After a decade of fragmented attempts at setting broader EDI standards, a number of industry groups and several large companies decided to mount a major effort to create a set of cross industry standards for electronic components, mechanical equipment, and other widely used items. The American National Standards Institute (ANSI) has been the coordinating body for standards in the United States since 1918. ANSI does not set standards itself, but it has created a set of procedures for the development of national standards and it accredits committees that follow those procedures.
How EDI Works
Although the basic idea behind EDI is straightforward, its implementation can be complicated, even in fairly simple business situations. For example, consider a company that needs a replacement for one of its metal-cutting machines.
Value-Added Networks
Trading partners can implement an EDI network and EDI translation processes in several ways. Each of these ways uses one of two basic approaches: direct connection or indirect connection. Direct connection EDI requires each business in the network to operate its own on-site EDI translator computer. These EDI translator computers are then connected directly to each other using modems and dial-up telephone lines or dedicated leased lines. The dial-up option becomes troublesome when customers or vendors are located in different time zones, and when transactions are time sensitive or high in volume. The dedicated leased-line option can become very expensive for businesses that must maintain many connections with customers or vendors.
Trading partners that use different communications protocols can make either of the direct connection methods difficult to implement. Instead of connecting directly to each of its trading partners, a company might decide to use the services of a value-added network. A value-added network (VAN) is a company that provides communications equipment, software, and skills needed to receive, store, and forward electronic messages that contain EDI transaction sets. To use the services of a VAN, a company must install EDI translator software that is compatible with the VAN. Often, the VAN supplies this software as part of its operating agreement.
To send an EDI transaction set to a trading partner, the VAN customer connects to the VAN using a dedicated or dial-up telephone line and then forwards the EDI formatted message to the VAN. The VAN logs the message and delivers it to the trading partner’s mailbox on the VAN computer. The trading partner then dials in to the VAN and retrieves its EDI-formatted messages from that mailbox. This approach is called indirect connection EDI because the trading partners pass messages through the VAN instead of connecting their computers directly to each other.
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