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Lecture #21
Lecture 21: Electronic Commerce #1 - EDI
Electronic Commerce
"Electronic commerce" can be understood in terms of two
"generations".
Some examples from the pre-Internet era (or first generation)
are:
- Electronic Data Interchange (EDI)
- Open Document Architecture (ODA)
- OSI (X.400) email services
In the Internet era (ie, the present), the ubiquity of
Internet connectivity is changing many aspects of business. A few
examples of these second generation business applications
include:
- Web advertising, and product information sites, eg
www.sony.com
- Web-based electronic storefronts, facilitating direct
purchase of goods and services via the Web. Many of these are now
moving to new electronic payment schemes.
- Internet-based (SMTP) email.
- EDI over the Internet.
- many, many more.
EDI -- Electronic Data Interchange
Of all the pre-Internet business applications of
computer networking, this was the single most
important. It still is.
What is EDI?
- EDI is direct computer-to-computer[1]
exchange of data normally (or previously) provided on standard
business paper documents.
- Can be implemented within a business, but normally used
between companies for the following reasons:
- Cost savings due to elimination of re-keying, printing,
courier costs
- Speed: communications can be essentially instantaneous
- Reduction of errors
- Security
- Integration with other office automation applications
- Just-in-time deliveries.
- Use of EDI is now regarded as essential in most large manufacturing
companies, and is now common in many smaller companies.
[1] More correctly, of course, we should
say "application to application" data transfer.
EDI Standards
The basic concept of EDI is that companies agree to a
standardised format of EDI messages which are then
unambiguously exchanged using a reliable, connection-oriented computer
network delivery service.
There have been two proposed EDI standards:
- ANSI X.12
- developed in the US and widely adopted, although not
an international standard. Will eventually (supposedly) be replaced
by:
- EDIFACT
- (EDI For Administration, Commerce and Transport),
originally developed by the U.N. (?) and submitted to ISO for
ratification as an international (and hence Australian) standard.
In EDI, an interchange is made up of one or more
messages (or possibly functional
groups containing messages of the same type), which in turn
are composed of segments built up from one or more
single or composite data elements.
EDI Data Structures
An EDI message is the basic unit of transmission --
typically a message can consist of an order, an invoice or a similar
business document.
NB: Original version of this diagram from Standards Australia,
AS 3801 -- 1989
Typical EDIFACT Messages
Some EDIFACT message types:
- CREADV
- Credit Advice
- CREEXT
- Extended Credit Advice
- CUSDEC
- Customs Declaration
- DEBADV
- Debit Advice
- IFTMAN
- Arrival Notice
- IFTMBC
- Booking Confirmation
- IFTMBF
- Firm Booking
- IFTMFR
- International Forwarding & Transport Message Framework
- INVOIC
- Invoice message
- ORDERS
- Purchase Order
- PAYORD
- Payment Order
- REMADV
- Remittance Advice
- and many, many more ...
There are also a larger number of draft and proposed message types
awaiting standards approval. It is possible for a group of users to
suggest a new message type to meet an unusual business need.
EDI Implementation
There is a great deal of flexibility in the way EDI can be
implemented. Some approaches include:
- Use of a commercial EDI provider company. EDI users establish a
"leased line" or dial-in link to the provider, usually in the
context of a turnkey EDI package. The provider
implements a "mail box" where EDI messages are lodged to await
delivery to the recipient. There is obviously a problem where
trading partners are connected to a different EDI service - EDI
users simply have to subscribe to more than one provider.
- In the past, it has been relatively common for telecommunications
companies such as Telstra Australia to offer electronic mail
facilities based on the OSI X.400 protocols. Prior to the emergence
of the Internet as "the only game in town", an
X.400 email service could be used as a carrier for EDI messages.
Your lecturer is uncertain as to how much use was ever made of this
option, and X.400 is hardly ever used anymore.
EDI System Architecture
An EDI system is based on three architectural elements:
- Application Software
- is where the business information is
created and used - eg: order entry and accounts payable systems.
Presumably, the company already has this.
- Translation Software
- is required to convert internal
representation of data to and from the standard formats used in
EDI. This can usually be supplied by the EDI provider as part of a
complete turnkey package. Such packages can be based on many types
of equipment, from PCs to mainframes.
- EDI Provider
- see previous slide
Note: PC-based translation software is regarded as suitable for small
businesses starting out with EDI. However:
- maximum gains from the technology are only attainable when the EDI
translation software is fully integrated with corporate databases
such that information can flow between applications without human
intervention.
- This implies development (or purchase) of EDI translation software
on the corporate mainframe = big $$
Case Studys and the EDI Industry Group
Major Australian EDI users include:
- All of the motor vehicle manufacturers and most of
their component suppliers
- A large proportion of government departments, both
state and federal.
and hundreds of others...
The Australian EDI industry body is "Electronic Commerce
Australia", now integrated into Tradegate Australia. Their
brief also covers other forms of electronic messaging such as:
- Interpersonal (human-human) computer messaging, or electronic mail
and forms-based email.
- Human to computer messaging. Typical examples of this include
one-way email, or automatic computer generation and transmission of
FAX messages, called C-Fax by EDICA.
NB: EDICA also stated (in 1994) Many organisations, particularly
those with over $100 million in sales have already begun full scale
trading partner initiation programs. Very few have achieved successes
which they would consider to be commensurate with the time, effort and
money expended
Links
There are lots of Web sites with information about EDI. For example:
Some EDI Examples
There's a newsgroup for Electronic
Commerce as well, but it doesn't seem to have much useful
information -- lots of advertisements though!
The tutorial for this lecture is
Tutorial #21.
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Copyright © 2001 by
Philip Scott,
La Trobe University.