Page 265 - Electronic Commerce

Chapter 5

spend considerable money to write their own programs. Only large companies could
afford this investment. Smaller or lower-volume businesses could not afford to participate.
In 1968, a number of freight and shipping companies joined together to attack their
collective paperwork burden. They created a standardized information set that included
all the data elements that shippers commonly included on bills of lading, freight invoices,
shipping manifests, and other paper forms. Instead of printing a paper form, shippers
could convert information about shipments into a computer file that they could send to
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any freight company that had adopted the standard. The freight company could then
transfer the standardized data into its own information systems. The costs saved by not
printing or handling forms, not re-entering data, and avoiding errors were significant, even
for smaller shippers and freight carriers.
Although these industry-specific data interchange standards were helpful, their
benefits were limited to members of the standard-setting groups in those specific
industries. Most businesses that are in one industry buy goods and services from
businesses that are in other industries. For example, a machinery manufacturer might
buy materials from steel mills, paint distributors, electrical assembly contractors, and
container manufacturers. Almost every business needs to buy office supplies and the
services of freight and transportation companies. Thus, full realization of economies and
efficiencies required standards that could be used by companies in all industries.

Emergence of Broader Standards: The Birth of EDI
The American National Standards Institute (ANSI), the coordinating body for standards
in the United States since 1918, does not set standards, but maintains procedures for the
development of national standards and accredits committees that follow those procedures.
In 1979, ANSI chartered a new committee to develop uniform EDI standards. This
committee is called the Accredited Standards Committee X12 (ASC X12). The ASC X12
committee and its subcommittees include information systems professionals from
hundreds of businesses. The administrative body that coordinates ASC X12 activities is
the Data Interchange Standards Association (DISA). The ASC X12 standard currently
includes specifications for several hundred transaction sets, which are the names of the
formats for specific business data interchanges.
The X12 standards were quickly adopted by major firms in the United States, but
businesses in other countries continued to use their own national standards. In the mid-
1980s, the United Nations Economic Commission for Europe invited North American
and European EDI experts to work together on designing a common set of EDI standards
based on the successful experiences of U.S. firms in using the ASC X12 standards. In
1987, the United Nations published its first standards under the title EDI for
Administration, Commerce, and Transport (EDIFACT, or UN/EDIFACT). The DISA and
the UN/EDIFACT group have attempted to develop a single common set of international
standards several times since 2000; however, these attempts have never succeeded. Today,
both standards continue to exist. Companies that do business worldwide must either make
their EDI software work with both standards or use a software product that does conversions
between the standards. Figure 5-4 lists some of the more commonly used transaction sets,
showing the paper document from which the transaction set was devised along with the
identifiers of the ASC X12 and the UN/EDIFACT versions of the transaction set.

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