Skip to main content

EDI Agreement

EDI consists of standard business messages being transmitted from one computer to another computer. If differs from the use of regular e-mail in that it is based on standard or code that is agreed upon by two parties, enabling the automated processing of the content of a message without human intervention. Over time, a variety of EDI standards have been developed, at industry, national and international levels, including the United Nations UN/EDIFACT standard. 

Since the parties to an EDI transaction must rely on using the same EDI messaging standard, parties generally enter into a "trading partner agreement", in which they agree on the EDI standard and additional provisions regarding the treatment and validity of the data messages being exchanged. The trading partner agreement may be a separate agreement or may be integrated into a master purchase agreement containing the substantive provisions of the sales-purchase relationship between the parties.

Since the 1990s, a number of model trading partner agreements have been developed on a national, regional or international level. In 2000, e.g., the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) adopted a model Electronic Commerce Agreement. 

The appropriate way to document the details of a trading arrangement between electronic trading partners is an EDI Interchange Agreement. The agreement makes clear the trading intentions of both parties, the technical framework for the transactions and the procedures to be followed in the event of a dispute. The EDI Agreement is a document, normally on paper, and signed by both trading partners before electronic trading begins. 

The agreement specifies: 
1) The point in its transmission and processing at which a message will be deemed to be legally binding 'document' achieves legal status when it arrives at the receiving party, the 'reception rule'. the usually accepted standard is that the

2) The timescale for processing EDI messages. One purpose of EDI is to speed- up the trade cycle and this is not achieved if messages are not reliably processed within an agreed timescale.
 
3) The time that copies of the message will be retained (a default of three years is provided for by the EU-IA but many member states require longer periods, e.g., seven or ten years).
 
4) The procedure for settling any disputes. The EU-IA suggests a choice between arbitration by a named organisation, e.g., a chamber of commerce appointed arbitration chamber, or by recourse to the judicial process.
 
5) The legal jurisdiction in which any disputes should be settled.

In addition to the legal (or legalistic) aspects of the agreement it is important to specify the technical requirements. These requirements include: 
1) The coding systems that will be used for identifying entities such as organisations and products and attributes such as quantities.
 
2) The EDI standard that is to be employed and, within that, the messages and data segments that will be used. Updating of message standards as new versions are released is an issue that also needs to be covered.
 
3) The network that is to be used - including details of scheduling and protocol where a post and forward network is not to be employed.

Previous Next

 
Labels:

Comments

Post a Comment

Popular Post

Advantages of EDI

1) Shortened Ordering Time : Paper orders have to be printed, enveloped and sent out by the customer's post room, passed through the postal service, received by the supplier's post room and input to the supplier's order pocessing system. To achieve all this, reliably, in under three days would be to do very well. EDI orders are sent straight into the network and the only delay is how often the supplier retrieves messages from the system. Orders can be in the supplier's system within a day, or if there is urgency, the messages can be retrieved more frequently, for example every hour.  2) Cost Cutting : The use of EDI can cut costs. These include the costs of stationery and postage but these will probably be fully matched by the costs of running the EDI service. The principle saving from the use of the EDI is the potential to save staff costs. For example, if the orders are directly input to the system there is no need for an order entry clerk.  3) Elimination of Errors :...
Post a Comment
Read more

Infrastructure for EC

Introduction The e-commerce infrastructure is defined here as the supporting capabilities for online trading between multiple companies which include hardware, software, networks, online payment technologies, security and encryption technologies, online trading business models, legal and regulatory framework, and managerial and organisation capabilities.  Infrastructure is the shared human, informational , and technical resources on which the work system relies in order to operate, even though these resources exist and are managed outside of the work system.  To evaluate the interdisciplinary aspects of construction e-commerce infrastructure, one proposes using a four pillar approach. Figure 5.1 illustrates the skeleton for the proposed integrated construction e-commerce infrastructure. The proposed integrated e-business infrastructure can be broken down into the following four groups of components:  1) Technological Infrastructure : Technology infrastructure is a work...
1 comment
Read more

Business Strategy - E-Commerce Strategy Inputs

E-Commerce Strategy Inputs Traditionally an IT strategy would be subservient to the business strategy. For e- commerce the IT strategy becomes a central component (or the determinant factor) in business strategy.  Inputs to an e-commerce business strategy are: Technology An E-commerce technology includes:  EDI : Streamline supply logistics and facilitate decreases in trade cycle times.  Electronic Markets : Re-define the operation of a market sector.  Internet E-Commerce : Provides new direct sales opportunities and novel business to business and business to consumer applications.  Internet e-commerce can be used to improve, transform and re-define business value:  Organisation  Source of Business value  i) Improve it a) Product promotion b)New direct sales channel c)Direct saving d)Time to market e)Customer service f)Brand image  ii)Transform it a)Technological and organizational learning b)Customer relations  iii)Re-define it a)New pro...
Post a Comment
Read more