Unit Two The History of EDI
Electronic Data Interchange（EDI）may be 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 organizations.
Amore careful definition of EDI is “the exchange of documents in standardized electronic form，between organizations，in an automated manner，directly from a computer application in one organization to an application in another.”
EDIcan be compared and contrasted with electronic mail（E-mail）.E-mail enables free-format and textual messages to be electronically transmitted from one person to another.EDI，on the other hand，supports structured business messages，and transmits them electronically between computer applications，rather than between people.
The essential elements of EDI are：
①The use of an electronic transmission medium rather than the dispatch of physical storage media such as magnetic tapes and disks；
②The 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）；
③Relatively fast delivery of electronic documents from sender to receiver；
④Direct communication between applications.
EDI depends on a moderately sophisticated information technology infrastructure.This mustincludedata processing，data management and networking capabilities to enable the efficient captureof data into electronic form，the processing and retention of data，controlled access to it，and efficient and reliable data transmission between remote sites.
Acommon connection point is needed for all participants，together with a set of electronic mailboxes，and security and communications management features.It is entirely feasible fororganizations to implement EDI directly with one another，but it generally proves advantageous to use a third-party network services provider.
EDI saves unnecessary re-capture of data.This leads to faster transfer of data，far fewer errors，less time wasted on exception-handling，hence it will become a more streamlined 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，between government agencies and their suppliers and clients.
EDI can be used to automate existing processes.In addition，the opportunity can be taken to rationalize procedures，thereby reduce costs，improve the speed and quality of services.
The early applications of what became known as EDI were undertaken in the United States.The ideas origins have an international flavor，however，being traceable back to the 1948 Berlin Airlift，where the task of coordinating air freighted consignments of food and consumables wasaddressedby devising a standard manifest.Electronic transmission commenced during the 1960s，initiallyin the rail and road transport industries.The standardization of documents was a necessary concomitant to that change.
At about the same time，the U.K.Department of Customs and Excise，with the assistance of SITPRO，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 into what became known as the GTDI，and were gradually accepted by some 2000 British exporting organizations.
EDIs 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 less data-caused delayed in the business process.Benefits can be attained in such areas as inventory management，transport，distribution，administration and cash management.