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1
E-Commerce The delivery of information, products
and services, or payments via telephone lines, computer networks or any other means – [Kim & Moon, 1998]
All electrically mediated information exchanges between an organization and its external stakeholders – [Chaffey, 2006]
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E-Business Involves E-buying, E-selling . It also refers to servicing customers and
collaborating with business partners. (Chesher et al. 2003)
E-Marketing- Wider in scope than Internet marketing as it refers to both digital media and web, e-mail, wireless media, Intranet, Extranets and mobile systems
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The World of The World of Electronic Commerce Electronic Commerce
EC
TechData
EI EBB
EDI
CE E-mail
JIT VMI
InterNetBarcoding
FAX
EC
4
MODULE 1 OBJECTIVES
At the completion of this module, you will be able to:– Define EDI– Explain EDI Terminology– Describe the background of EDI– Explain some benefits of EDI
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ELECTRONIC DATA INTERCHANGE
Module 1
• Definitions• Background• Benefits
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ELECTRONIC DATA INTERCHANGE
EDI is the computer-to-computer exchange of routine business documents (data) in a standard format between companies.
COMPANY A COMPANY B
TRANSACTION DATA
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VALUE ADDED NETWORK (VAN)
Post Office
Seller
Buyer
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EDI
Trading partners are companies that do business via EDI.
TRADING PARTNER
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EDI
Purchase Order (PO)
PO
Purchaser
A transaction set refers to a type of electronic document.
TRANSACTION SET
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PAPER DOCUMENT INTERCHANGE
Computer
Post Office
PO
Purchaser
Computer
Data Entry
Invoice
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ELECTRONIC DATA INTERCHANGE
Computer
VAN
Purchaser
Computer
Data Entry
Invoice
PO
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EC is Cross Functional
Implementation
Accounting
Order Processing
Account Executives
Infomation Systems
Shipping
EDI has an impact on all departmentsEDI has an impact on all departments
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Considerations for System Design
• Determine Requirements
• Determine Readiness
• Select Participants
EDI
System
Implementation
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Support areas
Accounting
Order Processing
Transportation
Technical AreasElectronic Commerce
Information Systems
Liaison Areas
Implementation
Marketing
Sales
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ELECTRONIC DATA INTERCHANGE
Module 2
Components
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MODULE 2 OBJECTIVES
At the completion of this module, you will be able to:– List the four major components of
an EDI system– Recall the terms VAN, ANSI X-
12,and their meaning– Recall reasons why companies
are doing EDI
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EDI ComponentsEDI Components
HardwareStandards
EDI
Software Communications
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EDI
PO
PO
Purchaser
Transaction set refers to a type of electronic document
Transaction SetTransaction Set
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WITH STANDARDIZATION
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Components
ELECTRONIC DATAINTERCHANGE
STANDARDS
ANSIX12
UN/EDIFACT
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Other Standards
Transportation Data Coordinating Committee (TDCC)
Uniform Communications Standard (UCS)
Warehouse Information Network (WINS)
Voluntary Inter-Industry Communication Standard (VICS)
EDI for Administration, Commerce, and Trade (EDIFACT)
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TYPES OF BUSINESS TRANSACTIONS VIA EDI
PurchaseOrders44%
Invoices24%
Other15%
Shipping Note14%
Credit/Debit
3%
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A Standard LanguageA Standard Language
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How EDI Works !How EDI Works !
quoteThe APL Group664 danbury CtWilson, ct
RFQ # 1234 06/07/951 WIDGET #56782 dz gizmos
ST* 843 12345
NTE**ShipCompleteN1 *SE* The Apl Grp Inc...
N3 *664 DANBURY
Converts Internal Data Format to ANSI X12 (outbound)
Converts ANSI X12 Standard format to Internal Format (inbound)
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EDI ComponentsEDI Components
HardwareStandards
EDI
Software Communications
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EDI SoftwareEDI Software
X12
Database
1. Document Support
2. Mapping
3. Standards Support
4. Translation Communications
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EDI ComponentsEDI Components
HardwareStandards
EDI
Software Communications
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Hardware Hardware
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EDI ComponentsEDI Components
HardwareStandards
EDI
Software Communications
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Value Added Network (VAN)Value Added Network (VAN)
U.S. Post OfficeBuyer
Seller
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Point-to-Point: Point-to-Point: EDI Without a VANEDI Without a VAN
Buyer
1
2
3
4
A
B
C
D
Supplier
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Value Added Network (VAN):Value Added Network (VAN):
1
2
3
4
A
B
C
D
Buyer Supplier
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Interconnect StrategyInterconnect Strategy
GE VAN
AT&T VAN
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---EDI Process------Integrated Systems---
BusinessManagement System
BusinessManagement System
Accounting
Receiving
Manufacturing
Purchasing
EDIShipping
Accounting
Sales/OrderProcessing
Order Processing
Purchase Order
Purchase Order Acknowledgment
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Data integration Issues
Networking Users
Part List Partner’s Part List
Cross-referencing
EDI Software
Database
Integrated Applications
Database
New Data
Bridge Between Applications
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EC GROWTH
*Source: EDI Forum
Number of RegisteredEDI Users.
Average Annual Growth ~ 45%
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
45,000
.
88 89 90 91 92 93
40,000
94
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Perc
ent
Perc
ent Customer/supplierCustomer/supplier
requirementrequirement
Cost savingsCost savings
Data accuracy/error reductionData accuracy/error reduction
Quick access to dataQuick access to data
In 1996, EDI grew substantially due to customer / major supplier In 1996, EDI grew substantially due to customer / major supplier requirements or requests. EDI is an element used to streamlinerequirements or requests. EDI is an element used to streamline business processes.business processes.
Why do Companies use EDI?Why do Companies use EDI?
0%
10%
20%
30%
40%
50%
60%
1992 1993 1994 1995 1996
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EDI USERS
Government Health care Retail Grocery TransportationPolicy
Insurance
Manufacturing
AutomotivePetroleumElectronicsChemicalBanks
Construction
Advertising
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Manufacturing Focus
EDI
EFT
Internet(IT)
VMI
Bar-CodeERS
JIT
BPR
Maximum benefits are obtained when EDI is coupled with BUSINESS PROCESS CHANGE
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EDI BENEFITS
More Accurate Records and Decision-making Information
Lower Data Entry Costs
Increased Business Opportunities
Reduced Inventory
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EDI BENEFITS
Better Cash Management
Decreased Mailing Costs Greater Customer Satisfaction
Reduction In Order Time
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Bar-Code
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EDI and Business Processes
EDI
EFT
Internet(IT)
VMI
Bar-CodeBar-CodeERS
JIT
BPR
Maximum benefits are obtained when EDI is coupled
with BUSINESS PROCESS CHANGE
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ELECTRONIC DATA INTERCHANGE
Module 3
EDI Translation
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Module 3 Objectives
At the completion of this module, you will be able to:
– Relate the paper document components to EDI transaction set
– Recall the sections of an EDI transaction set
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ANSI ASC X12 Standard
Purchase Order
Facilitates electronic interchange of business documents
Purchase Order
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Transaction Set Composition
File = Transaction Set
Record = Data Segment
Field = Data Elements
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Vendor:
Date: Purchase Order #
PURCHASE ORDER
Ship To:
Quantity Description Price Amount
ABC SuppliesP.O. Box 180Baltimore, MD 21239
12/31/92
Cleveland ECRC2415 Woodland AvenueCleveland, OH 44115
4001
2 Legal Pads LP8X11 $8.00/DZ $16.00
Paper Vs. EDI Document
ST*850*0001^BEG*00*NE*4001**921231^
N1*VN*ABC Supplies^N3*P.O.Box 180^N4*Baltimore*MD*21239^N1*ST*Cleveland ECRC^N3*2415 Woodland Avenue^N4*Cleveland, OH 44115^PO1*1*2*DZ*8.00**VP*LP8X11^CTT*1^SE*11*0001
Paper Document = EDI Transaction Set
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Envelopes
Address Information
Date and TimeStamp
Information Receipt
Information Routing
Audit and VersionControl
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Envelope Elements
Identification Information
Batch C
ontrol
Informatio
nAddressing
Information
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Trading Partner Enveloping Issues
• Envelope Identiffers
• Addressing codes
• Types of control numbers
• Control number sequence
• Version of standards
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Envelope StructureISA
IEA
InterchangeInterchange
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Paper Vs. EDI Document
Cleveland ECRC [electronic address]
ABC Company[electronic address]
Envelope = Interchange
ISA*05*0000000000*01*PASSWORD01*01*SENDERIDENTIFIC*01*ReceiveidentifI*950919*1503*U*00304*123456789*1*T*|^
GS...ST...
. .SE...GE...
IEA*1*123456789^
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Paper Vs. EDI Document
Folder = Functional Group
GS*PO*CECRC01*DISC*950919*1426*0001*X*003050^
ST*850*1001...
SE*17*1001GE*1*0001
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ISA
IEA
GS
GE
Envelope Structure
ISA*05*0000000000*01*PASSWORD01*01*SENDERIDENTIFIC*01*ReceiveidentifI*950919*1503*U*00304*123456789*1*T*|^
GS...ST...
. .SE...GE...
IEA*1*123456789^
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ISA
IEA
GS
GE
ST
SE
ST*850*0001^BEG*00*NE*4001**921231^
N1*VN*ABC Supplies^N3*P.O.Box 180^N4*Baltimore*MD*21239^N1*ST*Cleveland ECRC^N3*2415 Woodland Avenue^N4*Cleveland *OH* 44115^PO1*1*2*DZ*8.00**VP*LP8X11^CTT*1^SE*11*0001
Transaction Set
Transaction Set
60Transaction Set 850
Document = Transaction Set
Document
Paper Vs. EDI Document
ST*850*0001^BEG*00*NE*4001**921231^
N1*VN*ABC Supplies^N3*P.O.Box 180^N4*Baltimore*MD*21239^N1*ST*Cleveland ECRC^N3*2415 Woodland Avenue^N4*Cleveland, OH 44115^PO1*1*2*DZ*8.00**VP*LP8X11^CTT*1^SE*11*0001
Vendor:
Date: Purchase Order #
PURCHASE ORDERShip To:
Quantity Description Price Amount
ABC SuppliesP.O. Box 180Baltimore, MD 21239
12/31/92
Cleveland ECRC2415 Woodland AvenueCleveland, OH 44115
4001
2 Legal Pads LP8X11 $8.00/DZ $16.00
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Data Segment
Vendor:
Date: Purchase Order #
PURCHASE ORDERShip To:
Quantity Description Price Amount2 Legal Pads LP8X11 $8.00/DZ $16.00
PO1*1*2*DZ*8.00**VP*LP8X11^
Line Item = Data Segment
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Paper Vs. EDI Document
N1*VN*ABC Supplies^
4001
Vendor:
Date: Purchase Order #
PURCHASE ORDER
Ship To:ABC SuppliesP.O. Box 180Baltimore, MD 21239
12/31/92
Cleveland ECRC2415 Woodland AvenueCleveland, OH 44115
4001
Data Elements
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Paper Vs. EDI Document
N1*VN*ABC Supplies^
Code = Qualifier
Separator = Element Delimiter
Data Segment Delimiter
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Summary
ISA
IEA
GS
GE
ST
SE
ISA*05*0000000000*01*PASSWORD01*01*SENDERIDENTIFIC*01*ReceiveidentifI*950919*1503*U*00304*123456789*1*T*|^
GS...ST...
. .SE...GE...
IEA*1*123456789^
Communications Protocol
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Module 3 Summary
– The paper business document and its components can be compared with the EDI transaction set.
– EDI enveloping can be compared functionally to postal envelopes.
– EDI Software translates business documents into a standard format for transmission
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Organizational Issues in EC/EDI Implementation
Move From
Paper IntensiveNon - Integrated
AutomatedIntegrated
• Mind Sets• Cultural Change• Conveying Key Messages• Building a Case for Action• Bottom Up Support• Selecting EC Technologies • Linking EC Technologies to Business Results
68
Organizational Issues in EC/EDI Implementation
Two Key Messages:– Here is where we are and why we
can’t stay here.– This is the company we must become.
People must buy-in!People must buy-in!
•Supplier/Customer Mandate•Increased Competition•Globlization of the Marketplace•Reduce Costs
69
Organizational Issues in EC/EDI Implementation
Elements of an effective case for action:– Business context– Problem– Marketplace demands– Diagnosis– Cost of no action
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Increased competition and a rapidly changing business environment have forced the implementation of technology in businesses of every size.
Implementing Electronic Commerce can position your company to compete with a wide range of competitors.
A small business has the advantage of skipping layers of management when implementing electronic commerce. Execution can happen quickly, risk free, and at a low cost.
Organizational Issues in EC/EDI Implementation
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Organizational Issues in EC/EDI Implementation
How to bring people into the change process.“Start with reality. Get all the facts out. Give people the rationale for change, laying it out in the clearest, most dramatic terms.
When everybody gets the same facts, they’ll generally come to the same conclusions.”
J. Welch, CEO of General Electric
“To inaugurate large-scale change, you may have to create the burning platform. You have to give people a reason to do something differently. Scaring people isn’t the answer. You have to appeal to them. The more they understand why you want to change, the easier it is to commit to it.”
L. Bossidy, CEO of Allied-Signal
Fortune Magazine, Dec 13, 1993
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Organizational Issues in EC/EDI Implementation
The cost of integration in the absence of a cultural change actually are higher. This is true because a new technical system has been introduced within the old culture.
– The organization retains redundant processes.– Non concurrent processes slow the cycle.– Hand-offs further slow the process.– Creates an environment for error.– Rework is a characteristic.
These findings are especially pertinent today These findings are especially pertinent today because of the need to lower costs, the because of the need to lower costs, the requirements to be flexible and the ability to take requirements to be flexible and the ability to take advantage of the opportunities. advantage of the opportunities.
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1st tier
Virtual Enterprise
Electronic Communication(EC) Vision for the Future
Prime Contractor
Vendor
Vendor
2nd tier
Vendor
1st tier
Prime Contractor
3,000 Pound Gorilla
1st tier
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