E-Commerce and EDI
Although it appears these two systems may not be able to play together, the opposite is true. In this current climate of utilizing all the technologies available to make businesses more accessible and more user friendly, EDI can combine with e-commerce to do just that. While EDI is well entrenched as a major framework in many larger businesses, it is also being adopted by smaller businesses to increase their ability to make trading partners. EDI provides a fast and efficient way to exchange information. Currently, there are standards known as AS2 which govern Internet EDI transactions. The use of EDI through Internet modes is becoming more popular, as it does not require the same amount of set-up, costs or applications as for bigger corporate enterprises.
The advantages of implementing EDI within the Internet environment, is that trading partners can be more efficiently and effectively communicated with, it reduces the amount of errors, and therefore improves cost effectiveness. It allows businesses to trade with larger enterprises that require EDI as a communication medium. Plus Internet EDI is relatively inexpensive, and does not carry with it the ongoing costs of other forms of EDI transmission. This can enable big and small companies to save potentially millions of dollars. Instead of mailing out catalogues and brochures, companies can send emails, and advise clients of discounts, and allow them to download information from the Internet.
This is made possible by EDI, which also allows retailers and distributors to have speedily and reliable communications. Retailers can easily determine product availability of a distributor prior to placing an order. If the distributor is out of stock temporarily, the order can be passed directly to the manufacturer, with the distributor receiving credit for the sale. When products are drop-shipped to retailers and distributors, an automatic requires for their stocking requirements can be generated. Orders are encrypted for Internet transmission and then converted to EDI format for internal processing. Thus EDI has become and integral part of business which has evolved from transactions between businesses, to those between individuals and businesses. It enables a certain level of interactivity, which creates closer relationships between all parties involved.
The EDI standards were designed to be independent of communication and software technologies. 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, E-mail, HTTP, AS1, AS2, etc. It is important to differentiate between the EDI documents and the methods for transmitting them
There are four major sets of EDI standards:
- The UN-recommended UN/EDIFACT is the only international standard and is predominant outside of North America.
- The US standard ANSI ASC X12 (X12) is predominant in North America.
- The TRADACOMS standard developed by the ANA (Article Numbering Association) is predominant in the UK retail industry.
- The ODETTE standard used within the European automotive industry
All of these standards first appeared in the early to mid 1980s. The standards prescribe the formats, character sets, and data elements used in the exchange of business documents and forms. The complete X12 Document List includes all major business documents, including purchase orders (called "ORDERS" in UN/EDIFACT and an "850" in X12) and invoices (called "INVOIC" in UN/EDIFACT and an "810" in X12).
The EDI standard says which pieces of information are mandatory for a particular document, which pieces are optional and give the rules for the structure of the document. The standards are like building codes. Just as two kitchens can be built "to code" but look completely different, two EDI documents can follow the same standard and contain different sets of information. For example a food company may indicate a product's expiration date while a clothing manufacturer would choose to send color and size information.