How Does EDI Work?
How Does EDI Work? There are three main components to sending EDI documents:
Step 1: Prepare the documents to be sent
EDI (Electronic Data Interchange) requires electronic versions of files. Instead of printing a paper purchase order, you would organize the necessary information to build an EDI document within your system. The sources of the data and the methods available to generate the electronic documents can include:
- Data entry by human intervention
- Exporting data from excel spreadsheets or internal databases
- Reformatted electronic reports into data files
Step 2: Translate documents into EDI format
Put your collected internal electronic data through a translation software to convert into the EDI standard format. EDI standards describe the format in which the data will be sent and received. Most common standard sets:
- American National Standards Institute (ANSI) X12 in North America
- UN/EDIFACT globally
There is two ways to use translation software;
You can purchase EDI translation software that you have to manage and maintain on your premises. This requires dedicated IT resources with specialized mapping expertise in order to define how your internal data is to be mapped to the EDI data.
Alternatively, an EDI service provider would provide the translation services. Using this option you would send your electronic data to the EDI Service provider, who would then handle all mapping, translation and support to and from the EDI format on your behalf.
Step 3: B2B Connection and Transmission of your EDI documents
Once your business documents are translated to the appropriate EDI format they are ready to be sent to your business partners. There are several types of EDI for this connection:
- secure internet protocol (AS2)
- connect to an EDI Network provider with a Value Added Network (VAN)
- a combination of both, depending on the particular partner and the volume of transactions you expect to exchange.
Types of EDI
There are many methods organizations will use in order to enable EDI across their trading community.
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Complete EDI Guide
This is one of the most up to date EDI guide you will find on the internet with over 11,500+ words. It covers topics like history of EDI, EDI stats and market growth, benefits of EDI, EDI transaction types, EDI standards and more