Electronic Data Interchange

From ArticleWorld

Electronic data interchange is the exchange of structured information between two computers using certain standards with a minimal human intervention.


Electronic data interchange is in fact the standard way of conducting e-business to date. The regulations are independent of the medium use for transactions because they ware thought to be independent of these, if in the early days there were used sytems like the 2400 bit/s modem based value added networks, nowadays the most currently used are the modern internet protocols such as email, ftp and telnet. The most important for EDI (this acronym is often used) is the fact that the data appears exactly as on paper. The contract established always has an address for shipping, a billing address, the standard body containing retail information (quantity, price, conditions of delivery), the codes associated and some other data that the parties involved may wish to include. The standard in itself only shows the parts that are mandatory and the parts that are optional. The implementation itself may vary extremely from one type of business to another, for example a software company will include information regarding technical support while a company producing carpets will include information regarding the colours and patterns available. The parts exchanging information this way are usually called ”trading partners” according to EDI terminology.The flexibility of the specs contained in the sheet varies in reversed proportion to the size of the firms involved. Large businesses are usually reluctant in modifying their spec sheets and preffer using default types with proven validity, that’s why they usually have attached clarifications or specifications for each different transaction.

Data interpretation

Most of the time there are incoveniences to using EDI, due to the lack of clear specifications, when it comes to quantities this can be critical. For example let’s say that a contract is made for 100 packs of cigarettes. The cigarettes themselves come in a pack of 20 cigarettes which is further packed in a ten pack package, the contract should clearly specify on which type of package the contract reffers, ther must be an agreement on the terms used. The two most important terms in EDI terminlogy are ”inbound” and ”outbound”, it is critical to know that they never reffer to the content of the transaction, but only to its direction. Their importance consists in their usage for the EDI translation software. This interface provides a translation of the common standard to a custom used standard or the other way around, depending on the type of transaction (inbound or outbound). The software itself is not constricted by standards.