How does e-business work?

Companies are integrating themselves within the globalized worldwide economic streams in different ways. One of these ways is also the implementation of electronic or computerized interchange of data and of documents respectively.

Electronic interchange of documents (EDI) is providing the suitable base for the swift and efficient interchange of information between information systems without errors. When using standard messages or documents respectively is the electronic interchange enabling also the use of common language between information systems of different organizations wherever in the world.

Example of how does it function

Example of functionality of electronic interchange of information in retail shop:

1. Buyer prepares the electronic order in its information system (IS).
2. Buyer is sending electronic order to the supplier and supplier is obtaining the order directly into its information system.
3. Based on the electronic order, supplier is preparing the ordered goods and the electronic bill of delivery and is sending this document to the buyer. Electronic bill of delivery may contain the structure of the consignment and other data on delivered goods (date of use, number of series and lots etc.)
4. Buyer is receiving all these details in its information system. At the take over and acceptance of the goods he is confirming the electronic delivery bill and is sending to the supplier the electronic certificate of receipt.
5. Supplier is issuing the electronic invoice based on the received electronic certificate of receipt.
6. Buyer is verifying the electronic invoice with the confirmed bill of delivery and is sending he electronic order for payment to the bank.
7. Bank is sending electronic financial statements of performed transactions to both partners, i.e. to the buyer and to the supplier.

Business relations buyer – supplier

Buyer may submit to the supplier also other electronic documents for the management of the supply chain and production:

• report on status of supplies,
• report on sales,
• information on new location (new shop), ...

Supplier may submit to the buyer the electronic documents for goods and logistics management:

• catalogue of articles, price list,
• confirmation of order,
• release of goods, ...

Use of standard formats

At all these electronic documents normally the internationally agreed upon standard format of electronic messages is being used, thus enabling the communication between any buyer and supplier all over the world.