Connectivity with business partners

Released on: May 19, 2008, 3:12 am

Press Release Author: Harish Solanki

Industry: Transportation & Logistics

Press Release Summary: In order to understand the way that insurance works in the
warehousing and fulfillment business, we find the following analogy of a dry cleaner
to be an effective way of describing the situation.

Press Release Body: Email is great for quick communications to avoid the timely mail
system not to mention paperless. If you were to send a purchase order via email then
you would likely have to print out the document and enter the data into another
program such as an accounting or inventory package. Businesses need a structured
secured format for sending and receiving information. The white papers below will
highlight some of the options.


EDI: What is it?
EDI is simply the sending and receiving of information using computer technology

Benefits of EDI!
. Reduced postage costs, expenses in general
. Speed. Because information is moved faster and with greater accuracy, time spent
communicating with suppliers is decreased
. Elimination of paper documents
. Elimination of labor-intensive tasks such as data entry
. Greater accuracy of information
. Better tracking


The efficiency of EDI has made it a condition of doing business in numerous
industries, including retail, grocery, warehousing, transportation, health care,
education, real estate, and government. Companies or trading partners can exchange
standard business documents as needed using EDI as long as both have made the
preparations to do so. Some examples of the type of documents are purchase orders,
invoices, shipping schedule, inventory inquiry, and many more.

EDI is not limited by differences in companies or communication methods. Instead,
EDI bridges the information gap that exists between companies using different
computer systems. EDI can't be activated with a flip of the switch as many
procedures must be carried out in preparation for exchanging EDI data with a trading
partner.

There are typically two ways of communicating the data between trading partners.
Usually the trading partner will designate the method of either a VAN or Direct
Connect.

VAN (Value Added Network)
A Van is a third-party service that transmits and stores data in the "electronic
mailbox" until it is picked up by the appropriate party. Since the EDI message
contains addressing information, the VAN routes the message to the mailbox of the
recipient. Until recently, it was considered the most secure method of transferring
data. Communication via a VAN can sometimes become quite costly. Most VAN providers
charge monthly for the services that they provide based on the number of
kilo-characters transmitted.


Direct Connection
Unlike a VAN, a direct connection allows you to pass the data straight to the
receiving party. There are a few types of direct connection like, VPN (Virtual
Private Network), FTP (File Transfer Protocol), and EDIINT (EDI over the internet)
usually EDIINT is done in conjunction with AS2 software which encrypts the data
before sending it over the internet.

AS2: A new standard for data exchanges

AS2 (Applicability Statement 2) is the draft specification standard by which vendor
applications communicate EDI or other business-to-business data (such as EDI and
XML) over the Internet using HTTP, a standard used by the World Wide Web. AS2
provides security for the transport payload through digital signatures and data
encryption and ensures reliable, non-repudiable delivery through the use of
receipts. AS2 communications can securely transfer not only EDI documents but also
documents in various formats such as X12, SML and Microsoft word. Due to the high
level of security and cost-effectiveness, several businesses including major
retailers such as Wal-Mart and Kohn's have mad the move to AS2.


XML: A New Standard for Document Exchange and Application Integration

What is XML?

XML stands for "Extensible Markup Language. XML was developed by an XML Working
Group in 1996 and became a formal specification in February 1998. XML is now an
industry standard that enables accurate, flexible, information rich data exchange.

XML allows the flexible development of user-defined document types. XML is not a
programming language, and you don't have to be a programmer to use it or learn it.
XML makes it easy for a computer to generate data, read data and ensure that the
data structure is unambiguous. It provides a robust, non-proprietary, persistent
and verifiable file format for the storage and transmission of text and data both on
and off the Web.

XML is extensible, meaning that it is designed so that its capabilities can be
expanded. XML is also platform-independent, meaning that data can be exchanged
across the internet or from application to application, regardless of the operating
system/application used.

Why is XML important?

XML is commonly used in enterprise application integration, linking legacy systems
to newer systems such as intranets and Web sites. XML makes it easy to send data
from any application to any internet or desktop application
(application-to-application integration).

In order to appreciate XML, it is important to understand why it was created. XML
was created so that richly structured documents could be used over the web. The
adaptability and functionality of XML lends itself to many uses.


XML: A New Standard for Document Exchange and Application Integration

XML has the potential to become the method for exchanging data because it is easy to
use, extensible (its capabilities can be expanded as needed) and
platform-independent reasons and because XML document trading is more cost-effective
than other means for exchanging data, XML is becoming the buzz word in the 3PL
industry as the new standard format for trading documents electronically.

Who is using XML?

Distributors are beginning to use XML to trade documents such as Transfer Orders
(shipments), Shipment Confirmations (shipment acknowledgements), Receipt
Authorizations (inbound receipts), Receipts (receipt acknowledgements) and Product
Master Updates with their fulfillment centers (3PL Warehouses). With the use of XML
and applications that make use of internet connectivity, it is possible for 3PL's
and their customers to be "linked together" so that these documents can be traded
seamlessly. At the distributor's order processing center, the user generates the
order and sends it as an XML document. In even as little as seconds, the order is
received into the 3PL's WMS system without any user interface - meaning that the
user does not have to import a file into their system to create the order.

EDI and XML

The big question is, "Is traditional EDI obsolete?" There are advantages and
disadvantages to both, so therein lay the debate. At this time, though, the answer
is "Far from it."

"When the largest company in the world won't do business with you unless you do EDI;
when the US health industry makes it mandatory to use EDI; when the world's energy
companies are using EDI; when institutions that are sending people into space are
using EDI; when Universities are sending students' records in EDI; and when a
Department of Defense, with the largest budget ever, has an EDI system in place,
then surely one can't say EDI is obsolete."*

In reality, XML and EDI are not mutually exclusive. "XML actually complements EDI.
Any technology that promotes e-commerce is good for EDI."*

However, flexibility and speed are the key factors that make XML a viable
alternative to traditional EDI. It allows multi-point or many-to-many integration
required in an elaborate trading partner network. Unlike traditional EDI, where
information movement between companies is predominantly through batch transfers, XML
fosters cost-effective, real time data exchange.

In addition, there are moves to enable traditional EDI documents to travel inside
XML, as well as proposals to replace the existing traditional EDI formats with XML
ones**.

Probably the biggest effect on traditional EDI is the rise of standardization
attempts for XML business documents and transactions. The standard jointly
sponsored by OASIS and United Nations/CEFACT is ebXML (Electronic Business XML)
which provides Schemas for the common commercial transaction document types.**


Web Site: http://www.freshwarehousing.com/

Contact Details: John Cusumano, Jr.
618-271-5500 Extension 3006
4300 Church Road
Centreville, Illinois 62207

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