8/3/2019 Unit 31 Criteria 2-3&4

1/50

Unit31:E-businessOperationsSession9

8/3/2019 Unit 31 Criteria 2-3&4

2/50

LearningOutcomes

2-3DescribetheuseofVANs(ValueAddedNetworks)forEDI

2-4Evaluatetheadvantagesofusingoftheinternetforb2b

8/3/2019 Unit 31 Criteria 2-3&4

3/50

Topics

ReviewofLastsession

GroupReport

Lecture

ValueAddedNetworks,VANs

Advantagesofusingtheinternetforb2b

8/3/2019 Unit 31 Criteria 2-3&4

4/50

ReviewofLastSession

8/3/2019 Unit 31 Criteria 2-3&4

5/50

TopicsDiscussed

The purchase process of b2c

The purchase process of b2b

Activities of professional buyer

Different company purchases

Risks

Electronic Transactions Electronic Data Interchange

8/3/2019 Unit 31 Criteria 2-3&4

6/50

TestofBaselineKnowledge

8/3/2019 Unit 31 Criteria 2-3&4

7/50

TestofBaselineKnowledge-Review

WhatareValueAddedNetworks(VANs)?

WhatarethefunctionsofVANs?

HowareVANsrelatedtoEDI?

NameastandardEDItransactionset;aVAN;aTradingnetwork

HowdoVANsearn?

WhatareTransactionLogs?

Whataretheadvantagesofusingtheinternetvs.VANsforb2b

WhatisXML?

8/3/2019 Unit 31 Criteria 2-3&4

8/50

DescribetheuseofVANs

(ValueAddedNetworks)forEDI

CRITERIA2-3

8/3/2019 Unit 31 Criteria 2-3&4

9/50

ValueAddedNetworks

StandardEDItransactionsets Specialistnetworkorganisationsservice

BuyerSupplierNetwork

VANschargeforservices

Availabilityoftransactionlogswitha3rdpartyinvolved

8/3/2019 Unit 31 Criteria 2-3&4

10/50

ValueAddedNetworks

A private network used by a company primarily forrouting, storing and delivering electronic datainterchange (EDI) messages.

A value-added network (VAN) also provides otherservices such as message encryption, retransmission andsupport.

VANs may be operated by large companies for efficientsupply chain management with their suppliers, or byindustry consortiums and telecom providers.

8/3/2019 Unit 31 Criteria 2-3&4

11/50

CreationofVAN

A VAN is created when a network provider leasescommunications lines from a common carrier (such asa telephone company), enhances them by addingservices and improvements that facilitate business-to-business application integration, and then resellsthe network connection and services to others for afee.

Company-created

Third Party

8/3/2019 Unit 31 Criteria 2-3&4

12/50

FunctionsofVANs

1. providesEDItransactionservices,2. security,

3. documentinterchangeassistance,

4. standardmessageformats,

5. communicationprotocols,and

6. communicationparametersforEDI.

8/3/2019 Unit 31 Criteria 2-3&4

13/50

Diagram

VAN

8/3/2019 Unit 31 Criteria 2-3&4

14/50

Diagram

Client 1

Client 2

Client 3

VAN

8/3/2019 Unit 31 Criteria 2-3&4

15/50

VANsandEDI VANs emerged as a way to connect supply chain participants.

They offered store-and-forward mailboxes that providedprotocol conversion, security and guaranteed delivery.

EDI VANs proved to be too costly for most businesses.Expensive setup fees associated with EDI software andexorbitant per-transaction fees.

When the Internet and the World Wide Web entered thepicture, along with standards like ebXML.

8/3/2019 Unit 31 Criteria 2-3&4

16/50

WSNDiagram

8/3/2019 Unit 31 Criteria 2-3&4

17/50

8/3/2019 Unit 31 Criteria 2-3&4

18/50

TransactionStandards ANSI ASC X12 (American National Standards-

X12) X12 is a standard that defines manydifferent types of documents, including airshipments, student loan applications, injury and

illness reports, and shipment and billing notices.

The ANSI (American National StandardsInstitute) assigned responsibility for development

of EDI standards to the ASC (AccreditedStandards Committee) X12 organization in 1979.

8/3/2019 Unit 31 Criteria 2-3&4

19/50

PRODUCT/PRICINGTRANSACTIONS

PriceSalesCatalog 832PriceAuthorizationAcknowledgement/Status 845

Specification/TechnicalInformation 841RequestForQuotation 840ResponseToRequestForQuotation 843ElectronicBidForm 833

ORDERINGTRANSACTIONSPurchaseOrder 850PurchaseOrderAcknowledgement 855PurchaseOrderChange 860PurchaseOrderChangeAcknowledgement 865OrderStatusInquiry 869OrderStatusReport 870ContractAward 836

8/3/2019 Unit 31 Criteria 2-3&4

20/50

MATERIALSMANAGEMENTTRANSACTIONS

PlanningSchedule/MaterialRelease 830

ShippingSchedule 862ProductionSequence 866ShipNotice/manifest(ASN) 856ReportofTestResults 863MaterialSafetyDataSheet 848

ContractAward 836SHIPPING/RECEIVINGTRANSACTIONS

ShipmentInformation(BillofLading) 858ReceivingAdvice 861

Non-conformanceInformation-DispositionTransaction,Cause/Correction

842

8/3/2019 Unit 31 Criteria 2-3&4

21/50

INVENTORYMANAGEMENTTRANSACTIONS

InventoryInquiry/Advice 846ProductTransferandResaleReport 867

ProductTransferAccountAdjustment 844ResponseToProductTransferAccountAdjustment 849FINANCIALTRANSACTIONS

Invoice 810

FreightInvoice 859Paymentorder/RemittanceAdvice(EFT) 820Lockbox 823FinancialInformationReporting 821CONTROLTRANSACTIONS

FunctionalAcknowledgement 997ApplicationAdvice 824TradingPartnerProfile 838

8/3/2019 Unit 31 Criteria 2-3&4

22/50

TransactionStandards UN/EDIFACT UN/EDIFACT (United

Nations/Electronic Data Interchange forAdministration Commerce and Transport) is aninternationalsetofEDIstandardsthatarepublishedby the United Nations Trade Data InterchangeDirectory(UNTDID).

The standards include syntax rules and

implementation guidelines; message designguidelines, directory sets defining messages, dataelements,andcodesets,amongotherdefinitions.

8/3/2019 Unit 31 Criteria 2-3&4

23/50

PRODUCT/PRICINGTRANSACTIONS

PriceSalesCatalog PRICATPriceAuthorizationAcknowledgement/Status ATHSTS

Specification/TechnicalInformation PRDSPERequestForQuotation REQOTEResponseToRequestForQuotation QUOTESElectronicBidForm --

ORDERINGTRANSACTIONSPurchaseOrder ORDERSPurchaseOrderAcknowledgement ORDRSPPurchaseOrderChange ORDCHG

PurchaseOrderChangeAcknowledgement ORDRSPOrderStatusInquiry ORSSTAOrderStatusReport ORDREPContractAward --

8/3/2019 Unit 31 Criteria 2-3&4

24/50

MATERIALSMANAGEMENTTRANSACTIONS

PlanningSchedule/MaterialRelease DELFOR

ShippingSchedule DELJITProductionSequence --ShipNotice/manifest(ASN) DESADVReportofTestResults QALITYMaterialSafetyDataSheet --

ContractAward --SHIPPING/RECEIVINGTRANSACTIONS

ShipmentInformation(BillofLading) IFTMCSReceivingAdvice RECADV

Non-conformanceInformation-DispositionTransaction,Cause/Correction

NONCON

TradingPartnerProfile PARTIN

8/3/2019 Unit 31 Criteria 2-3&4

25/50

INVENTORYMANAGEMENTTRANSACTIONS

InventoryInquiry/Advice INVRPT

ProductTransferandResaleReport SLSRPT

ProductTransferAccountAdjustment --ResponseToProductTransferAccountAdjustment --

FINANCIALTRANSACTIONS

Invoice INVOIC

FreightInvoice IFTMCSPaymentorder/RemittanceAdvice(EFT) REMADV

Lockbox --

FinancialInformationReporting --

CONTROLTRANSACTIONSFunctionalAcknowledgement CONTRL

ApplicationAdvice BANSTA

TradingPartnerProfile PARTIN

8/3/2019 Unit 31 Criteria 2-3&4

26/50

TransactionStandards Open-EDI The ISO (International Standards

Organization) and IEC (International ElectricalCommittee)aredevelopinganEDI referencemodelunderajointcommitteecalledOpen-EDI.

The goal of Open-EDI is to allow electronic

transactions among "multiple autonomousorganizations" that may or may not have any prior

businessrelationships.

8/3/2019 Unit 31 Criteria 2-3&4

27/50

GSX f l GE I f ti

8/3/2019 Unit 31 Criteria 2-3&4

28/50

GSXformerlyGEInformationSystems

8/3/2019 Unit 31 Criteria 2-3&4

29/50

IBMGlobalServices

8/3/2019 Unit 31 Criteria 2-3&4

30/50

8/3/2019 Unit 31 Criteria 2-3&4

31/50

Rationale

Many enterprise buying organizations find thatmanaging their supply base can be very challenging andexpensive if to maintain their own site.

Point-to-point communications in multiple technologiesrequired by different suppliers are expensive andtime-consuming to manage.

Buyers can utilize transaction capabilities for reliabletranslation and delivery of business documents usingtrading networks.

8/3/2019 Unit 31 Criteria 2-3&4

32/50

SampleTradingNetworks

Ariba.com Connectory.com

TriangleAreaBuyer-SupplierNetwork

BuyerSupplierConnection Tradekey.com

Bayantrade.com

8/3/2019 Unit 31 Criteria 2-3&4

33/50

8/3/2019 Unit 31 Criteria 2-3&4

34/50

Charges

Set-upFee($5,000to$10,000) MonthlyFee($100to$1,000)

Consumables($1,000to$10,000)

PerKilobyteused($0.50to$1.00) Pertransaction(%oftransaction)

Subscriptionfee($2,000to$10,000)

MaintenanceCharges(20%ofset-up)

8/3/2019 Unit 31 Criteria 2-3&4

35/50

8/3/2019 Unit 31 Criteria 2-3&4

36/50

UNRules Toensurethevalidityandenforceabilityoftransactions

completedthroughtheuseofEDI,Section2.6requirestradingpartnerstostoreandretain:

(a)theMessagescommunicated(bothsentandreceived)and

(b)recordsrelatingtothoseMessages.

Thoserecordsmayincludehistoriesorlogsofthecommunicationsaswellasdatabasescontainingextracts

ofcertainportionsoftheMessages.

8/3/2019 Unit 31 Criteria 2-3&4

37/50

UNRules Therecordstoragerequirementswhichmaybespecifiedin

theTechnicalAnnexshouldbedevelopedbaseduponthecommercialorlegalrequirementsunderwhicheachpartyconductsitsaffairs.

Theobjectiveistoprovidethenecessaryrequirementswhichcanbestassureeachtradingpartnerthatbothrequiredanddesiredrecordswillexistwhenneeded.

Nationallawsandregulationsmaydifferconsiderablyregardingthereadability,durabilityorintegrityofelectronicrecords.

8/3/2019 Unit 31 Criteria 2-3&4

38/50

UNRules Nospecifictimerequirementsorstorageformatsare

indicated;however,tradingpartnersareencouragedtospecifydetailsregardingbothmatters,inorderthattheappropriaterecordscanberecoveredforreviewintheeventofanyfuturedisagreementsordisputes.

Otherwise,theAgreementimposesnorestrictionsonthe

internalproceduresusedbyapartytocomplywiththerequirementsofSection2.6.

8/3/2019 Unit 31 Criteria 2-3&4

39/50

TypesofTransactionlogs

Paperprintout Datastorage(softcopy)

Reportformat

Rawdata

8/3/2019 Unit 31 Criteria 2-3&4

40/50

ThirdParty

VANsresponsibility 3rdpartydatastorage

Buyerandsellerhardandsoftcopies

8/3/2019 Unit 31 Criteria 2-3&4

41/50

Advantages of usingthe internet for b2b

Criteria2-4

8/3/2019 Unit 31 Criteria 2-3&4

42/50

Advantages astandardcommunicationnetworkacrossthe

worldwhichcanbeusedforb2bbetweenbuyersandsellers,

avoidingthecostschargesbyVANs

Security makingitaccessibletoorganisations

enablingamorecompetitiveglobalmarketplace.

Otherdevelopments

Standard Communication

8/3/2019 Unit 31 Criteria 2-3&4

43/50

StandardCommunicationNetwork

Thereisnostandardcommunicationorprotocol

ProgrammersutilizeaProtocolSuiteoracombinationofstandard

communicationprotocols

Standard Communication

8/3/2019 Unit 31 Criteria 2-3&4

44/50

StandardCommunicationNetwork

8/3/2019 Unit 31 Criteria 2-3&4

45/50

AvoidingCostbyVANs Minimalcharge

Minimalornosubscriptionfee

Percentageoftransactionislower

Lowermonthlysubscription

8/3/2019 Unit 31 Criteria 2-3&4

46/50

Security Networklayersecurity

IPsecProtocol Electronicmailsecurity(E-mail)

PrettyGoodPrivacy(PGP)

MultipurposeInternetMailExtensions(MIME) Firewalls

8/3/2019 Unit 31 Criteria 2-3&4

47/50

Accessibility GlobalAccess

24x7access

Anyterminal

AuthorizedPerson

8/3/2019 Unit 31 Criteria 2-3&4

48/50

Competitiveness Strategicalliances

Up-to-date/minutedecisions

Fluctuatingpricesandterms

Expedientdeliveryofservices

8/3/2019 Unit 31 Criteria 2-3&4

49/50

OtherDevelopments-XML Aflexiblemarkuplanguageforstructured

electronicdocuments.

XMLisbasedonSGML(standardgeneralized

markuplanguage),aninternationalstandardforelectronicdocuments.

XMLiscommonlyusedbydata-exchange

services(likeblogfeeds)tosendinformationbetweenotherwiseincompatiblesystems.

8/3/2019 Unit 31 Criteria 2-3&4

50/50

END OF SESSIONSeeyounextmeeting