• October 18th, 2017
  • Posted by athanne

Electronic Data Interchange

Electronic data interchange process is the computer to computer business document between companies. Electronic Data Interchange replaces the faxing and mailing of paper document.

Electronic Data Interchange Electronic Data InterchangeDefinition of Electronic Data Interchange

It uses specific record format that are based on widely acceptable standard in a unique way that fit their business needs. It is used in a variety of industries; many of these companies require their entire partner to use Electronic Data Interchange.

Benefits of Electronic Data Interchange

Computer to computer exchange of information is much less expensive than handing paper document.

Less labour time is required

Few errors occur because computer system process the document rather than processing by hand.

Business transaction flow faster and it support reduction in level better use warehouse space fewer out of stock occurrences and low freight cost.

Paper purchased order can take up to ten days from the time the buyer produces an order when the supplier ships it. Electronic Data Interchange order can takes as little as one day.

In the traditional method of processing a purchased order a buyer or a purchasing agent will go through a fairly standard procedure to create a purchase order consisting of the following steps

  • A buyer reviews data from an inventory or planning system
  • The buyer enters data into a screen into the purchasing system to create purchase order
  • The buyer waits for the purchase order to be printed
  • After the purchase orders is printed, the buyer mails it to the vendor
  • The vendor receives the purchase order and posts it into their order entry system
  • The buyer cost the vendor periodically to determine if the purchased order has been received and processed.
  • When you consider the same document exchange a company places its purchase order electronically using Electronic Data Interchange
  • The buyer reviews the data and create purchase order but does not print the purchase order.
  • Electronic Data Interchange software creates an electronic version of the purchased orders and transmits it automatically to the sender within minutes.
  • The vendors order entry system receives the purchased order and update the system immediately receipt are received.

Data security and controls are maintained throughout the transmission process using password, user identification and encryption. Both the buyers and the supplier Electronic Data Interface application edit and check the document for accuracy.

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Electronic Data Interchange Requirement

Each trading partner has unique EDI document to be processed almost any business document that one computer wants to change with other computer can send via EDI, however each document must be exchanged with the partner in the exactly the format they specify. Many partners will have an EDI implementation guide or kits that explain their specific requirement. Maps are required to translate the EDI document from the trading partner format into the format that is waste by the receiving party.

What you need to be EDI compliant

  • Software for communication
  • Mail box for EDI transaction
  • Mapping and translation software
  • Mapping labour

And thus Electronic Data Interchange