EDI IN ACTION

EDI seeks to take what has been a

manually prepared form or a form from a
business application, translates that data
into a standard electronic format, and
transmits. At the receiving end, the
standard format is “untranslated” into a
format that can be read by the recipient’s
application. Hence output from one
application becomes input to another
through the computer-to-computer
exchange of information. This process
results in elimination of the delays and the
error inherent in paper-based transactions.
 EDI IN ACTION
• 1) EDI has been used extensively in the
procurement function to streamline the
interaction between the buyer and seller.
• 2) University use EDI to exchange
transcripts quickly.
• 3) Auto manufacturers use EDI to transmit
large, complex engineering design
created on specialized computers.
• 4) Large multinational firms use EDI to send
on-line price catalogs to customers listing
products, prices, and documents and
terms, thereby enabling EDI-capable
businesses can compare prices and terms
and make direct orders by EDI.
 EDI IN ACTION

• In a traditional system, the pervasive

practice of converting digital data
into hard copy data that is
reconverted into electronic
information again on the receiving
end generates unnecessary costs.
The use EDI carriers save
substantial administration costs by
eliminating the bulk of circulating
paperwork. Further, the
accessibility of information is
improved manifold, which enables
 EDI IN ACTION
• The EDI transactions for a purchase, shipment
and corresponding payment are as follows.
• Buyer’s computer sends Purchase Order to
seller’s computer
• Seller’s computer sends Purchase Order
Confirmation to buyer’s computer
• Seller’s computer sends Booking Request to
transport company’s computer
• Transport company’s computer sends Booking
Confirmation to seller’s computer
• Seller’s computer sends Advance Ship notice to
buyer’s computer
• Transport company’s computer sends status
seller’s computer
• Buyer’s computer sends Receipt Advice to seller’s
computer
• Seller’s computer sends Invoice to buyer’s
 EDI IN ACTION
• The Purchase Order Confirmation is the seller’s
acceptance of the price and terms of sale.
Various internal departments are aggregated
and called buyers and seller to simplify the
description. All interactions occur through EDI
forms and in most cases are generated
automatically by the computer.
• EDI is a strategic tool that enhances the
competitiveness of the companies involved.
The improved ability to exchange huge
amounts of data in a fast and effective
manner tends to speed up business process.
Further, these processes can be closely
monitored, providing the companies with the
ability to trace, manage, and audit the
operation. Such flexibility allows firms to
adopt business techniques aimed at removing
the bottlenecks and making the business
processes more efficient.
 EDI IN ACTION
• Benefits of EDI
• EDI can be cost-and time-saving
systems for many reasons. The
automatic transfer of information from
computer to computer reduces the
need to re-key information and as
such reduces cost errors to near zero.
EDI transactions produce
acknowledgements of receipt of data.
Many firms are now finding that this
acknowledgement can make this
invoice obsolete and save many
efforts now devoted to acquiring,
receiving and paying for goods.
 EDI IN ACTION
• Reduced paper-system: The effort and
expense a company devotes to maintaining
records, paper-related supplies, filing cabinets,
or other storage systems and to the personnel
required to maintain have been taken over by
EDI through automation, thereby drastically
reducing the time spent to process them. This
can also reduce the postage bills
• Improved problems resolution and customer
service- EDI can minimize the time companies
spend to identify and resolve inter-business
problems. Much of the problems come from
data-entry errors and EDI can eliminate many
of them. EDI can improve customer services by
enabling the quick transfer of business
documents and a marked decrease in errors.
This apart, by providing an automatic audit
trail, it frees accounting staff for more
productive activities.
 EDI IN ACTION
• EDI benefits for International trade
includes
• Reduced transaction expenditure
• Quicker movement of imported and
exported goods
• Improved customer service through “track
and trace programs that quickly identify
to the many participants in a trade deal-
companies, customs, bank, insurers,
transport agents and so on-where things
are located or being handled; and
• Faster customs clearance and reduced
opportunities for corruption, a huge