Developed in the United States the mid-1960s, the
idea of what became known as EDI today originated a group of railroad companies.
The standardisation of documents from these companies was a necessary
concomitant. Due to their concerned with the quality of inter-company exchanges of
transportation data, they formed an organization to study the problem and to improve
it. This organization was known as the Transportation Data Coordinating
Committee (TDDC).
Ed Guilbert, a member of the TDCC, now referred to as the Father of EDI, applied
the standards he invented 20 years ago to the transportation industry. TDCC act
to coordinate the development of translation rules among four existing sets of
industry-specific standards. In 1975, the first TDCC standard was published. A
further significant move towards standardisation came in 1978, TDCC, having been renamed the
Electronic Data Interchange Association (EDIA), received a charter from the
American National Standards Institute (ANSI) and became the ANSI X12 Committee, which gradually extended and
replaced those created by the TDCC.
Since the early 1970s, a number of businesses have used proprietary systems
to exchange invoices and purchase orders. Businesses involved
in trading operations were quick to recognize the economic advantages of fast,
efficient and accurate information flow. Much of the early work on EDI was
driven by particular industrial sectors, such as transportation,
pharmaceuticals, groceries, automobiles, and banking. Each sector developed its
own set of data elements and messages to meet its particular needs, with the
result that the various sectors were not able to exchange messages.
Individual companies such as General Motors, Sears and K-Mart were also
addressing the inefficiencies of inter-corporate document movement by using
their own electronic (but proprietary) systems with their major trading
partners. By the mid 1980's, K-Mart's system- EPOS was being used by over 500
companies. The problem with their system lay in the fact that each system was specific to the
company that in a proprietary sense had no standard except. A hypothetical
company in the late 1960s doing business with General Motor, Sears and K-Mart therefore
needed three different system interfaces.
During the same
time, the U.K. Department of Customs and Excise, with the assistance of SITPRO
(the British Simplification of Trade Procedures Board), was also developing its own
standards for documents used in international trade, called Tradacoms. These
were later extended by the United Nations Economic Commission for Europe (UNECE)
into what became known as the GTDI (General-purpose Trade Data Interchange
standards), and were gradually accepted by some 2,000 British exporting
organisations.
Problems created by
the trans-Atlantic use of two different (and largely incompatible) sets of
standardised documents have been addressed by the formation of a United Nations
Joint European and North American working party (UN-JEDI), which began the
development of the Electronic Data Interchange for Administration, Commerce and
Transport (EDIFACT) document translation standards. A full range of business
documents is in the process of being developed.
In the 1970's itself,
several industries sponsored a shared EDI system that they usually turned over
to a third party network. In some cases, the shared system was developed by the
third party for the group of common companies or industry trade group. Examples of this
early sharing include IBM IVANS, which the U.S. property and casualty insurance
industry sponsored. Another was ORDERNET, sponsored by the pharmaceutical
industry. These industry trade group systems had the same disadvantage as the
company proprietary EDI system: they were standard, but limited in scope, and
unable to communicate with other trade group EDI systems. In
1973, the TDCC decided to develop a set of standards for EDI between companies
and to invent a so-called "living standard"-ie: a standard that included
standards on how to change the standards! This resulted in the first
inter-industry EDI standard in 1975 covering air, motor, ocean, rail and some
banking applications. What evolved included generic formats for general business
ANSI X12 , first published in 1981; a WINS format for the warehouse industry;
and a UCS format for the food and drug industry; and for TDCC.
European
development of TRADACOMS, ODETTE and JEDI started around 1984. In 1985, work
started on EDIFACT (EDI for Administration, Commerce & Transport), an
international standard through the auspices of the United Nations.
EDI's direct impact
is to reduce the amount of data capture and transcription. This generally
results in a decreased incidence of errors, less time spent on
exception-handling, and fewer data-caused delays in the business process.
Benefits can be attained in such areas as inventory management, transport and
distribution, administration and cash management.
Today, analysts estimate that businesses
already trade well over hundred billion in goods and services using EDI. It is
predicted that this number will increase as new technologies such as the
Internet and XML (Extensible Markup Language) make EDI more accessible to
businesses.
