 |
|
|
 |
What is EDI? |
 |
|---|---|---|
|
|
|
|
|
|
What is EDI? |
|
|---|---|---|
|
EDI: All you ever wanted to know, but were afraid to ask.Our thanks for this information goes to the Uniform Code Council, Inc., a not-for-profit organization, who manages and administers three major EDI standards - UCS, WINS and VICS EDI. What is EDI?Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents between companies, using a public standard format. Rather than preparing paper and sending it through the mail, or using other communications methods such as telex, EDI users exchange business data directly between their respective computer systems. Widely used in the retail, transportation and medical industries, EDI is based on standards initially established during the 1970s. These standards specify the format and data content of standard business transactions. Today, there are about 80,000 companies using EDI. The use of EDI is not limited by differences in computer or communications equipment among trading companies. It bridges the previous information gap that existed between companies with different computer systems. What Are The Benefits Of EDI?The benefits available by using EDI are being realized by a large number of companies, many of which transmit a substantial percentage of their transaction volume via EDI. For these companies using EDI on a volume basis, the realization of available benefits can result in a definite competitive advantage. The most tangible benefit of EDI is it saves you money. It's estimated that processing a purchase order or invoice costs about $5 in paper, postage, handling, personnel and other costs. EDI lowers the cost of handling that same document to about $0.13. However, the savings can be even greater. One EDI user has reported that EDI cut the costs of processing an order from $70 to less than a dollar. Users report benefits in the following major areas. Reduced Lead Time/Quick Response EDI can provide a direct reduction in the ordering/shipping time cycle. This benefits both customer and supplier.
Warehouse Efficiencies In addition to the benefits cited above relating to warehouse operations, the following benefits are also being realized in this traditionally high-cost area:
Transaction Handling/Processing Accuracy The automated procedures associated with EDI result in a reduction in transaction errors and resulting corrective action, including the following:
Increased Salesman/Buyer Productivity The use of EDI provides the opportunity for major productivity improvement in this pivotal area of the retailing business. Both buyer and seller benefit.
Administrative and Clerical Costs One of the major goals in creating EDI was to reduce the great volume of business paperwork and many of the clerical tasks involved in handling the processing of paper documents. Many users have realized substantial productivity improvements and/or direct cost savings in their office operations by reducing or eliminating the time required for the following tasks.
In addition to the above cost benefits, direct savings can also be realized in the areas of paper, mailing, telex, and other physical costs. Intangible Benefits Intangible benefits also includes savings resulting from increased accuracy. With EDI, there is no need to re-enter information, thereby reducing the possibility -and costs- of errors. And since information flows smoothly, cycle times can be slashed. With EDI, orders can be processed, goods shipped, and invoices sent--all in one day! One study indicated that the time to record an order at the buyers location, enter it into the system, print it, mail it, receive it at the supplier, enter it into the system, process the paperwork, fill the order, ship the order, process the shipping papers and mail the invoice can take 10 days. With EDI, it is reduced to 1-3 days. Other studies indicate that EDI reduces cycle time by an average of 40% for such business functions as order entry, purchasing, manufacturing, logistics and finance. This all means you can accommodate greater volumes without added costs. Most importantly, EDI opens the door to increased business. More and more companies are mandating EDI capabilities. Some companies will not do business with you unless you are "EDI-ready." How Does EDI Work?EDI transmission typically involves the following process. The sender uses its internal computer files to assemble the data needed for the transaction, i.e., order processing, invoicing, etc. This data file then becomes input to a software module that generates the transaction into the EDI message standard format. The resulting data file is then transmitted to the receiver, over a Value-Added Network, or VAN. The VAN is like an electronic clearing house that ensures information is securely sent and received. At the receiving end, this data file is input to a software module that translates the data from EDI format into a file that can be entered into the receiver's computer application systems. The above process includes a number of control and security procedures. Data security is maintained through the use of user identification numbers and passwords. EDI generation/translation software that is available from commercial suppliers typically includes extensive data editing and error-checking routines. This facility ensures that the data is valid at the time of transmission, and that it is also valid when it is received. EDI standards also allow the receiver to acknowledge successful receipt of the transmission by sending an acknowledgment message back to the sender. EDI, then, is at least as secure and accurate as your present method of exchanging paper documents. How do I implement EDI?For companies interested in using UCS, WINS, or VICS EDI, several initial steps are recommended. First, contact the Uniform Code Council to obtain introductory material, including a membership application. Once the decision is made to utilize EDI, the first implementation action should be to join the EDI community through Code Council membership. The Council will then send you your Communication Identification Number, a Technical Manual, and provide other support services. This Communication Identification Number is unique to your company, and identifies you to your trading partners. Secondly, you need to contact your trading partners and determine what transaction sets they are using and what level. You then need to determine how you will process EDI. You have two choices, depending on your budget, your technical capabilities and the amount of EDI traffic:
How much do these approaches cost?Service bureau fees are dependent on traffic, and are usually priced as a flat fee plus a charge per transaction or line item on a document. The advantage of a service bureau is that your costs are directly related to your EDI processing, and you do not incur the costs associated with implementation. The cost of installing an EDI system internally is dependent on many factors, such as what computer system you now have (if any), the capabilities of your internal operations software and the ability to import/export to/from other systems, the technical capabilities of your staff and other such factors. The cost of EDI software can range from $1,500 to $15,000+, depending on your computer platform. The cost of programming or an outside consultant is difficult to determine. You also need to engage a Value-Added Network (VAN) which will require a one-time set-up fee, plus a monthly maintenance fee, in addition to transmission charges. Do I need special hardware?EDI software is available for virtually every computer system made. There are many choices of EDI software for PCs, running in either DOS or Windows. Some companies utilize a PC for EDI, even though their main computer is a larger system like a Unix or IBM AS/400 computer. They feel safer knowing nobody can dial into their main system, and they transfer the information to/from their main system. Also, you will find PC software is usually less expensive than software for larger systems. If you do not have a computer, a PC would be the best choice to implement EDI. It is also highly recommended that you utilize a PC if you are using a service bureau, especially if your trading partner does not specify how merchandise is to be packed and shipped. Who do I contact with EDI questions?E-mail us. We will try to answer your questions, or put you in the right direction. Uniform Code Council, Inc.:The Uniform Code Council, Inc. (UCC), a not-for-profit organization, manages and administers three major EDI standards.
|
 |
|
