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Electronic Data interchange:

Concept, Components &

Communication Process

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B2B Tool - EDI

Communication Tool used handle B2B

traffic.

It allows one computer system to

communicate with another computer

system using a standardized electronic

form.

Information exchange can be:-

Transaction data.

Request for quotes.

Order acknowledgement.

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Components of EDI

Interbusiness:

Transmission of data between businesses.

Most companies using EDI, use third partservice provider or Value Added Network

(VAN).

Computer-to-Computer Providing online links between buyers andsellers business application.

Delivery of information is done using

electronic transactions.

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Components of EDI

Standard Transaction:

Electronic version of standard business form

EDI handles standard business transaction in

machine readable form.

Standard Format:

Transaction must be transmitted in predefined

form.

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Traditional Commerce flow

between buyer and sellerInitiate purchaserequest

Purchasing

Inventory/Warehousing

Finance

Mailroom

Receiving

Finance

Mailroom

Shipping

Sales

Production

Buyers SideSellers Side

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Information flow between buyer and

seller with EDI

Initiate purchaserequest

Purchasing

Application

Inventory/Warehousing

Finance

EDI

Receiving

Finance

EDI

Shipping

Order

Processing

Application

Production

Buyers Side Sellers Side

Application

Files

Application

Files

InternalFiles

Internal

Files

Payment Invoice

Delivery

1 2 3

4

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Advantages of EDI

Cost reduction and time savings

Improved B2B problem resolution

Accuracy with Integrity

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Drawbacks

It is expensive and requires hugeinvestment to launch and maintaintechnology.

It is point to point. Every contact requiresspecial hardware and software

It requires expensive VAN networking.

It is not easy to use, learn or implement.

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Justify EDI

Volume of data.

Frequency of document transmission and

reception.

Content sensitivity.

Time sensitivity.