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Chapter 5

The Nature of Electronic Data Interchange


Electronic Data Interchange: Is defined as the exchange of computer processable data in a standard format between organizational entities It is a set of data definition that permits business forms that would have been exchange electronically.

ASC- American Standard Committee

UN/EDIFACT-United Nations EDI for Administration, Commerce, and Transport

EDI versus Paper-based System

The used of electronic and online technology in any sector or industry of the economy has brought forth with the so-called paperless transaction.

The concept of EDI veers away from voluminous paperwork's that come with the traditional business as diagrammatically shown in Fig.49.

Figure 49. EDI system versus paper-based system

Fig.50 Information flows in the EDI purchasing process

Fig. 51 Information flows in the paper-based process

EDI versus traditional Method

Fig.52 EDI versus traditional method

Components of EDI and how it works

Fig.53 Components of electronic data interchange system

Fig. 54 How EDI works in a procurement activity

Application of EDI

Fig.55 EDI application among participating firms

Fig. 56 Application of EDI transaction in a manufacturing concern

Direct versus indirect EDI connection

Fig.57 Direct EDI connection

Fig. 58 Indirect EDI Connection

Open EDI
A more recent innovation to EDI is Open EDI on Virtual Private Networks(VPN).

VPN is a technology that need for expensive leased lines for site-tosite communication and long distance remote access.

Two major requirement of a VPN: There must be a method of keeping the data secure as it traverse the internet. There must be a means of authenticating the person or system making the connection.

EDI and the banking system


As earlier mentioned, EDI and online banking have given rise to the popular use of EDI. Bank and eCommerce is routinely used in to the banking sector in particular for Financial EDI over secure global network.

The BancNet EDI System

Fig. 60 Strategic alliance among online banking players

The BancNet EDI System

Fig 61 SSSNet-EDI Program- linking up the employers and government agencies

The BancNet EDI System

Fig 62. BancNet EDI System- How it works

The BancNet EDI System

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