Friday, March 14, 2008

About EDI by Embassy

What is EDI?

Electronic Data Interchange, or EDI, is the electronic exchange of business data. Using a standard format, EDI provides a method of transmitting business data from one computer to another, without the need to re-key data. This electronic link can result in more effective business transactions. With EDI, paper documents such as invoices can be replaced with electronic transmissions, thus time is saved, and the potential for error is minimized. Data can be exchanged at any time. Related business expenses, such as postage, printing, phone calls, and handling, can also be significantly reduced. EDI can aid in the support of manufacturing efforts, such as Just-in-Time and Third Party Warehousing, and financial efforts, such as Electronic Payments.

What parts of the business cycle can be supported by EDI?

Any business documents that are currently exchanged using paper can be converted to an EDI. Standards. Standards include ANSI X12 and XML/EDI are primarily used in the United States, while EDIFACT is used in Europe and Asia.

What industries are using EDI?

The retail, automotive, grocery, freight, energy and financial industries were early users of EDI. The electronic, computing, insurance and the U.S. government are currently big users of EDI.

Who can use EDI?

Any company that buys or sells goods or services can use EDI. because it supports the entire business cycle, EDI can streamline the relationship that any company has with its customers, distributors, suppliers, and so forth.

Should my company use EDI?

EDI offers many potential benefits. EDI is a productivity tool that is beneficial to both suppliers and customers. It is a service to customers and is often viewed as an indicator of technical ability. A seller can get more business if buyers know that the seller has EDI capabilities.

What kind of software is needed to implement EDI?

EDI translation and communication software is available for most computers, whether PCs, minicomputers or mainframes. Basically all EDI software packages do the same thing. Translation software translates business documents into a standardized format that complies with ANSI X12, XML or EDIFACT, and communication software sends and receives documents. PassportXchange translates EDI to XML, ODBC and Flat File Text.

What kind of hardware is needed to implement EDI?

Hardware selection is dependent upon your preferences for speed, operating system, and level of integration with the current systems. The EDI system may be able to run on your existing hardware.

Which transactions does Embassy support?

Embassy Software supports all ANSI x12 Documents and some EDIFACT documents. Here are the most common we have solutions for:

ANSI X12 Document Number ANSI X12 Document Name Purpose
185 Royalty Regulatory Rpt Royalty Data on minerals or petroleum
204 Carrier Load Tender Shipment information for Motor Carriers
210 Freight Invoice Detail of Freight charges
211 Carrier Bill of Lading Legal Bill of lading for a shipment
214 Shipment Status Report Shipment Status (Dates and Times of pickups and deliveries)
810 Invoice Billing for goods and services
811 Consolidated Service Invoice Reporting of complex and structured service invoices. Used by Communication and Utility industries
812 Credit/Debit Adjustment Reports exceptions, adjustments, credits or debits to invoice
816 Organizational Relationships Reports relationships to parent parent organization and other members
820 Remittance Advice Payment detail of EFT sent from payer
824 Application Advice Text response to EDI transactions received
830 Planning Schedule Material Release Forcasting
846 Inventory Inquiry/Advice Seller's Inventory Information
850 Purchase Order Purchase Order for goods and services
855 Purchase Order Acknowledgment Vendor information that goods are available and will ship
856 Advance Shipment Notice ASNs describes configuration of goods Within the transportation equipment
860 Purchase Order Change Buyer Initiated change in Purchase Order
862 Shipping Schedule Shipping requirements for vendor
864 Text Message Error Reports
865 Purchase Order Change Acknowledgment Seller notification of acceptance or rejection of PO Change (860)
867 Product Transfer Sales report and product transfers
940 Warehouse Shipping Order Depositor advise to warehouse to make or confirm a shipment
943 Warehouse Stock Transfer Shipment Advice Advise that a shipment has been made
944 Warehouse Stock Transfer Receipt Advice Advise on product that has been received
945 Warehouse Shipping Advise Advise that the shipment has been made


How does EDI get started?

EDI gets started when one company contacts another expressing interest in trading business documents electronically using Electronic Data Interchange. The two companies must first determine each other's EDI capabilities. If you do not already know your EDI capabilities, we have prepared a questionnaire to help you determine them. If you are already EDI capable, we will coordinate with your technical staff to determine a testing plan. Upon completion of testing the EDI documents, the appropriate business personnel will set a production start date to begin the exchange of EDI business data. If you are not EDI capable, we recommend you first obtain a commitment from your upper management. Your company will need to allocate resources and capital for software, hardware, testing, possible programming, and training.

What is the flow of EDI?

The flow of EDI depends on the sophistication of your systems and your EDI software. If you have internal purchasing/order entry systems, you will need interface programs that can extract and insert data out of and into these systems. EDI programs that interface with your internal systems are preferred over software that requires re-keying of data. Embassy Software specializes in seemless interface between EDI and your back office systems. Using a purchase order as an example of a business document your customer would send that PO electronically (850) to you. It could be sent either through a VAN (Value Added Network) or through an FTP server. You would take that 850 and convert it either into and ODBC database, a flat file or XML document to be imported into your Order System with the use of EDI Software such as PassportXchange.. Using EDI communication software, which is part of the PassportXchange package you would pull down data at set intervals from the VAN or FTP. These documents are then processed through EDI translation software and output to our order entry system. Finally, an EDI document called a functional acknowledgment (997) is sent to your customer

Business progresses thru 3 phases for EDI

Your business has been profitable and successful for years, you understand your market, your product provides a solution to a critical need and you just signed a major national retailer that will mean significant expansion for your business. The only problem is that you keep being told that you need to implement EDI and you are not quite sure where to turn. Your problem is not unique, in fact even companies that understand and use EDI often struggle with how much or how little attention to pay to EDI. Having a critical understanding of EDI, how it impacts your business and how you can maximize use of this technology is critical for any small and mid-sized business in today’s market of margin pressures and high competition. As a business embarks on the road to effectively using EDI, it naturally progresses through three phases:

• Phase 1 - Reactive - At this phase you have just started using EDI - usually as a result of pressure from a significant trading partner, EDI is a required nuisance.

• Phase 2 - Proactive - Eventually the business begins to see the advantages of EDI and realizes the potential cost savings and decreased time to revenue. EDI becomes more important and dedicated resources are assigned to its expansion.

• Phase 3 - Strategic - Ultimately EDI becomes a mature part of an integrated IT infrastructure with data seamlessly being shared with trading partners directly out of in-house ERP systems and becomes a critical strategic component of the company’s IT infrastructure in support of revenues and cost reduction.

Reactive, getting started with EDI

As a small business your first exposure to EDI is often a forced one - most frequently small businesses are faced with a daunting proposition - you have signed an agreement with a major national retailer - great news for your business - but in order to work with that business you are being mandated to use “EDI technology” to exchange transaction documents like purchase orders, advanced shipment notices etc. At this phase of the EDI adoption curve most businesses will typically opt for out-sourced services or for low cost, easy to use in-house software. Of course the benefits of the out-sourced service is that the EDI work is done with little or no involvement from the business - there is no software to buy, no complicated terminology to learn - you just simply use a web-based system to receive purchase orders and enter advanced shipment notices, invoices and other transaction documents. While such a solution is perfectly viable for many small organizations that are gaining first exposure to EDI questions begin to eventually arise that make an in-house solution more viable - both for the small business and for the growing one:

Security

Regardless of available technology we have all seen stories in the press about sensitive credit card data, user information and other types of restricted data being compromised - the simple truth of the matter is that there is only one way to guarantee that your data will not be at risk of compromise - keep it within your firewalls - of course with any web-based system this is simply not feasible.

Availability

As with security, the availability of a web-based system is 100% reliant on an outside party. As a business begins to rely more and more on EDI, not having access to that data can have dire consequences on financial results in understated revenues, mis-allocated expenses and break-downs in relationships with critical trading partners due to faulty or missing EDI data exchanges.

Integration with IT Policies

Although web-based systems try to account for issues such as secure access, integration of a web-based system into broader IT policies can be daunting. Disaster recovery, business continuity, access and security planning and other mission-critical IT functions & policies are simply not designed to account for a web-based system; the task often proves impossible. It is at this stage that businesses begin to look to bring EDI in-house

Proactive, bringing EDI in-house & under control

Once a business has made the decision that EDI is important to the organization there are several considerations that need to be made. Carefully planning an EDI purchase, deployment and integration within the larger context of an IT policy must be done cautiously and in advance.

1) Selecting the right Vendor

Selecting a vendor with a solid reputation for developing reliable and easy to use EDI software is a critical first step. As a mid-sized business you want to ensure that the vendor has significant experience with EDI, that they will be able to understand your problems and provide you with the type of advice that you need in order to properly establish EDI as a critical function of your business.

2) Selecting the right software for your needs

Is the software easy to use? Does it have a reputation as a trusted, reliable product that can grow with your needs? Ensuring that you have positive answers to both questions will mean that you will have an easier time setting up EDI properly and that your staff will use it accordingly.

3) Understanding the growth potential

Does the vendor you are selecting provide an upgrade path to more sophisticated products? Will you be able to start with a single-user system and grow to a multi-user and perhaps to an integrated system as your EDI needs grow? Ensuring that you have growth opportunity with the investment you are making will mean not having to re-invest in new and unproven equipment as your business grows.

4) In what other ways can my vendor help ?

Can the vendor provide you with consulting services to help you best utilize your newly purchased EDI software? Will they provide you with reviews of your environment to help you identify areas that need bolstering? Ensuring that you work with a vendor that can help you and will treat you as a key customer is critical for the small and mid-sized business that does not want to get lost in the “other” revenue category of a multi-national corporation that happens to also provide EDI software.

Strategic, - Using EDI for growth & profitability

Eventually as your business grows you will find that having EDI as a stand-alone, dedicated system begins to become cumbersome and begins to use too much man-power in managing data and reports. As your business matures and you invest in more sophisticated business tools it’s critical to keep EDI in the forefront of that planning. Integrating your EDI transactions into your ERP back-end system can save you money in faster transaction turnaround, reduced errors due to mistakes in re-keying information and improved usage of EDI. Ensuring that the vendor you have selected for your EDI software can help you through this transition is critical to ensuring that when your EDI software becomes integrated with your ERP system it will be done quickly, efficiently and with few worries. An integrated EDI system will have some significant up-front costs - but the long term benefits to a growing business will mean a return on investment measured in mere months. At this stage of development it’s also critical to understand how EDI will fit into the larger IT perspective. Is EDI part of the IT department’s disaster recovery plan (DRP)? Are you considering issues relating to security and access and how they relate to EDI? For EDI to become a strategic aspect of your company it must become a key component for both
line of business and IT departments. At this stage having the right vendor to assist you and provide you with the right advice and the right tools will be critical.

Another description about EDI

Definition

Electronic Data Interchange (EDI) may be most easily understood as the replacement of paper-based purchase orders with electronic equivalents. It is actually much broader in its application than the procurement process, and its impacts are far greater than mere automation. EDI offers the prospect of easy and cheap communication of structured information throughout the corporate community, and is capable of facilitating much closer integration among hitherto remote organisations.

A more careful definition of EDI is 'the exchange of documents in standardised electronic form, between organisations, in an automated manner, directly from a computer application in one organisation to an application in another'.

Architecture for EDI

EDI can be compared and contrasted with electronic mail (email). Email enables free-format, textual messages to be electronically transmitted from one person to another. EDI, on the other hand, supports structured business messages (those which are expressed in hard-copy, pre-printed forms or business documents), and transmits them electronically between computer applications, rather than between people.

The essential elements of EDI are:

* the use of an electronic transmission medium (originally a value-added network, but increasingly the open, public Internet) rather than the despatch of physical storage media such as magnetic tapes and disks;
* the use of structured, formatted messages based on agreed standards (such that messages can be translated, interpreted and checked for compliance with an explicit set of rules);
* relatively fast delivery of electronic documents from sender to receiver (generally implying receipt within hours, or even minutes); and
* direct communication between applications (rather than merely between computers).

EDI depends on a moderately sophisticated information technology infrastructure. This must include data processing, data management and networking capabilities, to enable the efficient capture of data into electronic form, the processing and retention of data, controlled access to it, and efficient and reliable data transmission between remote sites.

A common connection point is needed for all participants, together with a set of electronic mailboxes (so that the organisations' computers are not interrupted by one another), and security and communications management features. It is entirely feasible for organisations to implement EDI directly with one another, but it generally proves advantageous to use a third-party network services provider.

Benefits of EDI

EDI's saves unneccessary re-capture of data. This leads to faster transfer of data, far fewer errors, less time wasted on exception-handling, and hence a more stream-lined business process. Benefits can be achieved in such areas as inventory management, transport and distribution, administration and cash management. EDI offers the prospect of easy and cheap communication of structured information throughout the government community, and between government agencies and their suppliers and clients.

EDI can be used to automate existing processes. In addition, the opportunity can be taken to rationalise procedures, and thereby reduce costs, and improve the speed and quality of services. Because EDI necessarily involves business partners, it can be used as a catalyst for gaining efficiencies across organisational boundaries. This strategic potential inherent in EDI is expected to be, in the medium term, even more significant that the short-term cost, speed and quality benefits.

History of EDI

The early applications of what became known as EDI were undertaken in the United States. The idea's origins have an international flavour, however, being traceable back to the 1948 Berlin Airlift, where the task of co-ordinating airfreighted consignments of food and consumables (which arrived with differing manifests, languages and numbers of copies) was addressed by devising a standard manifest. Electronic transmission commenced during the 1960s, initially in the rail and road transport industries. The standardisation of documents was a necessary concomitant to that change. In 1968 the United States Transportation Data Coordinating Committee (TDCC) was formed, to coordinate the development of translation rules among four existing sets of industry-specific standards. A further significant move towards standardisation came with the X12 standards of the American National Standards Institute (ANSI), which gradually extended and replaced those created by the TDCC.

At about the same time, the U.K. Department of Customs and Excise, with the assistance of SITPRO (the British Simplification of Trade Procedures Board), was developing its own standards for documents used in international trade, called Tradacoms. These were later extended by the United Nations Economic Commission for Europe (UNECE) into what became known as the GTDI (General-purpose Trade Data Interchange standards), and were gradually accepted by some 2,000 British exporting organisations.

Problems created by the trans-Atlantic use of two different (and largely incompatible) sets of standardised documents have been addressed by the formation of a United Nations Joint European and North American working party (UN-JEDI), which began the development of the Electronic Data Interchange for Administration, Commerce and Transport (EDIFACT) document translation standards. A full range of business documents is in the process of being developed.

EDI's direct impact is to reduce the amount of data capture and transcription. This generally results in a decreased incidence of errors, less time spent on exception-handling, and fewer data-caused delays in the business process. Benefits can be attained in such areas as inventory management, transport and distribution, administration and cash management.

By the time of the 1991 EDICA Conference in Sydney, it was claimed that there were 1,500 corporations using EDI in Australia and New Zealand. This would have compared favourably with the populations variously claimed for the U.S. (5,000-12,000), but less so with the U.K. (12,000) and Singapore (2,000). The transaction volumes in Australia to date were, moreover, small compared with those countries.

Thursday, March 13, 2008

101 EDI

101 EDI

In today's business environment, intense competition is forcing businesses to look at new ways of operating. Leaders are constantly looking for new methods that will allow their business to do things faster, cheaper, and better than before.

The problem with most approaches is that they often sacrifice one objective in favor of another. It's one thing to cut costs in your operation, but that often increases the time it takes to service the customer. Also, depending on how cost reductions are achieved, you end up providing an inferior product.

Electronic Data Interchange, or EDI, is a tool that allows you to achieve significant improvements in all three objectives. EDI can speed up many business functions, while cutting cost in a number of areas. By reducing unnecessary delays, you have more time to produce a better product and can provide your customers with improved service.

In today's competitive world, speed is a weapon you can use against the competition. By providing your product or service faster than the competition you can not only win increased business, but reduce sales loss due to price competition.

Before describing what EDI is, it is important to describe what it is not. EDI is not new and it is not dependent on any one technology. While the buzz-word, EDI, may sound new, EDI has been with us since the late 1960's.

While EDI has benefited enormously from advances in technology, EDI is not technology dependent. There are preferred ways to implement EDI in your business, but there are many approaches to choose from. The approach you choose should be driven by your business needs, not a particular implementation or technology.

So what is Electronic Data Interchange? EDI is paperless document transfer between companies. What's a Document? A document is any form of communication, usually paper, sent between two companies. Examples include:

* Purchase Orders
* Invoices
* Shipping Notices
* Export/Import Information
* Carrier-to carrier waybills
* Funds Transfers
* Design Specifications
* Health Insurance Claims

EDI is a data processing concept independent of communication protocols or transmission media. EDI is a logical outgrowth of the standard computerization going on within business for the last several decades. The type of electronic communication between departments within a business is now being extended to reach out to other business, or trading partners.

EDI is computer-to-computer communication. Contrast this with the other forms of communications like Electronic mail. E-mail is person-to person communications over a computer. A person creates a text message, which is sent to another person. While this form of communications is electronic, it still requires people to interpret the message.

EDI replaces human-readable, paper or electronic based documents with machine readable, electronically coded documents. With EDI the sending computer creates the message and the receiving computer interprets the message without human involvement.

Let's take a standard business transaction, a purchase order, and explore how and where EDI fits into the picture. Without EDI the process might look something like this:

* The Customer determines a need to purchase an item and creates a purchase order document. Often a computer produces these documents.
* The PO is sent to the supplier via either Post Office, Express mail, Electronic Mail or Fax.
* In all cases, it takes a person at the supplier to receive and interpret that purchase order
* The PO is then transcribed into the supplier's computerized order system.


An EDI implementation simplifies the process to:

* The customer's computer system creates and sends the electronic PO.
* The supplier's computer receives the PO and places the order directly into its system.

What is clear by the example is the time saved by eliminating the post office and the people cost saved in the process. What is perhaps a subtle area of savings is the cost due to errors. How much would it cost if the order entry clerk added an additional zero to the quantity field?

History

Since the 1960s, many companies developed in-house computer systems and internal networks to streamline business functions. A typical example is the order processing system, which can process customer's orders with greater speed. Still, the speed in which a business could respond was determined by the communication link between the company and its customers. That communication link consists of the postal service and the telephone, and remains a slow and costly process even today. Some business executives were working on methods to shortcut the conventional communication link. Electronic communications was a prime consideration in circumventing the paperwork/telephone problems. It soon became clear that linking up to other business electronically had one major initial problem, information format. Very few companies use the same paper document format. One company's Purchase Order form looks different from another. The same holds true with computer systems. Information stored in one company's computer system may be in a different format than that required by others. People can deal with format problems with relative ease. When an order processing clerk receives a purchase order form in an unfamiliar format, it's not a difficult task to analyze the new form and interpret the required information. Computers do not have that ability and require information in a specific format and in an exact order. You do not want your system to interpret your trading partner's purchase order number as the quantity ordered. That could easily happen if the two companies do not agree on a format and sequence of information they exchange with one another. A supplier serving one customer can follow that customer's formats and rules for EDI. The problem arises when one supplier has to deal with different rules from different customers. Systems can be developed to interpret an electronic transaction from Company A differently from Company B. This approach, however, is extremely costly to develop and maintain and it doesn't solve the problem when Company C comes along and wants to do business electronically. A better approach would be support standards that all customers and suppliers could adopt. EDI standards are a set of formats and protocols, much like a language, that trading partners agree to communicate to each other in. A good analogy can be found in the airline industry. All over the world there are airlines and airports in different countries. Pilots and crew may converse in their native tongue, but English is required from all aircraft to control tower communications. Could you imagine the confusion if there was not one standard language? The Transportation Data Coordinating CommiteeThe Transportation Industry recognized the need for industry standards early on and formed the Transportation Data Coordinating Committee in 1968. The TDCC was formed as a non-profit organization in Washington DC and organizes data standards, formats codes, and protocols for the transportation industry. The ground rules the TDCC began its standards development with were: The EDI interface must be insensitive to computer equipment internal architecture.The EDI interface should be responsive to end users needs.EDI should leave the choice of communication speeds and services to the using parties. Several hundred people worked in teams to develop these standards. These teams consisted of shippers, railroads, motor carriers, forwarders, ocean carriers, air carriers, and banks. The end product was the publication of the TDCC Electronic Data Interchange Standards. These Standards were first used in the rail lines and later across motor carriers. TDCC estimates that 90% of all rail waybills were electronically interchanged between railroads by 1985. Today, the usage of TDCC's EDI standards include: Export/import information for international shipments carrier-to-carrier waybill exchange.Reservation or pickup request.Shipment information from shipper to carrier. Freight bill data, carrier to payer.Shipment tracing information.Payment data, payer to bank, bank to bank, bank to payee.

Private Company Standards

A few major companies, such as General Motors and Kmart, charged into the EDI arena and developed their own standards. GM's EDI involvement was an outgrowth of their "Just-in-time" plant inventory approach. With Just-in-time inventory, each plant stocked only those parts required for one day's production. Because of the low inventory levels, GM needed a fast reliable way to order parts so that they arrived at their loading docks just-in-time for assembly. This approach allowed GM to save millions in inventory costs. EDI was the enabling technology without which Just-in-time inventory would not be possible.

We should note here that while GM saved millions, the inventory cost didn't disappear. The burden of inventory was shifted to the suppliers. Some of these suppliers were large enough to absorb these costs, but many were not. This put many suppliers in tough situations as GM was requiring EDI connections for suppliers providing production material to Just-in-time plants.

To complicate matters even more, Ford and Chrysler adopted similar plans, which led to confusion throughout the Automotive Industry. Also, several large suppliers, such as Rockwell, wanted to use EDI with their own suppliers. The question was whose standard should they use?

Private Industry Standards

Relief came to the auto industry in the form of the Automotive Industry Action Group, a trade association for the industry. The AIAG worked with the automakers and suppliers to develop an EDI standard for the entire Industry.

Other industries have taken the same approach of developing specific standards of their own. Industry specific EDI Standards Development Associations include: Voluntary Interindustry Commerce Standards VICSAmerican National Standards Institute ANSI Uniform Code Council UCCAutomotive Industry Action Group General Trade Document InterchangeNational Automated Clearinghouse AssociationNational Wholesale Druggist Association Transportation Data Coordinating Council Many other industries are also developing EDI standards and many are using the TDCC standards as a base. The Grocery Industry's Uniform Communications Standards and the Warehouse Information Network are examples of TDCC derivatives.

Even the collection of industry specific standards is not enough since few businesses operate in a single industry. For example, a telephone manufacturer in the Communication Industry must buy plastics from the Chemical Industry. Once again, the need for further standardization exists.ANSI X12 StandardsThe American National Standards Institute (ANSI) chartered a committee to develop inter-industry EDI standards. This committee, known as the x12 Business Data Interchange Committee, is using the TDCC standards as their base structure. The x12 committee has added many transactions to the list provided by the TDCC. The most common transactions are the purchase order and the invoice.

Also, the TDCC is serving as the Secretariat for the X12 committee. All data field names, types, formats, and lengths are defined in a data dictionary. The TDCC keeps this data dictionary available. Everyone supporting X12 standards knows exactly what format each field or data element should use. For example, The Purchase Order Number is defined as being from 2 to 30 characters in length. A 31 character PO number is not allowed.

Industries working with X12 standards include:

Telecommunications, electronics, chemical, auto, metals, textile, and aerospace. Individual industries may use a subset of the overall X12 standard. The format and meaning of the individual data elements remains constant, but different industries have chosen to implement some fields in a different order, or to exclude certain information not appropriate for their industry.

Conversion from industry specific standards to X12 has not been easy. Once an industry has an investment in one approach, it takes time to convert to another. The grocery industry established their industry specific UCS standard in the early '80s and has been the most notable holdout from X12 acceptance. The approach in the grocery industry has been "If it's not broken, don't fix it."

Even with X12 standards, many EDI trading partners are finding it necessary to translate documents from one X12 subset to another. Additionally, as more companies move to X12, there is a great need to translate their standard X12 transactions into industry specific standards. Conversion is often required in order to communicate with trading partners that have not yet made the step to X12. This translation of formats can occur either at the originator, the destination, or a 3rd party intermediary.

How does it work?

EDI is implemented in software and is conceptually an interface between the sender's and the receiver's internal computer programs. These company specific internal programs may be operating on different types of computers and may use different internal data structures. This interface between sender and receiver is implemented in at least the two trading partners systems, and often in a third, intermediary.

We'll use the transmission of a purchase order to illustrate how EDI works. The buying party's purchase order system generates a PO and passes it to the EDI software. The EDI software converts the internal data structure into a standard EDI transaction with the required fields supplied by the data dictionary. This transaction is then transported to the supplier whose EDI software converts (using the same data dictionary) the standard transaction into the format acceptable to their order processing system.

The TDCC and other vendors provide EDI software for mainframes, mini, and personal computers. The TDCC leases mainframe software written in ANSI COBOL and is shipped on 9 track tape. TDCC provides the COBOL source code because few mainframe COBOL systems are exactly alike. The user may need to make some changes to the software to match their particular system.

The TDCC software is "table-driven." This means that all translations between internal and standard data formats are defined in easily modifiable tables. You do not have to modify COBOL programs for translation. A portion of the EDI software, called the Set Generator, converts internal format records into standard transactions. These internal format records are produced by some internal system such as a Purchase Order System. The Set Generator reads these input records and performs the translation according to the parameter tables and the information in the data dictionary.

When the transactions are received by the destination EDI software, the receiver's data dictionary and parameter tables are used by the Set Interpreter to convert the standard format transaction into the desired internal format.

Communication Alternatives

EDI specifications do not require any particular type of transport. There are 4 general methods to choose from: Point-to-point Communications lines Wal-Mart is a typical example of a point-to-point communication. Vendors dial into Wal-Mart SNA network via bisynchronous modem. Point-to-point communications lines can be established between the trading partners using standard communications protocols. This connection could either be a leased or a dial-up line. A leased line is purchased on a monthly basis and is always available for transmission. A dial-up line is established just like a normal telephone call. When the sending party has something to transmit, the call is made and the data is transmitted. When dialup links are used, senders typically batch up their transaction and at certain points make the connection and send the entire batch. The dial up approach is cheaper when the amount of data is low and sporadic. An expensive leased line can be more cost effective if the amount of transactions is high, and fairly constant throughout the day. Also, faster line speed can be achieved with a leased line and there is no dial delay or need to batch transactions. With a leased line, the transaction can be transmitted as soon as it is created. For some applications, immediate transmission and reply may be appropriate. Value-added Networks This is the most widely use method. Samples of VAN (Value Added Networks) are IBM Information Exchange and Sterling Commerce Network. Point-to point links often present a scheduling problem to trading partners. Often, it is not convenient for the receiver to get transactions when the sender chooses to transmit them. The solution to this problem is a value-added network that provides a store-and-forward mailbox service. Compuserve, Telenet, and Tymenet are examples of value added networks. The sender connects with the value-added network and sends its EDI transactions to the recipient's mailbox where they are stored. The sender then disconnects from the service. At some point that is convenient, the recipient can connect to the network and receive those transactions from their mailbox. With this approach, both sending and receiving parties must use the same EDI standard transactions.Buyer Benefits
EDI is a productivity-enhancing tool that replaces the less efficient and error-prone human processes involved with inter-company communication. EDI provides the following benefits to the buyer: Lower Inventory Levels.

Quick Order Acknowledgment:

If a supplier can not provide the product desired, the buyer can quickly seek an alternate supplier.
Time spent matching invoices to purchase orders and re-keying invoices into an Accounts Payable System is reduced.

Supplier Benefits

EDI is a productivity-enhancing tool that replaces the less efficient and error-prone human processes involved with inter-company communication. EDI provides the following benefits to the supplier: Elimination of problems and delays caused by order entry errors
Manual order entry can result in errors in as many as 50% of all documents. Errors in order entry mean missed ship dates, shipment of wrong items or quantity, and lower customer satisfaction.

  • Personnel Reductions:
    •  There are estimates that as much as 70% of all computer output becomes computer input. With EDI, the supplier is relieved of the process of re-keying orders and verification of orders.
  • Inventory Reductions:
    • While EDI is often used in Just-in-time inventory approaches that place the burden of inventory on the supplier, it is possible for the supplier to achieve reduced inventory levels also. Production schedules can be tuned more closely to customer demand, to reduce goods inventory.
  • Improved Cash Flow:
    • Time taken out of the invoicing/payment cycle improves the cash flow of the supplier.
  • Improved Customer Service
  • Improved Sales Tracking - Cost Savings
    • A common benefit to both buyer and supplier is cost savings. Input, a California Based Market research firm, recently published a survey of Fortune 1000 size businesses, universities, and public companies entitled The North American EDI Service. One of the results of the survey was a comparison of the cost of manually prepared and transferred document at about $40 with the EDI document cost at about $2.10.

That 10 fold savings per document is impressive and when you think about the millions of such documents generated in some companies, you can see why there is pressure to implement EDI.

Examples

The following are some examples of EDI usage.

Auto Loans
 A major part of the automobile manufacturers business is the financing of the sale of its vehicles. Auto companies finance over 1/3 of all cars purchased in the U.S. General Motors Acceptance Corporation is one of the largest financial institutions in the world. To be more responsive to their customers, auto companies have implemented electronic links to credit bureaus such as TRW.

The normal process for the auto company is to request a credit history from the credit bureau via an EDI connection. The auto company's computer system electronically receives and analyzes the credit report. Each report is scored and then credit approval is provided without human involvement.

There is now movement to allow the dealers direct transaction input. This moves the personnel cost of data entry from the auto company to the dealer. This is also an advantage to the dealer as it allows them to better respond to their customers. It is possible to get back, instantaneous response to credit authorizations. Credit authorizations are often returned while the customer is still on the sales floor. The real payoff, in this example, is the extra competitive advantage the dealer has when he can offer immediate credit. Wal-MartAn EDI link between Wal-Mart and one of its suppliers, Seminole Manufacturing Co. cut the delivery time of Seminole slacks by 50%. This resulted in a 31% sales increase of these slacks in the first 9 months after the link was established. General MotorsGeneral Motors has integrated EDI Electronic funds transfer at 30% of its assembly plants. Shipping receipts are sent electronically from the GM plant to an Electronic Data System (EDS is subsidiary of GM) computer center where they are matched against electronic invoices and purchase orders. Suppliers group the shipping receipts, and one payment is made. This single payment may represent dozens of different shipments to different plants. These payments are also performed electronically via Electronic Funds Transfers. JC PenneySales of Stafford suits jumped 59% after JC Penney linked up with their supplier Lanier Clothes. EDI allowed Penney to quickly replenish stock fast enough to meet demand while cutting their overall inventory of suits by 20%. Rockwell Rockwell, a major automotive supplier received design change notifications directly from the automakers via EDI.

Rockwell has been able to react faster to their customer's constant design changes while reducing their inventory of finished goods. Parts now bypass their warehouse and go directly from their production lines to their shipping docks. Textile Industry The Textile industry is beginning to fight back against Asian competition with EDI. While the US textile industry is hard pressed to compete on a cost basis, EDI is helping them provide superior service. Service is making it easier and faster to do business with a US supplier. US Customs US Customs accepts electronic customs documentation, in advance of goods shipments. This reduces port delay and provides a competitive advantage for those ports of entry that support EDI. Market Outlook The Yankee Group, a Boston based market research group, estimates that 4/5 of all business transactions will be electronic by 2010. The EDI survey, published by Input, found that 70% of Fortune 1000 sized businesses; universities, and Public companies are currently using EDI. An additional 20% are planning EDI implementations. Input also forecasts that the EDI service market will grow to $28.2 billion by 2010. That's an annual 25% per year growth rate from the 2000 market size of $3 billion.

What is causing the growth?

One of the main reasons for the explosive growth of the EDI service market is that the business environment finally contains all the pieces to make EDI possible. Clearly, standards are a major factor. By 1986, there were over 150 standardized transaction types. Standard transaction development has a cascading affect. The Purchase Order begat the Invoice. The Invoice begat the Shipping Notification. This Shipping Receipt leads to the desire to make electronic payments, which spawns another batch of electronic transactions.

The spread of computers and available software has been a factor in EDI growth. The acceptance of the Personal Computer has been a stimulus to EDI. It is possible to develop an EDI solution based on a Personal Computer with less than $1,000 hardware investment.

Another factor is what you could call the "Domino Effect" within industries, where large companies in the center of an industry coerce their suppliers' partners to adopt EDI. Soon, the second tier suppliers require EDI links to the third tier suppliers. The automobile industry is an example of the Domino Effect.

There are two approaches to getting supplier compliance; incentive and force. Some companies have offered incentives for electronic linkups.

The retail industry relied on force with deadlines and ultimatums. If you supplied production material to a retail store, lack of EDI support meant loss of business.

What could inhibite EDI implementation? There are several factors: Lack of ease of use and accessible EDI software.Difficulty in understanding the various options for implementation of EDI.Advertisement misinformation. Inability to understand the importance of EDI as a strategic tool for acquiring new business opportunities. EDI is overcoming these obstacles to acceptance because it addresses a basic business goal within every company; the goal of reducing administrative overhead and opening new trading opportunities.

How to Proceed?

Form a taskforce with broad company representation. EDI implementation is not simply an Information Technology Group exercise, but affects the entire company. Select people across departmental boundaries to reduce operation gaps and resistance. Set your taskforce's goal to determine when, not if, to implement EDI. By setting the goal of when to implement EDI, you are acknowledging that almost every company is using EDI. If you have a large customer that is coercing you into electronic trading, you can certainly make a business case for doing it now. The threat of loss of your biggest customer can make the rest of the issues moot. Educate taskforce members on EDI, and the internal operation of the business. Make sure everyone understands that the business is a system and EDI is an important tool. Determine what form of transport, or third part services are appropriate and select software and service vendors accordingly. Determine the overall commitment to EDI within the organization. EDI can be implemented as a stand-alone process, where a workstation simply receives electronic orders and prints them on paper. The rest of the process is business as usual. EDI can also be implemented by integrating it within the overall business operation. The second approach can totally change the way you do business today. Based on your required volume, the integration may not be an option but a must do.

Future

EDI is a must in today's environment. By the end of the decade of the '90s, EDI was affecting almost every business in the U.S.The amount of standard transaction will steadily increase. All areas of business-to-business transactions will be increasingly automated with EDI. You can expect your trading partner to exchange no less than three documents (Purchase Order, Invoice, Advance Ship Notice). Other documents are mandatory in various companies like the ones that relate to electronic transfer of funds, PO automation, Inventory inquiries, shipment tracking, Item catalogs, etc. Further expansion will occur in multi-industry standards because few companies really operate in just one industry. The grocery stores, for example, sell many non-food items.

E-commerce glossary


Free ecommerce glossary that has explanations for the EDI terms and acronyms you may encounter as you automate EDI and XML ecommerce processes.

The Internet and eBusiness have created an entirely new vocabulary. This glossary has common words and definitions such as an electronic data interchange definition. Below are basic definitions for the frequently-used EDI terms:

A-D


    ACH, Automated Clearing House: the U.S. Provides for the electronic distribution and settlement of bank accounts between financial institutions in the United States.

    856 Advance Shipping Notice, An EDI 856 Advance Shipping Notice is an electronic version of a printed packing slip that tells a buyer how a supplier has packed their items for shipment. Most ASNs will follow either standard pack or pick and pack guidelines. Usually the buyer will specify how they want the goods packed. The Advance Ship Notice, or ASN, also tells the buyer that the goods have been shipped so they can be expecting the shipment.

    AIAG: Automotive Industry Action Group, Sets EDI standards for the automotive industry

    ANSI - American National Standards Institute, The coordinating group for national standards in the United States. The U.S. voluntary standards system consists of a large number of standards developers that write and maintain one or more national standards.).

    Application Programming Interface(API), An interface that programs use to communicate with other programs

    Application Control Structure (X12.6), This is the architecture that governs EDI standards in the United States. Contains the format definitions for terms related to electronic data interchange. X12.6 is downward compatible, and the current edition may be used with any older version of the standards.

    Application Service Provider (ASP), A company that offers monthly services for applications and related services on a pay-as-you-go basis. ASPs host, manage and maintain applications in their data center and make them available via the Web. Provides the latest information technology at a predictable cost.

    ASC X12, Accredited Standards Committee, X12 was chartered by ANSI in 1979 to develop uniform standards for inter-industry exchange of business transactions - electronic data interchange (EDI) standards. The X12 standards establish a common, uniform business language to allow computers to communicate with one another.

    ASN (Advance Ship Notice) , An XML or EDI standard transaction set sent by a vendor to a customer that specifies the content of a shipment and when it is estimated time to arrive.

    B2B, Business-to-business (B2B) electronic commerce - B2B systems exchange business documents, such as purchase orders and invoices, between pairs of partners in a supply chain. B2B systems also automate the purchase of goods that support business' maintenance, repair and operation (MRO).

    B2C, Business-to-consumer (B2C) electronic commerce; a marketing relationship between end consumers and businesses on the Web.

    B2G, Business-to-government (B2G) electronic commerce; transactions conducted between businesses and the government on the Web.

    Bar Coding, Encoding information using a series of black and white stripes. Bar codes are based on a series of parallel black bars and white spaces. New technologies include so-called "two-dimensional" bar codes that can store much more information than traditional one-dimensional bar codes.

    Benchmarking, Formal process of evaluating a company's performance by comparison with its peers and competitors in the industry.

    Benchmarking Gap, Difference in performance of an organization's particular activity or product, and that of their competition.

    Best Practice, Practices that have been shown to produce the best results for a particular process or activity.

    Bill of Lading, A document that is used by a vendor and a freight carrier that describes the freight classification of the goods being shipped by the vendor.

    Bisynchronous communication, An electronic method of communication in which data is sent in blocks of characters and in both directions at the same time.

    Bluetooth, A standard for wireless data transfer Bluetooth can be built into any wireless application. Bluetooth transmits at 2.45 GHz.

    Bps, Bits Per Second - a measurement of how fast data is transmitted.

    Broadband Web, High-speed broadband connections from businesses to the World Wide Web (internet).

    Browser, A PC tool for viewing HTML documents; used to retrieve, display, and print information from the World Wide Web using the HTTP protocol.

    Business Process, A series of business steps by a person or system that are started by a business event. (e.g. ordering process, shipping process, invoicing process).

    Catalog Buying, Provides customers with the ability to place and pay for orders online at the supplier's web site.

    Catalog Search, Provides customers with online accesses to a supplier's catalog.

    Catalog Syndication, The process for sending a Supplier's catalog is sent to customer. Possible uses of catalog information by customers include loading into purchasing or requisition software to facilitate ordering.

    Certificate Authority, A trusted company that will accept a public key, along with some proof of identity, and serve as a repository of digital certificates.

    Certification Authority (CA), A secure third-party organization that can vouch for the identity and origin of a person or program component.

    Certified Delivery Server, A server that uses public key encryption to validate a destination and provides a non-repudiation service. The server establishes that a message was received.

    CDMA (Code Division Multiple Access), A digital cell phone transmission technology based on assigning users unique sequence codes within a frequency range.

    Channel, The path used by a message; a means of transportation connects a sender and receiver.

    Charge Back, A penalty, for an agreed upon amount, assessed by retail customer to a supplier for not following vendor procedures established in the contract with the retailer.

    CIDX, Chemical Industry Data Exchange: sets standard for EDI and XML transactions in the chemical industry.

    Circuit Switching, Method of routing messages in which the communication channel is kept open until the message is complete (like the telephone).

    Clearinghouse, An organization that provides a message/file collection, routing and distribution service on behalf of other organizations. See also automated clearinghouse (ACH), Value Added Network (VAN).

    Common Business Library, Also called xCBL. A set of XML data tag definitions and schema language framework. Originated by CommerceOne.

    COM Object, A COM Object is a Component Object Model. Microsoft has migrated COM into DCOM. COM is used to support objects sent/distributed across a computer network. COM facilitates communication between ObjectBroker and OLE.

    Compliance Checking, A checking process that is used to ensure that a transmission complies with the syntax rules.

    Compression, Reduction of the size of computer files and records; saves storage space and increases the speed with which the file can travel over the Internet or across networks. EDI records are much more compressed in their original state than XML records by a factor of approximately 10.

    Content Management, The process of managing content to keep it current. For example adding new items to the online catalog. Also refers to a supplier's web site's ability to display information that varies by customer, for example customer specific pricing.

    Content, The information on a web site. Supplier web site content typically consists of relatively static catalog information and company information and constantly changing information that is customer specific such as order status.

    Counterfeit Access Device and Computer Fraud and Abuse Act of 1984, This act makes it a federal crime to knowingly access a computer in order to obtain financial records of financial institutions, consumer credit reports of consumer reporting agencies, and restricted federal government information. It is also a crime to use counterfeit or unauthorized access devices to transfer funds, obtain things of value, or to traffic these devices.

    Cryptographic Algorithm, A set of rules specifying the procedure required for the encryption and decryption of data.

    Data Communication, The transfer of data between two or more computers.

    Data Element, The basic unit of information in the EDI standards containing a set of values that represent a singular fact. It may be single-character codes, literal descriptions, or numeric values. For every piece of information a paper document, there is a corresponding data element in the electronic document or transaction set.

    Data Element Dictionary (X12.3), Defines the data that are used to construct the transaction sets. These must be used in the same version/release level as the transaction sets.

    Data Element Length, The range, minimum to maximum, of the number of character positions available to represent the value of a data element. A data element may be of variable length and range from minimum to maximum, or it may be of fixed length in which the minimum is equal to the maximum.

    Data Element Reference Number, Number assigned to each data element as a unique identifier.

    Data Element Requirement Designator, A code defining the need for a data element value to appear in the segment if the segment is transmitted. The X12 codes are mandatory (M), optional (O), or conditional (C).

    Data Element Separator, A unique character preceding each data element that is used to delimit data elements within a segment. "*" is often used as the delimiter.

    Data Element Type, A data element may be one of six types: numeric, decimal, identifier, string, date, or time.

    Data Encryption Key (DEK), Used for the encryption of message text and for the computation of message integrity checks (signatures).

    Data Rate, The speed at which data is transmitted and received. Usually measured in bits per second (bps).

    Data Segment, A data segment is an intermediate unit of information in an EDI transaction. It consists of a clearly defined sequence of functionally related data elements.

    Data Transfer, The amount of digital data that is moved from one place to another at a given time. Data transfer includes outbound traffic from a Website, with the exception of e-mail.

    Dedicated Line, A permanent connection to the Internet using an individual phone line.

    Delimiters, A delimeter is a punctuation character or group of characters that separates two names or two pieces of data, or marks the beginning or end of a programming construct.

    Dial-up Connection, A connection made over an ordinary telephone line between a computer (via its modem)

    Digital Certificate, An electronic document, issued by a certificate authority, used to establish a company's identity by verifying its public key; are used in much the same way as conventional forms of identification - such as a driver's license or passport - to provide irrefutable evidence of the owner's identity and, in some cases, authority in a given transaction. Digital Certificates are issued, managed, and verified by Certificate Authorities.

    Digital Signature, Digital signatures, like written signatures, are a method of authenticating the source of a document and/or its author. A common form of digital signatures are digital certificates, whereby the issuing company vouches for you and gives you a unique identification that can be verified by a merchant prior to accepting an order.

    Direct Connection, A permanent connection between a computer and the World Wide Web (Internet).

    Direct Goods, Raw materials and components that become part of a finished product.

    Direct Transmission, The exchange of data one sending computer to another receiving computer.

    DISA, Nonprofit organization supporting the development of e-business standards in e-commerce.

    DISA (Defense Information Systems Agency), An agency within the United States Department of Defense that is responsible for the Defense Information Structure (DII).

    DNS, Domain Name System is a system of servers located on the Internet that have been set up for Internet connections and the routing of e-mail.

    Domain Name Service (DNS), Domain name service allows a more friendly way to remember places on the Internet. DNS is what maps IP numbers to domain names across the Internet.

    DSL, Digital subscriber line; a technology for bringing high-bandwidth information to homes and small businesses over ordinary copper telephone lines.

    D-U-N-S Number, A database maintained by Dun and Bradstreet that is used to identify companies to each other and to the U.S. government. The nine-digit DUNS identification sequence, developed and assigned by Dun & Bradstreet, Inc is an internationally recognized common company identifier in EDI and global electronic commerce transactions.

    Dynamic HTML, HTML extensions that enable a web page to react to user input without sending requests to the web server.

    Dynamic Packet Filter, A firewall facility that can monitor the state of active connections and use this information to determine which network packets to allow through the firewall. By recording session information such as IP addresses and port numbers, a dynamic packet filter can implement a much tighter security posture than a static packet filter.

 
E-M

    EAI, Enterprise Application Integration, used to describe software tools that support integrating applications across a company or enterprise.

    e-business, Electronic Business, the process of using Web technology to help businesses to streamline processes, improve productivity and increase efficiencies. Enables companies to easily communicate with partners, vendors and customers, connect back-end data systems and transact commerce in a secure manner.

    EbXML, XML definitions and schema language framework designed to extend the usability of XML in e-commerce. Shares similarities with EDI.

    E-commerce, Electronic commerce; the exchange of information about goods or services via the Internet; the ability to buy and sell products and services over the Internet. May include ordering, billing, customer service and handling of payments and transactions.

    EDI, EDI (electronic data interchange) is the computer-to-computer exchange of business documents between companies. EDI is used for the transmission of business transactions in computer-readable form based on standard formats.

    EDI Capable, EDI Capble means that you are able to process EDI transactions for your EDI trading partners. This requires having EDI software, an EDI VAN, the correct hardware and EDI maps for translating EDI records into a useable form.

    EDI Compliance, EDI Compliance is the ability to send and receive EDI documents in the way that your partner requires it.

    EDI Compliant, A company is EDI Compliant if it is able to send and receive EDI documents in the various ways its partners require.

    EDI Coordinator, The person responsible for communicating with EDI trading partners and project managing new EDI implementations.

    EDI Outsourcing, EDI outsourcing is turning over to a third party the responsibility for EDI software, hardware, communications and personnel.

    EDI Service Providers, Third party companies that provide services for Electronic Data Interchange (EDI) to their clients. Services support the automated exchange of commercial data using EDI between business partners.

    EDI Services, Service provided by a third party that provide EDI mapping, translation, transportation, interconnection and integration.

    EDI Solutions, Service and software provided by a third party that provide the EDI components necessary to exchange EDI transactions with partners. Solutions can be either purchased piecemeal or outsourced in their entirety.

    EDI System, The software, hardware and labor required to receive and send EDI transactions with EDI trading partners. EDI systems can be either purchased by buying each of the components separately or outsourcing all of the components to a third party.

    EDIFACT, The United Nations EDI standard; EDI for Administration, Commerce, and Transport:. The Data Interchange Standards Association (DISA) serves as the U.S. link with the UN EDIFACT process.

    EDI Transactions, Electronic documents transmitted in EDI format according the standards of the EDI trading partner requesting the transactions.

    EDI Translation, The conversion of business application data to and from the X12 standard format. For example, to convert an invoice into an X12 standard format, some type of EDI translation software or service is required.

    EDI VAN (Value Added Network), A service for transmitting EDI that charges by the number and size of transactions.

    EDI Vendor, A third party provider of EDI software, services or VAN capability.

    Efficiency, Refers to how cost effectively company produce and sell a product or service

    EFT (Electronic funds transfer), Electronic payment in which funds are transferred between bank accounts at different financial institutions.

    e-fulfillment, The services a business' shipping department that leverage the internet for the assembly, and tracking of products. Facilitates customer specific packaging, labeling and shipping of products to customers.

    EDI Electronic Data Interchange, EDI is the computer-to-computer exchange of normal business transactions including payments, information exchange and purchase order requests.

    Electronic Data Interchange For Administration, Commerce and Transport (EDIFACT), The international standard for EDI messages. EDIFACT, also known as UN/EDIFACT, is one of the two international standards describing the syntax of EDI transmissions. EDIFACT is administered by a working party (WP.4) of the United Nations Economic Commission for Europe (UN/ECE). The EDIFACT syntax rules have been published by the ISO as ISO9735.

    Electronic Signature, A code or symbol that is the electronic equivalent of a written signature.

    Encryption, Encryption is the conversion of data into a form, called a cipher, which cannot be easily intercepted by unauthorized people. Decryption is the process of converting encrypted data back into its original form, so it can be understood.

    Enveloping, The grouping together of documents of the same type. Enveloping is used for sending groups of transactions to the same destination.

    E-Procurement, The business-to-business purchase of supplies and services over the Internet. Purchasing by customers includes the customer's internal back office applications and use of the internet to extend the applications to suppliers and partners.

    ERP (enterprise resource planning),Another name for front and back office applications software. Examples of applications within ERP include Purchasing, Materials Receipt, Accounts Payable, Accounts Receivable, Order Entry, and Customer Service.

    Exchange, see Marketplace

    Extended Enterprise, A company and its partners, including customers, suppliers and sub-contractors, that work together to design, development, produce and deliver a product to the final user. Also refers to the supply chains and logistics chains.

    Extensible Business Reporting Language or XBRL, XML definitions and schema language framework designed to extend the usability of XML to describe financial statements.

    Extensible Markup Language (XML), The universal format for structured documents and data on the Web, which is increasingly becoming the general standard document format of structured data.

    Extensible Stylesheet Language Transformation or XSLT, A specification for displaying XML as a user readable format, for example in HTML.

    Extranet, Extranets are an extension of a company network or a collaborative Internet connection to key customers, suppliers, and partners. Extranets provide access to specific company information and build closer business relationships.

    File Transfer Protocol (FTP), A mature service that transfers files from one computer to another computer over the internet.

    Firewall, A security system for protecting a server and local area network. A firewall monitors and manages traffic in and out of a network while limiting access to authorized users and programs.

    Full Duplex, A method of transmitting information over a communication channel, in which signals may be sent in both directions simultaneously.

    997 Functional Acknowledgement, A transaction set (EDI 997) transmitted by the receiver of an EDI transmission to the sender, indicating receipt and syntactical correctness of the data transmission. The functional acknowledgement is not an acknowledgement of data content.

    Functional Group, A group of similar transaction sets such as four invoices. A functional group has a functional group header segment and a functional group trailer segment. Each transaction set is assigned which is The first data element of the header segment is the functional identifier code.

    Functional Group Identifier, The functional group identifier is the first data element of the functional group header segment. The applicable functional group identifier is shown at the top of each message set after the message set name. In cases where no functional group ID is given, the message set assumes the functional group ID of the functional group.

    Gateway, a general term for software and related hardware that supports the exchange of electronic documents and messages.

    HTML (HyperText Markup Language), The programming used to display the content of web pages for use by web browsers. Used to create documents for the World Wide Web.

    HTTP (HyperText Transfer Protocol), The protocol facilitates communication between servers on the World Wide Web. It enables a server to connect to a Web server and to transfer HTML pages, i.e., enables the user to view Web pages. HTTP is based on Transfer Control Protocol/Internet Protocol(TCP/IP) developed for the Web.

    HTTPS (HyperText Transfer Protocol on Secure Sockets Layer) , HTTP (see above) that uses security called SSL (Secure Sockets Layer).

    Hub, An online exchange or market place where transactions are received and transmitted between multiple suppliers and customers.

    Hybrid EDI, Introduced by service providers to accommodate situations in which only one trading partner is capable of using EDI, while the other continues to trade using e-mail and web forms.

    Interchange, In XML and EDI (Electronic Data Interchange), it is the exchange of information between two companies.

    Interchange Control Segments (ISA/IEA), These EDI segments identify a unique interchange being sent from one sender to one receiver (see electronic envelope).

    Interchange Control Structure (X12.5), X12.5 contains specifications for the control structures (envelope) for the electronic interchange of one or more transaction sets. This standard provides the interchange envelope of a header segment (ISA) and a trailer segment (IEA) for the interchange through data transmission, and provides a structure (TA1) to acknowledge the receipt and processing of this envelope.

    Indirect Goods, Products that do not become part of a finished product.

    Interface, The connection between applications. Interfaces may connect applications within a company or to a company's business partners.

    Interoperability, The ability of an application to work with other vendors' and companies' applications.

    Internet, A global network of networks having in common the TCP/IP protocols and an agreed e-mail addressing structure that provides communications and other distributed services.

    Internet 2, The next generation Internet.

    Internet Appliance, A computer terminal that does not have an operating system or applications but only supports Web access.

    Internet Protocol (IP), The Network layer protocol on which the Internet is based. IP allows a single connectionless packet exchange. Other protocols, including TCP and UDP use IP to perform their connection-oriented or guaranteed delivery services.

    Internet Protocol (IP) address, The Internet Protocol address is a unique number which is used to represent every single computer in a Network. All the computers on the Internet have a unique IP address.

    Intranet, A web site that is only access able to employees with a password. Password security usually limits an employee to only seeing information relevant to his or her role.

    810 Invoice, An EDI 810 Invoice is an electronic version of a paper Invoice or bill. A supplier will use the 810 Invoice to communicate to a buyer the specific items, price, and quantities they have delivered and now must be paid for by the buyer. Payment terms will usually accompany the billing information.

    IP (Internet Protocol), The interaction method used by the Internet.

    Java, A programming language intended to be a universal language for the Internet. Developed by Sun Microsystems, this language creates platform independent applications which can run on any operating system.

    Javascript, A programming language that is object-based which allows Java objects to be directly embedded in an HTML page.

    JIT, Just In Time, a technique of managing inventory pioneered in Japan, under which materials are delivered by suppliers to a manufacturer as they are needed for production, rather than for storage or inventory.

    Key, A series of encrypted numbers.

    Latency, In a network, latency, a synonym for delay, is an expression of how much time it takes for a packet of data to get from one designated point to another.

    Legacy Application, This is an application in which an organization has already invested a considerable amount of time and money. Legacy applications are typically database management systems running on mainframes or minicomputers.

    LDAP (Lightweight Directory Access Protocol), An internet protocol used to access information contained in directories such as user data

    Linux, Linux is a free operating system that runs on UNIX machines.

    LTL, Less Than Truckload. A less than truck load is a shipment that requires less space than a full truck load.

    Manifest, A document from the vendor who is shipping goods to a customer that describes where the goods will arrive. Multiple destinations may be included.

    Mapping, Connecting document fields from one companies format to anther company's format is mapping. In XML and EDI mapped data elements are converted into XML or EDI data streams or vice versa.

    Marketplace, An online web site that supports multiple buyers and sellers. Examples include Pantellos,Trade Ranger and ChemConnect

    Message, The communication of information from a source to one or many destinations. This term can be used to describe a set of transactions in Electronic Data Interchange (EDI) or Extended Markup Language. The transaction can include data for a purchase order, a shipping notice, or any other electronic document.

    Microsoft .NET, Microsoft's products that support XML and web services

    Mobile Delivery Ticket, Field based delivery ticket and electronic signature to establish POD (Proof of Delivery) for payment of supplier's invoice. May be sent electronically to customer to serve as Material Receipt with electronic signature.

    Mobile Material Receipt, Field based transmission of delivery tickets, electronic signature on receipt sent to customer's A/P. May be preceded by electronic delivery ticket or shipping notice.

    Mobile Procurement,Field-based access to supplier catalog or customer's procurement system for order generation

    MRO or Maintenance, Repair, and Operations, A large group of products used to maintain facilities and production capabilities.

 
N-R

    OASIS or Organization for the Advancement of Structured Information Standards, A non-profit, international organization that creates standards for XML

    OFS Portal, A group of suppliers working together to develop standards for upstream energy products and services.

    Online Services, Supplier web site services that improve customer service by helping customers do more of their commerce interaction online. Examples include tax calculation, credit checks, shipping requirements and order status.

    Open, A way of describing software vendor products that indicates a product will work well with other programs and data from other companies including other software vendors as well as custom programs developed by a company or their trading partner. Products that are open are said to have interoperability.

    Open Systems, "Open" systems are those based on s standardized computer operating systems and hardware; standardized graphical user interfaces; communications standards, standard database management interfaces; and standardized data exchange software technology.

    Order Status Service, Allows customers online access to order status information on the supplier's web site.

    Outsourcing, As relates to electronic commerce, hiring a professional e-commerce provider to manage the day-to-day operation of an enterprise's B2B needs and Internet presence. The business can benefit from the resources and experience of the service provider without having to invest in people, hardware and software.

    Password, A secret word or phrase used to identify a user who is permitted to have access to gain information.

    Payment Remittance Transaction, An electronic authorization to make a payment.

    PDA, Personal Digital Assistant, used for any small, mobile, hand-held device that creates, stores or sends personal and financial information.

    PIDX, Petroleum Industry Data Exchange; a task group within the American Petroleum Institute responsible for XML and EDI standards in the petroleum industry.

    PO (Purchase Order), A customer's formal request to buy goods and or services from a vendor. Consists of header information and one or more line items.

    Point of Presence (POP), The place that customers call to gain access to the Internet, typically and ISP.

    Point-to-Point Protocol (PPP), A scheme that is used to connect to the Internet over the phone line.

    Point-to-Point Tunneling Protocol (PPTP), A set method for connecting Windows NT clients and servers to each other over a Remote Access Services. When PPTP is combined with encryption, it makes up a virtual network between a LAN or WAN and ordinary dial-up users.

    POP3, POP3 (Post Office Protocol 3) is the most recent version of a standard protocol for receiving e-mail. POP3 is a client-server protocol in which e-mail is received and held for you by your Internet server.

    Port 80, On a Web server or HTTPD (Hypertext Transport Protocol daemon), port 80 is the port that the server typically expects to receive from a Web client.

    Private e-Marketplace, An adapt ion of software originally intended for public marketplaces (see above) that can used by a single company for doing with its business partners.

    Procurement, The process for acquiring goods and services including planning, negotiation, vendor selection, purchase, and delivery.

    Product Life Cycle, The four stages of the retail product life cycle: 1) introduction, 2) growth, 3) maturity, and 4) decline.

    Punch Out with ERP to ERP, See Round Trip with ERP to ERP definition.

    Punch Out, see Round Trip.

    850 Purchase Order, An EDI 850 Purchase Order is an electronic version of a paper Purchase Order. A buyer will use the 850 Purchase Order to communicate to a supplier the specific items, price, and quantities they wish to have delivered. Shipping instructions will frequently accompany the purchasing information.

    855 Purchase Order Acknowledgment, An EDI 855 Purchase Order Acknowledgment is an electronic version of a phone call or fax that tells the buyer who sent you a purchase order that you will be filling the purchase order as requested. The buyer then knows that you will be filling the order and shipping the goods as requested by the date requested.

    Purchasing System, A transaction processing system that supports and documents transactions associated with the purchasing of goods and services.

    Purchasing Transaction, One of many transactions containing information relating to the purchase of a product or service.

    Qualifier, An EDI data element that identifies or defines a related element, set of elements, or a segment. The qualifier contains a code taken from a list of approved codes.

    Quick Response (QR), A supply chain management philosophy in which a business responds quickly to customer orders. Analogous to just-in-time manufacturing; a business practice in the retail industry of which an important part is the strategic deployment of XML, EDI and bar coding. Produces improved inventory turns, avoidance of out-of-stocks and reduction of excess inventory. XML and EDI are used to deliver market data gathered at the point-of-sale (POS) terminals and delivered to suppliers much more quickly than using manual systems.

    Requirements Definition, The document that specifies what a configured system has to do to meet the business and technical needs of users.

    Request For Proposal or RFP, a formal request from a customer to a supplier for a proposal that includes pricing and terms on a specific item or items and usually services also.

    ROI or Return on Investment, is the expected value of cost savings or margin increases divided by the amount of money to be invested.

    Requisition, A requisition is one part of the procurement process and is a formal request by an employee of a customer for specific items. May also include product performance requirements and required delivery dates. The requisition becomes a purchase order after internal approvals are completed.

    Roundtrip with ERP to ERP, Includes the Round Trip process described above plus customer sends and receives transactions via XML with supplier. XML transactions are automatically interfaced to suppliers and customer's ERP systems.

    RoundTrip, A procurement process in which a Customer uses an internet browser to access a suppliers web site with single sign-on and puts items into a shopping cart on the suppliers web site. Then, rather than checking out, the shopping cart is electronically sent to the customers procurement software where the procurement process proceeds. Roundtrip makes it easy for the customer to get exactly the items they want with the suppliers most current pricing without having to maintain the suppliers catalog within their procurement application. Roundtrip doesn't require the supplier to send catalog and pricing information to customers. Round Trip is the same process as Punch Out.

 
S-Z

    SAP (Systems, Applications, Products), A German software package designed to contain all the core computer models necessary to run major corporations. SAP R/2, as it is commonly known in available for mainframes; a separate Client/ Server version is called R/3.

    Salability, The ability of a business to add content and resources as its presence on the Web grows.

    Secure Server, Secure servers are used to conduct confidential transactions over the Internet. Data is sent between the servers in an encrypted form.

    Security, Techniques for ensuring that data stored in a computer cannot be read or compromised. Most security measures involve data encryption and passwords. Data encryption is the translation of data into a form that is unintelligible without a deciphering mechanism.

    Security Certificate, Information that is used to establish a secure connection. Security Certificates contain information about who it belongs to, who it was issued by, and an encrypted term that can be used to verify the contents of the certificate.

    Segment, EDI segments consist of related data elements in a defined sequence. An EDI data segment consists of a segment identifier, one or more data elements each preceded by an element separator, and a segment terminator. "*" is a typical data element separator and NL is used as a segment terminator.

    Sender, In the communication process this is the originator of the message; the point where the communication starts.

    Server, A computer in a network supplying a specialized service to "clients" on the network, such as managing a file store, managing a data base or communicating with centralized devices such as plotters, printers and scanners. Servers may be mainframes, departmental computers or PC's.

    Shopping Cart, A storage place or holding place for online purchases until the final purchase is made.

    Simple Mail Transfer Protocol (SMTP), The method by which Internet mail is delivered from one computer to another.

    SKU, Stock Keeping Unit. An SKU number refers to a particular item or part. A UPC number may be assigned to an SKU by the UCC.

    SMEs, small to medium sized companies and enterprises.

    S-Mime Encryption, Protects the privacy of e-mail. If the sender and receiver both have e-mail clients that support the S-Mime protocol, they can communicate with e-mail that is secure.

    SMTP (Simple Mail Transfer Protocol), A TCP/IP protocol used in sending and receiving e-mail

    SOAP (Simple Object Access Protocol), a protocol for software components that uses XML standards in calls for exchanging information across a network

    Sourcing, The act of choosing a supplier to fill a particular need. May be centralized in the customer's purchasing organization or may be decentralized in areas of usage or a combination of the two.

    SOX (Schema for Object-Oriented XML), A method for organizing schemas within XML that facilitates interfacing applications.

    SSL (Secure Socket Layer), A protocol for sending and receiving messages over the Internet via browsers. Special encryption for public and private keys is used to encode and decode information.

    SSL encryption, Secure Socket Layer, a security measure developed by Netscape, scrambles data to provide data encryption and authentication of servers or clients often dealing with highly sensitive data.

    Stock Keeping Unit or SKU, A unique number assigned to particular inventory item.

    Storefront Design, The way a Website is designed for the public.

    Supply chain, The interaction of suppliers and customers necessary for the production of goods and services. Includes planning, ordering, delivery/receipt, service and distribution

    Supply Chain Management (SCM), SCM refers to the effective integration of the processes related to the forecasting of the product's market demand, the acquisition of the raw materials to make the product, its manufacturing, the inventorying of the product, its transportation to market, its eventual sale (or the fulfillment of demand), and the measurement of the satisfaction of the customer who purchased it. Combines the power of the Internet with the latest technology, enabling participating suppliers to access up-to-date company information and enabling companies to better manage and track supply and demand.

    TCP/IP (Transmission Control Protocol/Internet Protocol), The basic communication language or protocol of the Internet. It can also be used as a communications protocol in intranets and extranets.

    Telecommunications Act of 1996, Established as law on 2.8.96, this act changed the laws affecting telecommunications and the Internet. An attachment to the act was the Communications Decency Act, which was intended to protect children from obscene information on the WWW.

    Tier 1 Supplier, A supplier with prime design responsibility for key subsystems or components of the end product. Also referred to as rime contractor" or simply "prime".

    Tier 2 Supplier, In the Extended Enterprise, a supplier to a Tier 1 Supplier, or a direct supplier of less critical components. Also referred to as "sub-contractor" or simply "sub".

    TL, Truck Load. A shipment of goods that fills an entire truck.

    Trading Partners, Companies that an organization does business with, for example, customers and suppliers.

    Translation/Translator, The conversion of a document from one format to another by an application system that performs the conversion or translation from document format to another document format.

    Tunneling, A methodology that allows digital data to be transmitted and read at another location that uses a different format from the original source.

    UCC (Uniform Code Council), The organization that oversees the standards for product identification and related electronic communications. The UCC oversees the Universal Product Code (U.P.C.) in the United States as well as Uniform Communication Standards (UCS) for EDI in the grocery industry and Warehouse Information Network Standards (WINS) in the warehousing and transportation industry.

    UCC 128 Label, A bar code label that is placed on each carton and that includes the purchase order number, the store location the goods are being sent to and a description of the contents in the carton. When the carton arrives at the customer's location, it is placed on a conveyer belt, the UCC-128 bar code is scanned and the carton is routed to the appropriate area. For vendor payment purposes, scanning the UCC-128 bar code confirms that the order has been received.

    UNSPSC(Universal Standard Products and Service Codes), A common standard numbering scheme for products that is 10 digits long. Up to five levels of categories may be used.The UN of UNSPSC came from the United Nations Common Coding System (UNCCS) and the SPSC came from Dun & Bradstreet's Standard Products and Services Code.

    Unfair Trade Practice Act, This is a federal law that prohibits wholesalers, retailers or professional Websites from selling their products at below cost.

    Uniform Resource Locator (URL), A World Wide Web address that specifies a specific site, page, graphic, or document on the Internet.

    United Nations Economic Commission for Europe (UN/ECE), The Economic Commission for Europe (UN/ECE) is a trade and economic body/forum in Europe which the countries of North America, western, central and eastern Europe and central Asia come together to forge the tools of their economic cooperation. This organization is the working backbone that administers EDIFACT and plays a leading role in developing EDI.

    U.P.C. (Universal Product Code), A 12 digit numeric bar code standard used in supermarkets on grocery items, magazines and over-the-counter medical items. The left five characters are assigned by the Uniform Code Council to identify the manufacturer of the product; the right five characters are assigned by the manufacturer to identify the product. A number system character appears on the left hand side and check digit on the right.

    User ID, A unique combination of numbers and letters used to identify a user by a server.

    Value Chain, A variation on Supply Chain. Value Chain is typically used to describe processes that add value in the supply chain that the final buyer in the supply chain will pay for.

    VAN (Value Added Network), A third party entity that provides a service for electronically exchanging information between trading partners. Services provided by the VANs include electronic mailboxes for EDI transmissions and EDI record keeping for audit tracking.

    VAN Interconnect, If one of your trading partners is using a different EDI service provider than you, VAN Interconnect will give you the ability to trade with these partners. VAN Interconnect allows two different VANs (Value Added Networks) to exchange EDI documents.

    Vendors, Companies or people that sell products or services.

    VICS, Voluntary Interindustry Commerce Standards Association.

    VICS EDI implementation, The VICS EDI implementation guidelines contain transaction sets which support the following business functions - Product Development/Merchandising Ordering, Logistics, Financial, Business Support, Import.

    VMI (Vendor Managed Inventory), A technique used by customers in which manufacturers receive sales data in order to forecast consumer demand more accurately. The vendor uses the sales information to maintain the proper level of inventory for each product that is stocked.

    VPN ( Virtual Private Network ), Network connections or "pipes" that encrypt data sent across the internet to provide security and control of the information transmitted between computers.

    Web EDI, The ability to exchange EDI transactions with trading partners over the web (internet) and avoid costly VAN charges per transaction.

    Web Based EDI, Solutions that have the capability to support exchange EDI transactions with customers (trading partners) over the web and avoid having to pay for expensive VAN fees per transaction.

    Web Server, A computer whose purpose is to display web pages to Internet users.

    WINS (Warehouse Information Network Standards), A set of EDI standards for warehousing and distribution, maintained under the auspices of the Uniform Code Council (UCC). WINS is a subset of the ANSI X12 national standard.

    Wireless, Communications, monitoring, or control system in which electromagnetic or acoustic waves carry a signal through atmospheric space rather than along a wire. In most wireless systems, radio-frequency (RF) or infrared (IR) waves are used. Some monitoring devices, such as intrusion alarms, employ acoustic waves at frequencies above the range of human hearing.

    Wireless Application Protocol (WAP), An open, global application standard that enables wireless devices to instantly and easily access and interact with information and services. Used in mobile computing devices, it features a micro Web browser that displays and transmits specially formatted pages over a broad range of mobile data channels.

    World Wide Web (WWW), A collection of information located on many Internet servers that can be accessed with a browser or by navigating via hypertext links.

    Work Flow Management, The electronic control and distribution of documents and work instructions.

    WWW, World Wide Web; is a set of pages or documents that are connected by hyperlinks.

    X12, Accredited Standards Committee. X12 standards are used in many industries for conducting ecommerce via EDI.

    xCBL or Common Business Library, A set of XML data tag definitions and schema language framework. Originated by CommerceOne.

    XML (eXtensible Markup Language), A universal format for structured documents and data on the Web. A file format for representing data, a schema for describing data structure, and a mechanism for extending and annotating HTML. Document Type Definition (DTD) tags carry information pertaining to a data structure and its content within a document. The tags are used by XML interpreters to understand the data contained within a particular document.

    XML/EDI, provides a standard framework/format to describe different types data so that the information in a transaction, catalog or a document in a workflow can be searched, decoded, manipulated, and displayed consistently. Combining XML and EDI provides a powerful means of exchanging data between many different types of organizations.