Electronic Data Interchange (EDI) is used by organizations for transactions that occur on regular basis to a pre-determined format. It is one of the electronic commerce technologies.
It is used in number of trade sectors for inter-organization, regular, repeat transactions. These systems require EDI standards, EDI software, an EDI network and trading community.
Layered Architecture of EDI:
EDI is most commonly applied in the Execution and settlement phases of the trade cycle. In execution of a simple trade exchange, the customers’ orders can be sent by EDI and the delivery notification from the supplier can be electronic.
For settlement the supplier can use EDI to send the invoice and the customer can finish
the cycle with an electronic funds transfer via the bank and an EDI payment notification to the supplier.
This whole cycle may be complex and other electronic messages can be included.
EDI can be used for Pre-Sales transactions; there have been EDI messages for transactions such as contract but are not wisely implemented.
EDI can be used for After -Sales transactions but only if they were in a standardized format and frequent enough to justify system costs, transactions such as dealer claiming payment for warrantee work could be possible application.
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