ELECTRONIC DATA INTERCHANGE(EDI)

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M.COM First Year Tutor Marked Solved Assignment

Course Code: IBO – 04
Course Title: Export-Import Procedures& Documentation
Assignment Code: IBO-04/TMA/2019-20
Coverage: All Blocks

IBO – 04 Export-Import Procedures & Documentation Solved Assignment for 2019-20

Q1.) (a.) "Electronic Data Interchange (EDI) can not work without standardization". Give your arguments and discuss the EDI standardization.

Ans: Electronic Data Interchange (EDI) is the electronic transmission of structured data by agreed message standards from one computer system to another without human intervention. It is a system for exchanging business documents with external entities.

EDI cannot work without standardization, as EDI will involve diverse parties like exporters, importers, customs authorities, freight forwarders, and shipping lines. Communication would break down if interchanging partners did not follow agreed standards, leading them from and an intolerable mountain of paper documents to an electronic "Tower of Babel", in international EDI.

EDI is a sequence of messages between two trading partners, either of which may serve as the originator or recipient. The messages are transmitted and received without human intervention. Each message is composed according to a standardized syntax from a sequence of standardized data elements. The EDI standards were designed to be independent of communication and software technologies. EDI can be transmitted using any methodology agreed to by the sender and recipient.

There are four major sets of EDI standards:

(a.) The UN/EDIFACT Standard: The only international and UN- recommended standard.

(b.) The US Standard ANSI ASC X12: The predominant standard in North America.

(c.) The TRADACOM Standard: The predominant standard in the U.K. retail industry.

(d.) The ODETTE Standard: The standard used in the European automobile industry.

EDIFACT was born in 1985 as a merger between the best features of UNTDI and ANSI X12.EDIFACT defines the syntax rules for the transmission of messages and can be used across industries, across global boundaries and for both government and private sector. EDIFACT is a fusion of European and American national standards. A single international EDI standard flexible enough to meet the needs of the government and private industry. 

EDIFACT covers standardization in five main areas:

(1.) Data Elements: Data Elements can consist of details relating to buyer, seller, goods description and value.

(2.) Syntax Rules: It is the grainmet for writing messages in a structured manner.

(3.) Message: A set of information stored in the predefined format along with the precise function. Messages are equivalent to documents.

(4.) Segment: Segment is the immediate unit of information in a message which equates to sentence in a passage.

(5.) Codes: Codes are used as abbreviations. The EDIFACT codes are built on existing ISO codes.

Messages are designed by technical exports with interactions with the users. The new business will require changes to the existing directions to include new messages, changes to segments, new data elements, new codes. These changes in the directories must be agreed by the maintenance organization, directory changes must be agreed at the international level. 

When the new directory has been formally approved then the new message or new version of an existing message is available for use.