Page 45 - DCAP306_DCAP511_E-COMMERCE_AND_E-BUSINESS

E-Commerce and E-Business

The transmission of binary or textual data is not EDI. It requires human intervention
to transmit the data unless the data is treated as one or more data elements of an
EDI message.
In the year 1996, the National Institute of Standards and Technology defined EDI as "the computer-to-
computer interchange of strictly formatted messages that represent documents other than monetary
instruments.”

Consider an interchange of messages between a buyer and a seller. Messages from
buyer to seller can include Request For Quotation (RFQ), purchase order, receiving
advice, and payment advice. Messages from seller to buyer can include bid in
response to RFQ, purchase order acknowledgment, shipping notice, and invoice.
These messages may simply provide information like receiving advice or shipping
notice, or they may include data that may be interpreted as a legally binding
obligation like bid in response to RFQ or purchase order.

The EDI standard was created to facilitate the exchange of business communication between
enterprises.

The EDI standards define structures that represent documents such as an invoice or
shipping order for a company.

Electronic Data Interchange for Administration Commerce and Transport (EDIFACT) is an international
standard for EDI trading in a wide range of commercial and non-commercial sectors.
The UN/EDIFACT standards can be used for any application, domestic or international.

EDIFACT was developed by the United Nations to facilitate international trade. This is
Did you know? the most common EDI standard which is used outside the United States.

4.1 Electronic Data Interchange (EDI) to E-Commerce
E-Commerce is associated virtually in all industrial sectors. For statistical purposes, the U.S. Census
Bureau defines e-commerce as the value of goods and services sold online, whether over open networks
like Internet or over proprietary networks running systems like EDI.

E-Commerce payment systems have become very popular majorly due to the widespread use of the
Internet-based shopping and banking. EDI is a set of protocols for doing electronic business over
computer networks. Initially, these networks were private Value-Added Network (VANs) but EDI is
now done over the Internet. EDI supports the electronic exchange of the structured business data like
purchase orders, invoices, and shipping notices, between two organizations. The relationship is
generally between a vendor and a customer.

Using EDI, based on the re-order levels, a customer can place an order for goods
using the vendor’s computer. The EDI system coordinates transactions, initiates
deliveries, and produces invoices.
4.1.1 EDI vs. E-Commerce
It is very important to differentiate between EDI and e-commerce. Let us understand the difference
between EDI and e-commerce.
E-Commerce encompasses all the aspects of electronic business exchange, including person to person
interaction, money transfer, data sharing and exchange, Web site merchant systems, and so on.

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