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IST-2000-26429 HERMES Training Material METU-SRDC, Jan., 2002 The Electronic Data Interchange  Aybar C. Acar Software R&D Center Middle East Technical University  Ankara Turkey

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IST-2000-26429 HERMESTraining Material METU-SRDC, Jan., 2002

The Electronic Data Interchange

 Aybar C. AcarSoftware R&D CenterMiddle East Technical University Ankara Turkey

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IST-2000-26429 HERMESTraining Material METU-SRDC, Jan., 2002

Definition of EDI It is not easy to define EDI in strict terms.

EDI defines the paradigm of exchanging data

electronically more than anything else. It is easier to describe the commonly used EDI

practices. The collection of these commonpractices amounts to what is known today as EDI.

EDI can be thus described as an information

sharing system utilizing an intermediate messagestore-and-forward entity and premeditatedmessage syntax and interaction processes whichare modeled by trading partners around standardtemplates.

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The Main Requirements of EDI The interchange has to be hardware

independent.

The message syntax has to be unambiguous,although not always self-describing.

It has to reduce labor intensive tasks of exchanging data such as data reentry.

Should allow the sender to control theexchange, including knowing if and when arecipient has received the message.

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History of EDI The earliest implementation of a system compliant with

EDI is the British  A utomated Clearing Service (1970).

Many organistions that had a significant amount of regularpayments used the B ACS.

B ACS users would record information they would otherwisehave printed as cheques, on to magnetic tape reels andcourier them to the B ACS center.

Later an online submission facility was added

Other early examples include L ACES (1971-1981), afreight clearing system used at Heathrow and WMO,the World Meteorological Office system used to shareweather information.

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IST-2000-26429 HERMESTraining Material METU-SRDC, Jan., 2002

History of EDI Preliminary initiatives of trading groups increased and

standardization in Europe soon became needed.

The first effort is TR A D ACOM, a UK standard developed by A N A  in 1982 for general trade.

Other European countries developed similar standards such asSED A S in Germany, and GENCOD in France. These standardshave since migrated to EDIF ACT.

North  A merica had similar problems with industrygroups making up their own standards rapidly. In the beginning of the 80s  A NSI took up the task of 

standardizing the EDI messages, in order to make cross-industry trade possible. The resulting standard is called  A NSIX12.

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The Struct ure of EDI Systems The basic EDI struct ure is given below.

Each partner has their own internal software systems.

Special EDI adapters have to be implemented which will be

able to interface with the internal system as well ascommunicate with the value added network.

The particulars of the message syntax and interactionprocess are negotiated between partners in advance.Sometimes a dominant partner will impose its standards onsmaller partners.

Partner B

Internal

SystemEDI Software EDI Software

Partner A

Internal

SystemVANVAN

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Security and Privacy in EDI

Internal

SystemEDI

Adapter Comms Comms

EDI

Adapter 

Internal

SystemProtocol

Checks

EDI Checks

Digital Signatures / Encryption

EDI Acknowledgement

(physical)

EDI Acknowledgement

(logical)

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 Value  A dded Networks  Value  A dded Networks are the go-between in EDI

communications.

The V A N is responsible for routing, storing anddelivering EDI messages. They also provide deliveryreports

Depending on the V A N type, messages may need extraenvelopes or may be routed using intelligent V A Ns

which are able to read the EDI message itself.  V A Ns may be operated by various entities

Telecom companies

Industry group consortiums

A  large company interacting with its suppliers/vendors

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EDIF ACT EDIF ACT stands for EDI for administration, commerce

and transportation.

It has been introduced by the UN center for thefacilitation of administration, commerce andtransportation (UN/CEF ACT) in the mid 1980s.

Older European EDI standards such as TR A D ACOM,GENCOD, SED A S and ODETTE have all migrated to

EDIF ACT. EDIF ACT has f urthermore has become an international

standard as  A NSI has stopped all work on X12 since1997 and X12 systems are migrating to EDIF ACT.

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EDIF ACT: Struct ure EDIF ACT Interchanges consist of messages which are

in t urn composed of data segments. The segments

themselves consist of data elements.Interchange

Message MessageMessageI¶change Header I¶change Header  

Data

Segment

Data

Segment

Data

Segment

Message

Header 

Message

Header 

Data

Element

Data

Element

Data

Element

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EDIF ACT: Message SyntaxSample EDIFACT Message:UNB+UNO A :1+6464:XX+1141:XX+BEN0273 

UNH+000001+ORDERS:2:932:UN 

BGM+220+ AC6464 

DTM+4:20000305:102 N A D+BY+6464326::91 

N A D+SU+1149646::91 

UNS+D 

LIN+1++PT-1073-R:VP 

QTY+21:1600 

LIN+1++PT-1073-S:VP 

QTY+21:1200 

UNT+13+000001 

UNH

.

UNT

UNZ+1+BEN0273 

Message 1

Message 2

Interchange

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Everyday Uses of EDI Financial and monetary.

Systems like SWIFT and EFT all use EDI.

Governmental. Payroll operations.

Official information sharing (e.g. For motor vehicleinformation, visas etc.).

Transportation.

I A T A  system is built on EDI.  A ll airplane bookingand ticketing operations done over EDIF ACT.

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 A  Case in EDI:  A lcatel-Bell

Telephone A lcatel Bell Telephone is Belgiums most prominent 

exporter of telecommunications equipment and

systems for both private and public networks.

The key strategies employed by the company for itsdominance were flexibility and short lead times.

In order to increase its flexibility towards customersthe company decided to increase its flexibilitytowards suppliers.

It therefore started deploying EDI in several phasesfrom 1990 to 1994.

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 A lcatel Bell: Facts

The company was first founded in 1882 as a subsidiary of Bell Co.in the US.  A fter the antitrust cases of 1928 the European divisions

formed ITT which later became  A lcatel in 1982.

Operates 10 plants in Belgium, 4 abroad and 12 overseas offices.

50% of its t urnover (1 Billion $ in 1991) comes from exports toover 80 countries.

Purchases of materials and components accounted for 60% of the

costs of goods sold.

There existed about 1250 suppliers, 100 of which generated about 70% of all orders. 22 suppliers were critical for the supply chain.

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EDI project details The main aim of  A lcatel was to perform 80 90% of all financial,

transport and commercial transactions over EDI.

The project started in 1989 and lasteduntil 1994. The first phaseaimed to build the buyer-supplier EDI relationships.

By mid-1992 all 22 critical suppliers had implemented purchase orderf unctionality

4 of these links were totally paperless.

3 of the 22 also employed Price Sales Catalog f unctionality.

By mid-1993 the remaining 18 key suppliers had joined.

By the end of 1994, 100 suppliers were linked with processes such asPrice Sales Catalog, Purchase Order, Purchase Order Response,Purchase Order Change Request, Delivery Schedule, Dispatch  A dviceand Invoice

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Impact of EDI on  A lcatel Shorter lead times, more flexibility and less inventory

A purchase negotiation which used to take 2 weeks now took 24hours.

A bout 1 million $ reduction in the inbound inventory

Greater  A ccuracy

Reduced Manpower

Logistic buyers decreased from 12 in 1982 to 3 in 1992.

Single Sourcing

Instead of splitting orders among suppliers an order is now given to asingle supplier, since backup supply is not hard to arrange anymore.

Total annual tangible benefits to  A lcatel: 0.5 M$ with annualincurred costs for installation and operation being only 30000 $.

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Benefits of EDI EDI is a well developed system with a lot of 

organizations using it extensively.

Contrary to popular belief EDI is not obsolete. Theexplosion in EDI started occurring in the mid 1990sand EDI use is still growing.

Large organizations will probably continue to use EDI

for the foreseeable f u

t u

re du

e to increased secu

rityand existing infrastruct ure investments.

Companies doing business with large organizationswill need to implement EDI.

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Drawbacks of EDI EDI adapter software is too expensive for most organizations.

The software has to be practically rewritten for different combinations of V A Ns, internal hardware and trading scenarios.

The software is also subject to change when there is a revision inEDIF ACT

 V A N subscription costs and dedicated line costs are prohibitive formost SMEs

The EDI system is highly static and every business process has to

be meticulously negotiated between partners. Since there is no common registry or discovery mechanism,

partners have to retain information on instit ution codes, product codes, up-to-date catalogs etc. associated with everybody they dobusiness with.

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XML - EDI XML-EDI is the collection of five core technologies:

XML: provides the foundation and replaces EDI segment identifierswith XML tokens.

EDI: Provides the business methods and existing process dataformats and specifications.

Templates: Define the rules by which the data is to be processed.They provide the glue which holds the process together.

 Agents: Interpret the Templates to perform the work needed, and

also interact with the transaction and the user to create newtemplates for each new specific task, or look up and attach the right template for existing jobs.

Repository: This component provides the semantic foundation forbusiness transactions and the underpinning that the  A gents need tocorrectly cross-reference entities.

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EDI and ebXML Both the  A NSI X12 group and the EDIF ACT group have joined in

the ebXML initiative as of July 2001

The EDI groups will be work in the development of the core

components of ebXML dealing with business process integration. A NSI has about 300 different business processes and EDIF ACT

contains about 1200 processes. Process definition is key.

The business processes outlined in EDI use standardized messagesegments which are re-usable.

The main problem is defining the EDI business processes c

urrently inuse with an unambiguous format. When this is done, the processes

will become syntax independent.

Once this is done (est. 2 years), EDI and ebXML will be able to usethe same processes and be able to communicate regardless of syntax.