Business to Business Electronic Commerce
Part IX
Prepared By
P. K. Nakhate
What is Internet Based EDI?
For most companies, the world of EDI is one that they have been exposed to for only the past five to ten years. EDI itself however is significantly older, going back to the days before the Internet was prevalent as a communication medium between businesses. During this time, EDI transactions were typically exchanged using third-party service providers known as Value Added Networks or VANs. Internet based EDI has begun to grow at significant rates over the past few years, spurred in large part by the adoption of key Internet based EDI technologies by companies like Walmart.
How Internet-Based EDI works?
The basic operational aspect of Internet based EDI is simply to use already existing communication protocols available on the Internet to exchange EDI data. For this reason Internet based EDI uses the SMTP (email), HTTPS and Secure FTP communication protocols to exchange data. Because these communication channels are being used to send and receive Internet based EDI however they are often referred to through a set of acronyms that were established in the mid 90s. Accordingly, when using SMTP for Internet based EDI the common terminology is AS1, while HTTPS is AS2 and Internet based EDI through secure FTP is known as AS3.
Benefits of Internet Based EDI
Internet based EDI can have a number of benefits over using VANs. The reason is simple - VAN based EDI and other "aggregators" of EDI data charge based on the amount of data that is used and transmitted over their lines. By employing Internet based EDI you establish a direct link to your trading partners bypassing third parties and sending and receiving data directly. It was this benefit, coupled with the low cost of using the Internet, that convinced Wal-Mart to switch their entire supplier network to Internet based EDI. While they are the only one to require use of Internet based EDI other retailers have also made this option available. For businesses that rely on EDI for their operations using Internet based EDI can save a great deal of money and provide significant return on investment.
The Future of Internet-Based EDI
The future of this technology is very bright indeed. While in the early days software that allowed for AS1, AS2 or AS3 communications was extremely expensive there are solutions in the market place that make using Internet based EDI significantly more cost effective making it a viable technology not only for large organizations with hundreds of trading partners, but also for smaller businesses who trade with only one or two trading partners. Because of these developments many small businesses are beginning to convert to this technology and are seeking software solutions that either include this technology or that have it available as an add-on at reasonable prices.
Internet-Based EDI and You
As you embark on the use of EDI you may question whether internet based EDI is right for your business. Ultimately the answer is going to depend on how heavily you use EDI. The more your use of EDI will grow, the more benefits you will get by using Internet based EDI. Over time, your business will find that internet based EDI is the most profitable, due to its low fees and high degree of compatibility with your trading partners.
TRADITIONAL EDI
EDI is a communication standard that enables the electronic transfer of routine documents, such as purchasing orders, between business partners. It formats these documents according to an agreed-upon structure. An EDI implementation is a process in which two or more organizations determine how to work together more effectively through the use of EDI. For other organizations, it is an internal decision spurred by the desire for competitive advantage. EDI is basically a computer-to-computer messaging system with a minimum of human intervention. For a comparison of EDI versus no EDI see Exhibit W5A.1. EDI often serves as a catalyst and a stimulus to improve the business processes that flow between organizations. It reduces costs, delays, and errors inherent in a manual document-delivery system.
◗ Business transaction messages. EDI primarily is used to electronically transfer repetitive business transactions. These include purchase orders, invoices, credit approvals, shipping notices, confirmations, and so on.
◗ Data formatting standards. Because EDI messages are repetitive, it makes sense to use formatting (coding) standards. Standards can shorten the length of the messages and eliminate data entry errors, because data entry occurs only once. EDI deals with standard transactions, whereas e-mail is more open. EDI uses a special standard language and is secure, whereas e-mail is not. When a user enters data into the EDI system, the data are automatically converted to EDI language. If there are missing or incorrect data, the EDI converter offers assistance. EDI fosters collaborative relationships and strategic partnerships. In the United States and Canada, data are formatted according to the ANSI X.12 standard or the UCS code. An international standard developed by the United Nations is called EDIFACT (see bambooweb.com).
◗ EDI translators. An EDI translator automatically translates data. The software organizes information into a standard format. EDI has been around for about 30 years in the non-Internet environment. To distinguish it from Internet-based EDI, we call EDI on the non-Internet platform traditional EDI.
APPLICATIONS OF TRADITIONAL EDI
Traditional EDI has changed the business landscape, triggering new definitions of entire industries. It is used extensively by large corporations, sometimes in a global network, such as the one operated by General Electric Information System (which has over 100,000 corporate users). Well-known retailers such as Home Depot and Wal-Mart would operate very differently without EDI, because it is an integral and essential element of their business strategies. Thousands of global manufacturers, including Procter & Gamble, Levi Strauss, Toyota, and Unilever, have used EDI to redefine relationships with their customers through such practices as quick-response retailing and just-in-time ( JIT) manufacturing. These highly visible, high-impact applications of EDI by large companies have been extremely successful.
LIMITATIONS OF TRADITIONAL EDI
However, despite the tremendous impact of traditional EDI among industry leaders, the set of adopters represented only a small fraction of potential EDI users. In the United States, where several million businesses participate in commerce every day, fewer than 100,000 companies have adopted traditional EDI. Furthermore, most of these companies have had only a small number of their business partners on EDI,
mainly due to its high cost. Therefore, in reality, few businesses have benefited from EDI. The major factors that held back more universal implementation of traditional EDI include the following:
◗ Significant initial investment is needed, and ongoing operating costs are high.
◗ Business processes must be restructured to fit EDI requirements.
◗ A long start-up period is needed.
◗ EDI requires use of expensive private VANs.
◗ EDI has a high operating cost.
◗ Multiple EDI standards exist, so one company may have to use several standards in order to communicate with different business partners.
◗ The system is difficult to use.
Integrating Back Office Systems
What is Integration?
Back Office Systems
Why Integration for Small Businesses?
Role of Software Agents in E-Commerce
Although the theory of agents stated that agent is given a very famous with the growth of internet. Software agents are a piece of software which works for the user. However software agent is not just a program. An agent is a system situated within and a part of an environment that senses that environment and acts on it. Over time in pursuit of its own agenda and so as to effect what it senses in the future? Important use of agent concept is, as the tool for analysis not as dosage. As the system changes on can understand it.
Thank You