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EC/EDI
Electronic Commerce (EC) is the paperless exchange of business information, using Electronic Data Interchange (EDI), electronic mail, bulletin boards and other related technologies.
Electronic Data Interchange (EDI) is the computer to computer exchange of business data in a standardized format which are widely recognized both nationally and internationally.
Suddenly, you will find that EC is all around you. Let numbers tell you the story. In 1999 global EC was worth a little over $150 billion. Around 80% of those transactions were between one business and another. Yet growth of all forms of EC is hectic. Business-to-Business web exchanges are mushrooming (The Economist).
EDI is a new way of doing business. Large corporations have already started implementing this technology, and have attained remarkable achievement in the field of inventory management, and just-in-time manufacturing.
Let Larry Irving show you the world of EC/EDI. Imagine, if you
will, the following scenario about a small farming business:
John owns a small, organic tomato farm just outside of
Santa Fe, New Mexico. On Thursday afternoon, he receives an
urgent Request for Quotation (RFQ) from a Santa Fe restaurant
for a four-month requirements contract. The message asks for
a bid by Monday morning.
John begins calculating his probable expenses. He e-
mails his organic fertilizer provider for price information
for the next four months. The fertilizer provider sends
current prices as well as a binding offer that is encrypted
for privacy and digitally signed for authenticity. John also
examines various on-line catalogs for tomato seeds and other
products necessary to fulfill the restaurant contract. He
views products on the Web, interacts with sales people on-
line, and receives legally binding offers from various
providers. John also checks a government weather center for
relevant information about expected rainfall.
After determining his total expenses, John answers the
RFQ by close of business Friday. Again, encryption guarantees
privacy and integrity, while a digital signature guarantees
authenticity and ensures non-repudiation. John adds that the
rainfall over the next four months should provide excellent
conditions for growing plump tomatoes. He also includes
letters of recommendation digitally signed by satisfied
customers. By submitting his bid on Friday, John's weekend
plans with his family are undisturbed.
From the various bids received from national and local
farmers, the restaurant picks John's. His bid is timely,
precise, informative, and his letters of recommendation
persuasive. Instead of waiting to draw up paper contracts and
send them via physical mail, the acceptance is transmitted
electronically. Electronic Data Interchange (EDI) is
established so that when the restaurant's inventory of
tomatoes goes low, an order for additional tomatoes is
automatically sent to John's farm. Acknowledgment of receipt
of order, shipping schedules, invoices, and electronic
payments are all handled by John's and the restaurant's
computers, minimizing human error, delay, and other
transaction costs. [end of scenario]
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