EDI (Electronic Data Interchange) in English means "electronic data interchange." Before this scheme appeared, trade relations went a long way. Any company that decided to join this form of documentation transfer is able to cooperate with all members of the system. For such a process, the installation of an EDI gateway at the enterprise is required.
What is this form of communication for?
The EDI system is capable of exchanging commercial information (orders, deliveries, money transfers, etc.). This contributes to the rapid cooperation between companies in the field of trade relations. Electronic Data Interchange is an innovative technology.
Benefits of EDI
The EDI ordering system has several advantages:
- All actions are carried out on an automatic level, without delays and errors, as opposed to manually entering documents.
- The use of automated procedures increases the speed and accuracy of collecting the necessary data and allows firms to focus on the main problems, rather than on paperwork.
- Any retailer, supplier or logistics company makes just one connection. Thus, there is an unlimited opportunity to communicate with minimal cost with all participants. At the same time, their accounting systems, circulation of documents and staff qualifications are not taken into account.
- The EDI system can resolve disputes in which one partner claims that the order was sent to them and the other that it did not receive it. This situation is common. In this case, the system records all operations and is able to provide detailed information regarding a particular action with the documentation. This contributes to the quick resolution of the conflict.
What guarantees the authenticity of the documentation?
EDI is an electronic data interchange system. In Europe, its software acts as a guarantor of the authenticity of all documentation passing through it. Fakes are not possible. If the tax service is interested in the details of certain reports, including the VAT rate, then all data can be extracted from the system electronic archive. The right to conduct operations with documents in electronic rather than in paper form is enshrined in law.
Example of calculating the efficiency of using EDI
What is the effectiveness level of the EDI system? Examples of calculation serve as a visual confirmation.
It is easy to clarify how many different exchange agreements need to be concluded by those involved in a particular case:
- For six participants, the following calculation applies: N = 6 x (6-1) / 2 = 15.
- For 100 collaborating people, the calculation is applicable: N = 100 x (100-1) / 2 = 4450.
With an increase in the number of participants, the growth of the number increases exponentially.
The number of users is equal to the number of exchange operations, each partner acts in accordance with uniform rules and connects to a common platform. At the same time, he is absolutely not interested in the method of connecting other providers. The EDI provider is responsible for everything thanks to a certain standardization of messages.
We proceed to the analysis of economic efficiency. As a basis, we take a distribution network that sends 4000 orders per month. Manual order processing takes half an hour. An EDI electronic system can do this in five minutes. If a trade organization has several thousand suppliers, then even a half-hour time savings on each partner gives a significant result.
What do users themselves think about a device like the EDI system? Electronic document management reviews praise. Users claim that the operation of the circuit is clear and uninterrupted. Without such a system, it would be difficult to conduct business in the modern world of business, where every minute is expensive.
EDI Providers in Russia
For example, the commercial form of the system in our country is possible due to the existing localized standard for the exchange of information at the electronic level EANCOM. There is also a global local information structure and provider companies that take responsibility for ensuring the implementation of all projects for electronic exchange of documentation.
In 2004, a tender was held by the ECR-Rus Technology Committee, which resulted in the selection of companies that received the right to provide electronic document exchange services. The committee intends to continuously increase the number of providers. The main criterion for choosing is technological mobility in the EDI service, as well as the price of the services provided to users.
The main objective of ECR-Rus is the application of EDI system technologies not only in the medium and small business.
The committee concludes an agreement with all service providers, which makes it possible to control and support the basic quality standards established by ECR-Rus.
Provider Obligations
Providers of EDI systems are required to outsource their own IT structure and provide the user with access to a processing center that has a high level of productivity and reliability. System services should be available all year round and at any time of the day.
Unlike the IT structure of most companies, the processing center is provided with uninterrupted power supply, multi-level protection against hacking, and guarantees of information safety in case of any malfunctions. The time for which the document is sent from one point to another should not exceed 10 minutes.
The provider is responsible for the speed of the service, guarantees the forwarding of messages and checking for errors in them. At the same time, providers communicate via the Internet, and provide direct contacts between users via a network with an additional function (VAN).
The difference between the domestic model of using the system from the European
EDI is an electronic data interchange system. How does this scheme work in Russia? Using EDI in our country is fundamentally different from the European and American models. In these countries, the form appeared in the 70s of the last century, and we introduced it 20 years later. Therefore, providers offer different connection systems, which depend on the level of IT in the company, the volume of documents sent and communication tools. This allows each company to solve their problems in an optimal way. You should integrate your accounting system and become the owner of a web interface that will ensure the exchange of documentation with business partners.
A variety of tasks and methods for solving them imply different levels of connection and maintenance. Providers in our country serve both large companies and small partners - suppliers and customers.
At first, some companies with large turnover are so interested in working with the EDI provider that they offer him to pay for the transactions of their counterparties at their own expense or introduce a low monthly fee for using the network.
Basic requirements for service providers
The customer sets out his requirements in a written agreement. It indicates the duration of the service, support, response to a client request, troubleshooting. Other important points are recorded.
As a rule, providers offer various schemes for connecting to the system, as well as various tariffs, which depend on the level of network service.
Client requirements can be much wider than the main provisions established by ECR-Rus.
For example, large companies need guarantees of the duration of processing and delivery of messages, which are calculated not in minutes, but in seconds. It is assumed that one message will be sent in no more than 10-20 seconds.
Key requirements for service providers include:
- support for all types of transmission;
- Low total cost of ownership
- connection security;
- interoperability with partners;
- simplicity of installation and configuration;
- audit of sending documents through the network;
- translation of a document from one format to another;
- quick connection of client business partners;
- localization and development of EDI software ;
- consulting services, training and development of solutions in the system;
- technical user support.
The degree of risk when using the system
Even with a reliable EDI service provider, some internal changes are possible. For example, many Russian companies use internal codes without resorting to using a GLN code.
Before you start using EDI, you need to get these codes and enter them into the system. The risk of implementing EDI depends on the level of IT. With patchwork automation, the threat will come from the lack of a normal accounting system.
Risks of retailers of large companies are associated with poor development of the EDI market. The development is served as a brake on legislation, despite the fact that a law on electronic signature has been adopted. Companies doing business in Russia are required to archive all documents executed on paper. Partners from the regions are afraid of the electronic form of doing business and refuse it, not obeying the retailer.
EDI cost
As for the cost, the EDI system cannot be expensive for users, as it is designed to optimize logistics costs. However, for small companies, such technology may seem overwhelming, if they are not used to working with IT, their business is not well-functioning. It is unlikely that such firms will receive monetary benefits when using an electronic documentation exchange system.
What is included in the infrastructure?
Infrastructure includes dial-up, cable lines, networks. The Internet in the development of the electronic sphere offered many open-type networks (BITNET, etc.) and internal corporate specialized networks (EDI-Express General Electric, IBM Information Exchange Network). Backbone networks, which were distinguished by the height of speed, were widely used.
Transmission scheme
Transportation is via e-mail, Telnet and HTTP. Other common protocols are SMTP, POP3 (ISP), IMAP, HTML.
The EDI electronic document management system can provide transactions without the use of generally accepted protocols. In European countries, VPN (Virtual Private Network), FTP (File Transfer Protocol) and EDIINT (EDI over the Internet), as well as networks with additional VANs (Value-added Networks), became direct means of connection.
Two standards have also been created: AS1, which allows you to send EDI documents via SMTP (e-mail), the AS2 standard, which is used for transmission via HTTP.
The basic principles for using the EDI system on the Internet through AS1 and AS2 are:
- secrecy of information from unauthorized persons - the ability to familiarize themselves with documents only by the sender and recipient;
- authentication support - authentication through verification of electronic signatures;
- the reliability of the document - the impossibility of changing its content without the participation of the recipient;
- reliable notification - the inability to refuse the received message.
XML Basics
The rapid development of the Internet has attracted an increasing number of users to the network. Requirements for sharing documentation over the Internet have increased. The HTML protocol has ceased to satisfy the demands of many participants.
How was the reform of the system carried out? XML EDI was approved in early 1998 by W3C as a new specification.
XML (Extensible Markup Language) has become the basis for creating new languages. There are also many Web servers that use XML technology to organize the information stored on them.
Using XML, you can describe a whole class of data objects, which are called documents focused on a specific subject area. The system makes it possible to determine whether it is permissible to type tags and their attributes.
XML made it possible to attract small and medium business customers to the electronic market. Existing EDI systems in the modern world are expensive (from 10,000 to 100,000 thousand dollars). Many small companies simply can not afford it.
Performance and Standards
This level involves the definition of a data structure through syntax and semantics. An important issue is the creation of standards for data structuring using the widely known ANSI X.12 standards used in the USA, UNECE EDIFACT, used in Europe and Asia.