Thursday, January 25, 2007

EDI Electronic Data Interchange for B2B E-Commerce

EDI or Electronic Data Interchange is more than just a shorthand for electronic transmission of business information. It's an established standard that links companies through a common protocol. EDI was invented to replace the snowstorm of paper documents that are mailed or faxed between businesses. It creates electronic transactions that mimic purchase orders, invoices, and shipping notices. All in all, there are over 250 standardized electronic forms.

EDI is now the norm in industries as diverse as health care, manufacturing, warehousing and shipping, transportation & logistics, aerospace, and automotive. In fact, the foundations for electronic data interchange were put in place over 30 years ago for the transportation industry. Businesses that engage in EDI, usually vendors and customers, are called trading partners. The computer to computer data consists of messages that are comprised of strings of data elements called data segments that are framed to created transaction sets. A transaction set or compound document is the basic unit of transmission for EDI exchanges. It contains all the information that you'd find in the equivalent paper based document or form.

What makes EDI efficient is the level of standardization worldwide. In the United States, the dominant standard is ANSI ASC X12 from the American national Standards Institute. World-wide it is the United Nations/Electronic Data Interchange for Administration Commerce and Transport or UN/EDIFACT. XML based Web services are emerging as an alternative approach, but EDI standards are so entrenched that they're likely to remain the standard for some time.

Trading partners have a number of alternatives for interconnecting their EDI systems. The current popular methods are point to point private line service, encrypted dedicated Internet services also called Extranets, and VANs or Value Added Networks. A VAN is a specialized service that works something like an electronic post office to store and forward EDI transactions. VAN providers typically peer so that companies using different VANs can communicate.

Regardless of which transmission scheme is employed, reliable digital communications lines are critical to efficient business processes. The basic business grade circuit that comes with a service level agreement is the T1 line. Point to point T1 lines and T1 dedicated Internet connections are almost universally available. Costs have really come down the past few years so that full T1 lines at 1.5 Mbps are practical for even SMB or small and medium size businesses. Larger corporations may consider T3 lines or DS3 service on fiber optic carriers. Both run at 45 Mbps. Dedicated Internet connections may be encrypted using IPSec (IP Security), PPTP (Point-to-Point Tunneling Protocol) or L2TP (Layer 2 Tunneling Protocol) protocols to create VPN or virtual private networks within the Internet.

Does your company depend on EDI for efficient B2B transactions? Regardless of whether you need point to point private lines, dedicated Internet VPN connections, or connectivity to your VAN, our experts can help you get the best value in data transmission services. Just let us know what you need at T1 Rex.

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