted using any methodology
agreed to by the sender and recipient. This
includes a variety of technologies, including
modem (asynchronous, and bisynchronous), FTP,
Email, HTTP, AS1, AS2, etc

Working of EDI
1. Exchange of data with several trading
partners directly in a standard format.
2.

Interaction with multiple companies

through a central information clearing
house. Here each companies add EDI
program to its computer to translate the
company data into standard formats for
transmission,
and
for
reverse
translation in the data.

Working of EDI cont

Supplier
One to Many

Manufacture

Supplier
Supplier

One to Many

Manufacture
Manufacture
Manufacture

Supplier
Third
Party
Vendor

Supplier
Supplier

EDI Business Cycle

Vendors
Company XYZ
tin
s
e

Notes, Documents,
Images, Letters,
Purchase Orders,
Invoice, Queries,
Order Entry,
Shipment Details,
Payment Orders,
Bankers Advice,
Miscellaneous claims.

Computer
with EDI
software

n
io
t
a

n
D
tio
I
a
n
ED
sti
e
ID
ED
on
tinati
s
e
D
ED I

EDI Service
Network

EDI Destination

ED I
ED

De s

ID

tinat

ion

es
ED
t in
ati
ID
on
es
t in
at
io
n

Customer
s
Branch
Office
Distributor
s

Stores
Banks
Transporters

Processing of EDI message

External
User
Interface

External
User
Interface

Applicatio
n

Applicatio
n

Translatio
n
Services

Translatio
n
Services

EDI
Service

EDI
Service

Network
Access
Control

EDI Service
Network

Network
Access
Control

Benefits of EDI
Generation of a paper document on a form by
software application.
Delivery of a few copies of document to the
internal dept to be filed and others to the trade
partners via postal service.
Retyping the document received by the trading
partner on the form into their computers which
may offer introduce errors.
Generation of a paper acknowledgement and
sending it to the originating company.
Generation of a file containing the processed
document by the application program.

Benefits of EDI cont

Conversion of the document into agreed standard
format.
Electronic transmission of the file containing the
document over the network , which may link the
originating company and its trading partner.
Automatic generation of the receipt and its
delivery over the network to the originating
company.

Features of EDI
Exchange of structured business information
standard formats between computers.

in

It has reduced data entry link, eliminates the need for

a paper bases system and improved business cycle.
EDI
transfer structured business documents
internally among groups of departments or externally
with its suppliers, customers and subsidiaries.
In EDI, information transferred over a network will not
have to read, retyped or printed but must have
predefine structure agreed between the two
company's which send and receive data.
The two companies or groups which exchanged
information through EDI are called the Trading
Partners.

Components of EDI
There are 3 types of component

1. Application service
2. Translation service
3. Communication service

Components of EDI cont

Business
Application

Application
Service

Trading
Partner

Transmissio
n Service

Communicati
on Service

File Types
Edi creates following files as a document passes through the
system:
1. Internal format file (IFF):It contains single document for single trading partner.
2. External format file(EFF):It contains same data as the internal format file translated into
the appropriate standard document format.
3. Transmission file:it contains one or more document for the same trading partner.
Documents of same format are packed into an functional
groups. The functional groups going to one trading partner are
packaged into an interchanged set. An interchanged set. An
interchanged set contains one or more functional groups of
documents with the same sender and receiver.

EDI software
1.Translators:Every EDI sender and receiver should have EDI
translator. It varies based on the computer on which
it is going to reside. The computer may be a micro
computer or a midrange or a mainframe. Translator
reads the fixed length file and generates valid Edi
standard and maintains control information.
2.Application link software:There are 2 components of software, which is
generally used to link the existing
business
application to the EDI data. One is the translator and
the other is application link software . Application link
software is used to collect information from the
business application and then it formats into fixed
length computer file and passes it onto translators.

EDI services
1. Application Services :It provides the link between application and EDI.
It allows you to send documents from an EDI
system. The set of callable routine is used to
transfer document from the business application
into EDI document destination can be either
intra-company or to the external companies .

EDI services cont

File Server
Internal Format File

Document

Business
Application

Document

Callable
Routines

Management - Interface

Application
Service

Internal Format File

EDI services
2. Translation service:Converts the out going documents from an
internal format file to an agreed external format.
Translates internal document from external
format to EDI internal format file.

EDI Services cont

Translation Service

File Server
Internal Format
File

Internal Format
File

Transmission File

External Format File

External Format File

TFB

TFS

Transmission File

Management - Interface

Converter

TFB

Transmission file Builder

,
,

Translator

TFS

Transmission file Splitter

EDI Services cont

3. Communication service:The communication service sends and receives
transmission files to and from the trading
partners either directly or by using party service
called a valued added network(VAN).

EDI Services cont

Communication
Service
File Server
Transmission File
Transmission File

CC

Transmission File

Gateway 1
Gateway 1
Management - Interface
CC = Communication
Controller

Transmission File

EDI Standards
1.

Transaction set standards:These defines the procedural format and

content requirement for specified business
transactions. Eg: Purchase orders.

2. Data Dictionary And Segment Dictionary:These defines the precise content for data
content and data segment used in building
transaction sets.
3. Transaction control standard:These define the format s for the information
required to control the data interchange

Thank you