1.4 Electronic Data Interchange (EDI)

EDI can be compared and contrasted with electronic mail (email). Email enables free-format, and textual messages to be electronically transmitted from one person to another. On the other hand, EDI supports structured business messages, and transmits them electronically between computer applications, rather than between people. Business messages are expressed in hard-copy, pre-printed forms or business documents (Clarke 1998).

The essential elements of EDI are (Clarke 1998):

The use of an electronic transmission medium (originally a value-added network, but increasingly the open,

public Internet) rather than the dispatch of physical storage media such as magnetic tapes and disks.

The use of structured, formatted messages based on agreed standards: such that messages can be translated,

interpreted and checked for compliance with an explicit set of rules.

Relatively fast delivery of electronic documents from sender to receiver: generally implying receipt within hours,

or even minutes.

Direct communication between applications: rather than merely between computers.

1.4 Electronic Data Interchange (EDI)

EDI depends on data processing, data management and networking capabilities, to enable the efficient capture of data into electronic form, the processing and retention of data, controlled access to it, and efficient and reliable data transmission between remote sites.

A common connection point is needed for all participants, together with a set of electronic mailboxes (so that the organizations' computers are not interrupted by one another), and security and communications management features. It is entirely feasible for organizations to implement EDI directly with one another, but it generally proves advantageous to use a third-party network services provider.

Fundamental objectives include (Keeney 1999):

The application/ conversion layer

			Consists of the actual business applications that are going to be connected through the EDI systems for
			exchange of electronic information.

The standard message formats layer

			consists of the actual business applications that are going to be connected through the EDI systems for
			exchange of electronic information.

1.4 Electronic Data Interchange (EDI)

Example:

				ANSI X12 Standard: X12 devised the standards to deal with transactions such as purchase-order
				placement, order-processing, shipping, invoicing and payments etc.
				EDIFACT Standard: serves the purpose of trans-border standardization of the EDI messages. It
				combines the efforts of American National Standards Institute's ASC X12, Trade Data Interchange
				(TDI) standards developed and deployed by much of Europe and United Kingdom.

The data transport layer

the data transport layer consists of services that automate the task of electronic transfer of messages.

The interconnection layer

			it refers to the network infrastructure that is used for the exchange of information between trading
			partners.

1.4 The Importance of Financial Planning (Planning...

In details:

Liquidity planning:

You can use cash inflows and outflows, to outline your cash position.

In brief you can calculate your in and out cash, where it resulted to over cash (excess) or shortage

(deficit).

Profitability:

You can plan for your profitability I pick up two techniques which are suitable to be used in

personal finance particularly in small business to plan for profitability these include:

Break - even point which depend on the following factors:

1. Total fixed costs. 2. Sale - price for one unit. 3. Variable costs for one unit.

1.4 The Importance of Financial Planning (Planning...

Example

If fixed costs = $ 50,000

One unit price = $ 25

One unit variable cost = $ 15

Therefore:

1.4 The Importance of Financial Planning (Planning...

It means that you must produce and sell 5000 unit to cover the total costs (just covering the costs) without any

loss or profit, so any unit will be sold over this point means "profit" this technique enables you to evaluate

yours business, if you can't sell the quantity which you have produced (break - even point) you will not cover

even the costs regardless of profit, and if you are able to sell not only this quantity but also more than this

point, you can start your business as your business is profitable.

Return on investment (ROI):

It means return on investment, you must ask your self where you plan for your own small business, if it

can be earned and how much - is the return in comparing with you capital.

Example

If a project realizes a return round $ 25,000 and your investment $ 125,000 compute ROA:

1.4 The Importance of Financial Planning (Planning...

Finally, ask yourself is 20% return on your investment goad or poor investment to decide what can you do.

Importance of Financial Planning

Effective planning includes (See Exhibit 3)

1.4 The Importance of Financial Planning (Planning...

1. Planning focuses on determination of goal. 2. Data provides all details about all variables and alternatives. 3. Forecasting techniques are necessary to use information or data in service of future. We use the     information of past and present to explore the future. 4. The possible alternatives which are related to your goal on the light of your data, for example you can use     selection window to evaluate the alternatives (see exhibit 4).

1.4 The Importance of Financial Planning (Planning...

In comparing between resources and success probability:

window No. I is not risky and safe 100% and in need to resources 50%.

Window No. 2 is safe 100% but in need to resources 100%.

Window No. 3 is safe 50% and resources 50%.

Window No. 4 is safe 50% and resources 100%.

5. Finally you can determine the alternative which will be implemented on the light of "selection     window" (Note: the best "A" and the worst is "D" and don't forget that in a few years your budget (plan)     could significantly change from what it is now.

If you are single now you might get married, have kid... and so on budgeting is related to future, and the future is unknown, but we can decrease the bad effect of the future, changes and protect you against fluctuations.