Inter Organizational Commerce

1) What is EDI? Explain benefits of EDI.

Ans: – Electronic Data Interchange: EDI developed in the 1960s as a means of accelerating the movement of documents pertaining to shipments and transportation.

– Electronic data interchange is the transmission in a standard syntax of unambiguous information of business between computers of independent organizations. – Electronic data interchange is the interchange of standard formatted data between computer application systems of trading partners with minimal manual intervention. – Electronic data interchange is the electronic transfer from one computer to another of computer processable data using an agreed standard to structure the data.

Benefits of EDI

i) EDI saves time, cost and due to automated transfer of information errors are nil. ii) EDI transactions produce acknowledgements of receipt of data; this facility can eliminate invoice i.e., paperwork. iii) EDT reduces postage bill as no papers are sent across.

Iv) EDI can improve customer service by enabling quick transfer of business documents. Inventory maintenance is done efficiently with the help of EDI.

2) Explain the Applications of EDI.

Ans: – EDI Applications in Business:

Railway rolling stock monitoring.
Cargo plans for container ships. (iii) Ship berthing/scheduling notices. (iv) Notification of the presence of hazardous/dangerous goods on ships/trains/planes.

(v) Exchange of CAD/CAM documents. (vi) Tender tracking

(vii) Lodgement of law court documents (viii) Airline ticket settlements etc.

-Originally, EDI was used as expeditor of the transfer of trade goods.

EDI for insurance claims processing, manufacturing, and retail procurement. – EDI has shaped a company’s marketing and distribution efforts by helping to create new distribution channels, develop new merchandising and market research methods and introduce better customer service.

Applications of EDI in Legal Security:

-Issues of legal admissibility and computers security are important aspects to be considered for companies involved in trading through EDI.

Companies that deal through EDI take the service of a lawyer during the design of an EDI application so that the appropriate evidentiary/ admissibility safeguards are implemented.
Analyzing the security requirements of particular applications can be aided by considering the security characteristics the application should possess as well as the sensitivity level for each.
Assume that the message sent through EDI is delayed due to transmission delay (routing problem), or message is lost due to network failure; nobody can be held responsible for business losses caused by this error.

3) Write Note on Value Added Networks (VAN).

Ans: – Value Added Networks (VAN):

A VAN is a communications network that typically exchanges EDI messages among trading partners.
It also provides other services including holding messages in ‘electronic mailboxes’ interfacing with other VANs and supporting many telecommunication modes.
A VAN’s ‘electronic mailbox’ is software in which a user deposits EDI transactions and then retrieves those messages when convenient.
It works much like residential personal mailboxes.
VANs have allowed companies to automatically and securely exchange purchase orders, invoices, and payments.

The following diagram illustrates the EDI process:

Company A places an EDI message for trading partner manufacturing company B in the VAN mailbox at a due date and time of its choosing.
The VAN picks up the message from the mailbox and delivers it to the trading partner B’s mailbox, where it will remain until trading partner B responds to trading partner A in the same fashion.
The cycle repeats itself on a weekly, daily or even hourly basis as needed. This service is generally referred to as mail-based EDI.
The disadvantage of EDI-enabling VANS is that they are slow and high-priced, charging by the number of characters transmitted.
Some of the VAN service providers are: AT, British Telecom, Cable & wireless, GEIS