Rise and Shine Donuts is a growing business in the state.Attempting to improve the efficiency of its communications withoutside suppliers, the company is investigating the use ofElectronic Data Interchange (EDI). As part of its evaluation, Riseand Shine Donuts has decided to document the new processes thatwould result from its use of EDI. Because the change will alsoimpact its suppliers, Rise and Shine has invited Half-BakedNecessities, it largest supplier, to assist with evaluating thechange and its impact. Both companies have agreed to begin by firstmodeling the purchasing process using a BPD. Because the efficiencybenefits of EDI only arise when most of a company’s suppliers alsoagree to use EDI, Rise and Shine Donuts and Half-Baked Necessitiesintend to present the model to other Rise and Shine suppliers inorder to convince them to also adopt EDI. Half-Baked Necessities isalready convinced that it would benefit from EDI due to the largenumber of transactions it engages in with Rise and Shine.

EDI designates standardized mappings or document templatesfor conducting business transactions electronically betweencompanies. The types of transactions within each mapping areclassified by number. For example, the template for the electronictransmission of an invoice is designated as an 810 transaction. ForRise and Shine Donuts and Half-Baked Necessities, three types oftransactions are relevant to the purchasing process: the purchaseorder (EDI 850), purchase order acknowledgement (EDI 855), andfunctional acknowledgement (EDI 997).

The functional acknowledgement, or EDI 997, is essentiallyan electronic receipt that the recipient of an EDI transmissionsends back to the initiating party to confirm that the EDItransmission was received. Rise and Shine Donuts and Half-Bakednecessities have agreed that a 997 should be transmitted every timean EDI transmission is received, regardless of whether thetransaction is or is not accepted.

The purchasing process begins when Rise and Shine Donutsdiscovers that it needs to order inventory. A purchasing clerkevaluates Rise and Shine’s inventory needs and inputs and transmitsthe po details via an EDI 850 purchase order to its supplier BakedNecessities. Rise and Shine then waits to receive a 997 functionalacknowledgement. If it does not receive an acknowledgment within 10minutes, it resends the purchase order and repeats this processuntil it receives an acknowledgment.

When Half-Baked Necessities receives the 850 purchaseorder transmission, it immediately responds with an EDI 997transmission. Next, the sales team at Half-Baked Necessitiesreviews the order to decide whether to reject or accept the order.The decision to accept or reject the order is then transmitted viaan EDI 855 purchase order acknowledgement to Rise and Shine Donuts.If rejected, the EDI 855 provides details, such as new pricinginformation, to allow Rise and Shine Donuts to rewrite and transmita new purchase order.

After sending the 855 purchase order acknowledgement, Half-BakedNecessities waits to receive a 997 functional acknowledgement. Ifit does not receive an acknowledgment from Rise and Shine Donutswithin 10 minutes, it resends the 855 and repeats this processuntil it receives an acknowledgment. Once the 997 is received, thepurchase order, if accepted, is forwarded to order fulfillment forfurther processing.