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Unit31:E-businessOperationsSession7

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LearningOutcomes

2-1Explainhowelectronictransactionscanreduce

paperworkanddelay

2-2ExaminehowEDIhaslaidthefoundationsforb2be-business

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Topics

ReviewofLastsession

GroupReport

Lecture

ElectronicTransactions ElectronicDataInterchange

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ReviewofLastSession

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TestofBaselineKnowledge-Review

What are paper-based transactions?Electronic Transactions?

Compare: differences and similarities What are EDIs? Research its history

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Explain how electronictransactions can reducepaperwork and delay

CRITERIA2-1

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ElectronicTransactions

Paper-basedtransactions

Electronictransactions

Diagramsforeach

Simplifiestheprocessandreduces

delays

Needtokeeprecords

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2-1Outcome

comparingpaper-basedtransactionsbyuseof

adiagramwithelectronictransactionsforthe

completepurchasingprocess,

emphasisinghowreducingpaperworksimplifies

theprocessandreducesdelayscausedbythetransferofinformation;

needtokeeprecords(transactionlogs)incase

thereareproblemslateregcontractdisputes

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PurchaseProcess Existence of demand or requirements

Generation of requisition Preparation of Request for Proposal (RFP) or Request for Quotation

(RFQ)

Suppliers send quotations

Review of quotes Preparation of purchase order (with TOR)

Delivery of the products/service

Recording of delivery

Invoicing Payment

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SamplePurchaseDiagram

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Traditional

Process TraditionalGeneration of requisition Paperworksdoneforrequisition

Preparation of Request for Proposal

(RFP) or Request for Quotation (RFQ)

RFPandRFQdocumentsprepared

manually

Suppliers send quotations Quotationdocumentsaredoneandsent

manually

Review of quotes Encodingofquotationsandanalysisis

done

Preparation of purchase order (with

TOR)EncodingofPOandTOR

Delivery of the products/service Deliveryandinspectiondonemanually

Recording of delivery RecordedmanuallyInvoicing Invoicingdonebysuppliers

Payment Paymentbycheck

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ElectronicPurchasing

Process ElectronicGeneration of requisition Requisition done via system/ RFQ and RFP

incorporated

Review of quotes Comparison system is included in the e-purchase

software

Preparation of purchase

order

System generated PO and TOR

Delivery of the

products/service

Delivery and inspection done manually

Recording of delivery Bar code requirements automatically records

delivery

Invoicing Invoicing may also be incorporated in the system

Payment Payment done through online fund transfer

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ComparisonofTraditionalandElectronicPurchasing

Process Traditional ElectronicExistence of demand or

requirements

Yes Yes

Generation of requisition Paperworksdoneforrequisition Requisitiondoneviasystem

Preparation of Request for

Proposal (RFP) or Request for

Quotation (RFQ)

RFPandRFQdocuments

preparedmanually

RFPandRFQareset-uponlineto

befilled-upbysuppliers

Suppliers send quotations Quotationdocumentsaredone

andsentmanually

Noneed

Review of quotes Encodingofquotationsand

analysisisdone

Comparisonsystemisincludedin

thee-purchasesoftware

Preparation of purchase

order (with TOR)EncodingofPOandTOR SystemgeneratedPOandTOR

readyforprinting

Delivery of theproducts/service

Deliveryandinspectiondonemanually

Deliveryandinspectiondonemanually

Recording of delivery Recordedmanually Barcoderequirements

automaticallyrecordsdelivery

Invoicing Invoicingdonebysuppliers Invoicingmayalsobeincorporated

inthesystem

Payment Paymentbycheck Paymentdonethroughonlinefund

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Advantages of Electronic Transactions Reduces Errors Creates Transaction Database/ reduction of paperworks Increases Accountability Minimizes Fraud Quicker Transactions/ minimizes delays Eliminates Equipment Lowers Transaction Costs Faster Billing Recurring Billing

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Record Keeping (Transaction details)1. User Need for Product or Service

Purchaserequisitionsfrominternalusers

Forecastsandcustomerorders(electronically) Routinereorderingsystems(barcodes)

Stockchecks

Materialrequirementsidentifiedduringnew

productdevelopment

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Record Keeping (Transaction details)2. Purchase Approval and Supplier Evaluation

Accreditation papers of suppliers for repetitive

purchase Negotiated contract with supplier, with established

terms for delivery, pricing, quality, etc., and the

supplier has already been entered into the

accounting system.

RFQ format to suppliers (printed or online)

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Record Keeping (Transaction details)3. Bidding, Negotiation, and Supplier Selection

Purchase approval document

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Record Keeping (Transaction details)4. Purchase Approval

Electronicpurchaseorder(PO),sometimes

calledapurchaseagreement.

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Record Keeping (Transaction details)5. Release and Receive PurchaseRequirements

Deliveryreceipt(barcodeorprinted) Materialpackingslip,thebilloflading,and

thereceivingreport

Inspectiondocument

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Record Keeping (Transaction details)6. Payment

E-check

Fundtransferconfirmation E-paymentreferencenumber

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ExaminehowEDIhaslaidthe

foundationsforb2be-business

Criteria2-2

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ElectronicDataInterchange(EDI)

Historyanddevelopment;

Dedicatedlinesornetworks,

Formats

Standardisedtransactionsets

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ElectronicDataInterchange(EDI)

thecomputer-to-computer

interchangeofstrictlyformatted

messagesthatrepresentdocumentsotherthanmonetaryinstruments.

NationalInstituteofStandardsandTechnology,1996

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History

1960s-companiesdevelopedin-housecomputersystemsand

internalnetworkstostreamlinebusinessfunctions. 1968establishmentofTDCC

1975establishmentoffirstTDCCelectronicstandard

1978TDCCrenamedtoElectronicDataInterchange

Association(EDIA);furtherdevelopmentofstandardsANSIX12

1982TRADACOMwasintroducedintheEuroperetailmarkets

1985EDIFACTwasstartedthroughtheUnitedNations

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BENEFITS OF EDI Providestrategicbenefitsbyhelpingafirm'lockin'

customers

PreventsTimedelays

MinimizesLaborcosts

Accuracy

InformationAccess

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ModeofTransmission

Dedicatedlines(leasedline)

Dial-up

Point-of-Sale(POS)Machine

ManualDelivery Modem

InternetProtocol ValueAddedNetworks(VANs)

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SampleFormat-EDIFACT

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TheUNA-segmentdescribesthesegmentterminator,dataelementseparator,

componentdataelementseparatorand

releasecharacter '=>isasegmentterminator

+=>isadataelementseparator

:=>isacomponentdataelementseparator

?=>isareleasecharacter

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UNH+1+PAORES:93:1:IA'

Thisistheheadersegmentwhichisrequiredatthestartofeverymessage.This

codespecifiesthatthemessagenameand

versionisPAORES93revision1anditwasdefinedbytheorganisationIA(IATA).

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IFT+3+NOMOREFLIGHTS'

-Thisisan"InteractiveFreeText"segmentcontainingthetext"NOMOREFLIGHTS".

UNT 13 1'

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UNT+13+1'

Thisisthetailsegment.Itindicatedthatthemessagesentcontains13segments.

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InfrastructureforEDI

1) Format standards to facilitate automated processing by all

users,2) Translation software to translate from a user's proprietary

format for internal data storage into the generic external

format and back again,

3) Value-added networks to solve the technical problems ofsending information between computers,

4) Inexpensive microcomputers to bring all potential users

even small onesinto the market, and

5) Procedures for complying with legal rules.

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END OF SESSIONSeeyounextmeeting