EDI (Electronic Data Interchange)
The Definitive Guide
Commport Communications is the largest retail network, with more than 125,000 retail supply chain partners to connect and collaborate. In this EDI guide explore the benefits of electronic data interchange (EDI) for your business, discover industry-specific EDI programs or browse types of EDI document types, and also know the future of EDI.
This is a complete guide to EDI (Electronic Data Interchange)
In this in-depth guide you’ll learn:
- History of EDI
- What is EDI Compliance
- How EDI works
- Lots more
So if you’re ready to go “all in” with EDI, this guide is for you.
Let’s dive right in.
History of EDI
In this chapter, we will go through the history of EDI
We will also cover the definition of EDI and what does EDI stands for
Then, in later chapters, we’ll cover 'How EDI works', EDI X12 Document Types, EDI Standards
But for now, let’s cover the basics of EDI.
Chapter 1 summary,
Definition of EDI
“Electronic Data Interchange (EDI) is defined as the electronic communication process for exchanging data amongst trading partners without human intervention. Simply put, EDI provides a technical basis for commercial “conversations” between two entities, either internal or external.”.
The Beginning in 1948
Back in June 1948, the Soviet Union, which controlled eastern Germany, cut off the access between western Germany and the parts of berlin which was controlled by the U.S., England and France by blocking the road, rail and barge. This created a problem to deliver cargo for US Army.
To resolve the problem a US Army Master Sargent named Edward Guilbert he is also called as “The father of EDI” designed a standard manifest system that could transmit data by telex, radio-teletype, or telephone. With this new standard manifest system in place, they were able to track tons of cargo per day until the roads to berlin were reopened in 1949. These initial concepts later shaped the first TDCC (Transport Data Coordinating Committee) standards in the US.
Guilbert continued his work in improving the standard manifests even after he left his military duty. When Guilbert joined Du Pont Co in 1960s he developed a standard set of electronic messages for sending cargo information between Du Pont and a carrier company, Chemical Leahman Tank Lines.
As many companies across various verticals started using EDI which allowed them to transmit documents electronically through telephone, telex messages, and radioteletype the popularity of EDI grew significantly
Among the first integrated systems using EDI were Freight Control Systems. One such real-time system was the London Airport Cargo EDP Scheme (LACES) at Heathrow Airport, London, UK, in 1971. Implementing the direct trader input (DTI) method, allowed forwarding agents to enter information directly into the customs processing system, reducing the time for clearance
In the early 1970s, a file transfer protocol (FTP) was introduced. Which enabled the transfer of files between internet sites. This FTP protocol was created as a standard in RFC989 Declarative. Which outlines certain standards like which ports are used, commands that FTP accepted, and values for the transfer parameters and modes allowed.
The first national EDI specification was published in 1975 and in the same year, the first Value added network (VAN) was also established by Telenet. Gulibert was a big contributor to developing the first national EDI specification.
In 1977, a plan was made to draft an EDI project by a group of grocery companies and their partners.
In 1978, TDCC becomes the EDIA (Electronic Data Interchange Association) and later EDIA is chartered by the ANSI (American National Standards Institute) to become ANSI X12 committee which is responsible for publishing EDI standards.
As the maritime traffic increased, customs across various ports in the UK faced similar problems to those experienced at Heathrow Airport London and this led to the implementation of DTI systems in all major ports across the UK in the early 1980s
In 1981, ANSIX12 published its first standard for the food, drug, warehouse, banking, and transportation industries. Soon, many major retailers and automobile companies mandated their suppliers to use EDI to do business with them, some of the companies include Ford, General Motors, Sears, and more.
The 1990s and 2000s
By the early 1990s many companies across various industries and verticals started adopting EDI to streamline their supply chain process, roughly 12,000+ companies mandated their suppliers to start using EDI. Then came Internet EDI (EDIINT) which was introduced by the UCC (Uniform Code Council) which standardized communications of EDI data over the internet.
As we entered the new millennium security of EDI data has become a major concern for many companies, so a new communication standard was published by UCC which enables to encrypt of transmitted data over the internet and it’s called ‘AS/2’
EDI is Everywhere Today
Today, Over 95% of Fortune 500 companies are capable of using EDI. Many different types of EDI have been developed which allows much smaller to medium businesses to adopt EDI. One such cost-effective EDI solution is Internet EDI which has been widely popular among small to medium size businesses and requires no prior EDI knowledge, technical team, or software to use.
AS/2 has also grown its popularity as it is also cost-effective and it keeps the EDI data secure by encrypting it during the data transfer. AS/2 is now used by many major retailers like Walmart, Target Lowe’s, and many more and they require all of their suppliers to use it too.
EDI Statistics & Market Growth
It's estimated that 80 percent of business-to-business traffic is conducted through EDI, and this number is growing 3 to 5 percent annually.
Over 41% of businesses have no EDI capability and 21% just use web portals.
According to Fortune Business Insights
The global electronic data interchange software market size was $1,547.2 Mn in 2019 & is projected to reach $3,451.3 Mn by 2027, at a CAGR of 10.7% in the forecast period
According to the grand view research industry analysis report,
The global healthcare Electronic Data Interchange (EDI) market size was valued at USD 2.7 billion in 2016 and is expected to grow at a CAGR of 9.4% during the forecast period
What is EDI?
EDI, or Electronic Data Interchange has changed the way businesses manage and process their information on a grand scale. EDI solutions save immeasurable amounts of time and lost revenue from clerical errors.
Simply put, EDI provides a technical basis for commercial “conversations” between two entities, either internal or external.
EDI encompasses the entire electronic communication process including,
- Message flow
- Document format
- Software used to interpret documents
Using EDI, companies send information digitally from one business system to another, using a standardized format. EDI automates the order processes, transactions, and communications that were done with paper or fax in the past.
Businesses can exchange digital information and transactions such as purchase orders, invoices, advanced ship notices, and other documents via EDI with greater accuracy and speed.
As supply chains become more complex, EDI offers the technology you need to connect your systems, trading partners, demand channels, and customers.
EDI creates a bridge between your internal systems, your partners’ systems, and a variety of sales platforms, such as online marketplaces or eCommerce storefronts. By automating the transfer of data between these systems, EDI can quickly process large order volumes, eliminate errors and delays, and streamline communications across your supply and demand channels
Think of EDI as a common electronic business language that allows trading partners to quickly and easily communicate with each other.
Manual Process Vs Automated EDI Process
Manual Process (Traditional methods)
Before EDI, businesses relied on moving paper-based documents, which would take far too long and did not provide the flexibility that an electronic exchange would.
In manual process, businesses exchange documents via postal mail, fax and email.
Step 1 - The buyer either receives a notification in his system to place an order or, after querying the inventory, determines he needs to place an order.
Step 2 - The buyer enters data onto the screen of a purchasing system to create the PO, print and mail it, or email it to the vendor.
Step 3 - The vendor receives the PO, either day later or via email (along with a long list of other communications) and manually enters it into the sales order system.
Step 4 - The vendor prints an invoice and encloses it with the shipment and/or sends it separately by mail or email.
Step 5 - The buyer manually enters the invoice into the accounts payable system.
With the manual process, it could take weeks or sometimes months of back-and-forth shipping time to the process. Also, it is susceptible to manual data entry errors and increasing order time.
Automated EDI Process
EDI replaces the manual exchange of B2B documents. With EDI documents flow directly from the sender’s computer application (e.g.: A logistic system) to the receiver’s computer application (e.g.: an order management system)
Step 1 - The buyer's procurement system, which uses EDI, auto-generates and sends an EDI-formatted PO when inventory reaches a pre-specified level.
Step 2 - In minutes the vendor's sales order system, using EDI software, receives the EDI PO.
Step 3 - The supplier's system automatically notifies their shipping department to send goods.
Step 4 - Once the goods are packed and ready to ship, the shipping system generates an Advanced Ship Notices (ASN) to send to the buyer's receiving department
Step 5 - The vendor's ERP system then generates an EDI invoice to transmit to the buyer's accounts payable system
With the automated EDI system in place, the entire process can be completed in less than 1 hour.
Using EDI doesn’t just save your business time and money. It also makes it easier and more cost-effective for your partners to do business with you. This gives you an edge over your competitors. When you’re easier to do business with, you can do business in every direction
EDI dramatically simplifies the exchange between a buyer and supplier. A buyer’s internal system uses EDI to send a purchase order, which is accepted by the supplier’s internal network. Everything is exchanged in real-time without the need for faxing, mailing, or manual entry.
Electronic data interchange is now widely used both in the United States and globally, based on a number of standards that have been enacted that provide basic guidelines for its use. The two standards bodies that are most frequently associated with Electronic Data Interchange are the ANSI X12 standard, used primarily in the US, and the UN EDIFACT standard is used outside of the United States
Today, industries use EDI integration to share a range of document types — from purchase orders to invoices to requests for quotations to loan applications and more. In most instances, these organizations are trading partners that exchange goods and services frequently as part of their supply chains and business-to-business (B2B) networks.
Types of EDI
There are 8 Types of EDI solutions which include:
- Integrated EDI (EDI Software)
- Internet EDI (Web EDI)
- EDI Outsourcing
- Direct EDI/Point-to-Point
- EDI via AS2
- EDI via SFTP
- EDI via FTPS
- EDI via Value Added Network or EDI Service Provider
There are many methods organizations will use in order to enable EDI across their trading community.
Electronic data interchange (EDI) is one of the most common forms of structured electronic exchange of business documents between organizations.
1. Integrated EDI
An integrated EDI solution translates your inbound documents like purchase orders from your trading partners' EDI files into a format that can be imported directly into your ERP, accounting, or another business system.
When you’re ready to send out invoices, PO acknowledgments, or other outbound documents, it takes the format exported from your system and translates it into the EDI formats required by your trading partners.
The translation is fast and reliable so you can focus on your business
Key features of Integrated EDI
Integrate business documents with your internal operations.
Achieve seamless translation, converting business system documents into documents that are global standards compliant.
Mappings and translation are managed by Commport, so there is no software to install or maintain.
Exceed your trading partner’s needs with documents that are formatted to meet their specific business requirements.
Connect directly with your trading partners using protocols such as AS2 or sFTP.
2. Internet EDI (Web-based EDI )
How Internet EDI Works
- Your customer sends an EDI Purchase Order (PO) the way they do with all of their EDI suppliers.
- You receive an email alerting you a PO has arrived. Then you log into Commport Internet EDI using a web browser.
- You process your new PO for viewing and printing in a readable format. Commport Internet EDI then sends an EDI acknowledgment back to your customer confirming you received the PO.
- When goods are ready to ship and invoice, you select a PO and an invoice screen appears already populated with billing information from the PO.
- Your invoices are converted to EDI and delivered to your customer. You can also send PO acknowledgments and ship notices and print packing labels.
Communication of EDI messages via the internet. Internet EDI is an economical solution that is easy to use. Even smaller or mid-sized vendors need to be compliant with their large retail customers. As a low-cost option, Internet EDI enables you to get up and running with very little
Investment required. All you need is an Internet connection and a web browser and you can begin exchanging EDI with your trading partners today.
The straightforward Internet EDI document interface is user-friendly and doesn’t require a lot of experience with EDI systems. It tailors the screen to include only the information requested by your trading partners. All forms include business rule validations and controls, ensuring effortless compliance with your trading partner’s EDI programs.
Key features of Internet EDI
- Generate MH10, UCC 128 and GS1-128 shipping labels
- Order Management
- Order picking and packing automation
- Notification email alerts
- Business rule validations
- Duplicate checking
- Access to Commport Monitor track and trace tool
- Reports for all transactions
- Sent documents archive
- Document import and export to enable partial integration
- Customize trading partner-specific fields
- Training and Support
3. EDI outsourcing
EDI outsourcing is the process of having a third-party company like Commport Communications manage a part or the entire process of using EDI to exchange data with trading partners. While businesses of many sizes use EDI outsourcing, the primary benefit is usually associated with smaller businesses.
EDI outsourcing is also suitable if you have implemented a fully integrated EDI-compliant system but still have partners who want to send you faxes.
By outsourcing your EDI, you set yourself free to focus on your business and what you do best. EDI outsourcing means that you will not need to make any investment in EDI software, nor will you have to directly manage the EDI aspect of your relationship with your customer, including large retail clients.
Key features of EDI Outsourcing
- Fax-to-EDI/EDI-to-Fax solutions for everyday business transactions such as Purchase Orders (850), PO Changes (865), Invoices (810), Advanced Ship Notices (856), and Remittance Advice (820)
- Fax-to-EDI/EDI-to-Fax for specialty partners, industries and transactions for example: the JC Penney Routing Instructions (753/754), Planning Schedule (830), and the ability to create an ASN based on the planning schedule for Just-In-Time logistics partners (Automotive)
- Blended options enabling you to send/receive some documents electronically while faxing others
- Easy to read reports for all transactions processed by the Service Bureau
- Packing instructions to accurately convey how your shipment has been prepared
- Comprehensive VAN Services with global connections carried on the network
- Products and services to support your EDI needs now, and as you grow
- UCC-128 labels for all shipping documents (can be made available for print at your location or can be couriered to you as a part of the service)
- Access to the Network’s online real-time visibility tool
EDI outsourcing is perfect for,
- A seasonal vendor who only needs to exchange EDI documents during specific times of the year
- A vendor looking to cost-justify every business transaction
- Looking to avoid costly upfront software fees
- Able to integrate some business transactions but not others
- Needing to meet a retailer’s EDI requirement immediately, without delay
- In between business systems and looking for a way to keep your external-facing business running seamlessly in the meantime
- Not interested in supporting the communications, software, or personnel required to run in-house EDI
- Looking to outsource your EDI Department
4. Direct EDI/Point-to-Point
Direct EDI, sometimes referred to as point-to-point EDI, establishes a single connection between two business partners. In this approach, a business would connect with each of its business partners individually. Typically large corporations that have business partners with whom they exchange a high volume of EDI documents will choose this method.
While Direct EDI provides more control for each business, it can become very complex quickly. Different EDI trading partners often use separate EDI protocols which means you need to support each available option.
With the direct connection model, you will need to purchase a software package that enables you to use all the agreed-upon protocols, such as
5. EDI via AS2 (Applicability Statement 2)
AS2 stands for Applicability Statement 2. Easily described as a business-to-business connection in a point-to-point manner via the web. AS2 is one of the most popular methods for transporting EDI data securely and reliably used by millions of businesses, including most major retailers, such as Amazon and Walmart.
6. EDI via SFTP (Secure File Transfer Protocol)
SFTP stands for Secure File Transfer Protocol, also called SSH File Transfer Protocol, and is a network protocol for accessing, transferring, and managing files on remote systems. STTP provides organizations with a higher level of file transfer protection which allows businesses to securely transfer billing data, funds, and data recovery files.
7. EDI via FTPS (File Transfer Protocol)
FTPS stands for File Transfer Protocol Secure which is an extension to the commonly used File Transfer Protocol. In FTPS, FTP data travels through the network using either Secure Sockets Layer (SSL) or Transport Layer Security (TLS) protocols.
8. EDI via Value Added Network or EDI Services Provider
The majority of EDI exchanged today occurs through EDI Value-Added Network (VAN). As long as two organizations are using the same VAN, communication is possible regardless of which EDI protocol is used to transfer information. Unlike Direct EDI this means organizations can manage one connection with the EDI VAN instead of separate lines of communication with each potential partner. Many businesses prefer this model to save them from the ongoing complexities of supporting the varying communication protocols required by different business partners.
What is EDI Compliance?
In this chapter, we will go through information related to EDI Compliance
We will also cover what is EDI Compliance and why it is important for businesses to be EDI Compliant to do business with all major trading partners
Then, as we go into detail, we’ll also cover topics like 'why do you need an EDI solution', 'who can use EDI', and more
Let's get started,
Chapter 2 summary,
- Define EDI Compliance
- Why do we need an EDI solution?
- Who can use EDI?
- EDI for small and medium size businesses
- What do you need to get started with EDI?
Define EDI Compliance
EDI compliance refers to a business's capacity to accurately send and receive EDI transactions according to the order data requirements of its EDI trading partners. Each document must adhere to a specific EDI format to ensure the successful exchange of EDI documents.
Many companies insist that their trading partners communicate using EDI software, including retail giants like Walmart, Target, Costco, and Amazon.
Each retailer indicates which specific documents your business must follow in order to complete business and become EDI compliant. This means that your trading partner’s EDI requirements can change at any time. So your EDI partner needs to make the necessary adjustments, such as EDI mapping, on your behalf so you can continue business as usual and stay EDI compliant.
With virtually all major trading partners demanding that businesses who wish to trade with them be EDI compliant, the importance of building and maintaining EDI compliance cannot be understated, especially given how it can benefit your bottom line.
At its most basic level, EDI compliance means your business can use EDI to receive your purchase orders and send out invoices.
Solid, trust-based relationships built on being EDI capable foster confidence and business growth. EDI implementation issues are not only frustrating, but they can also be costly. And that cost of being non-compliant comes in the form of EDI chargebacks.
EDI chargebacks are financial penalties for non-compliance with your trading partner requirements. Trading partners issue EDI chargebacks because of vendor non-compliance with agreed-upon elements of the Service Level Agreement (SLA). Because vendor non-compliance disrupts operations and creates additional expenses for the trading partner, the customer offsets those additional costs by issuing EDI chargebacks to the vendor.
There are a few key steps in the process to become EDI compliant. You first need to understand the requirements for your specific trading partner. Most trading partners will have resources on their websites that detail the full set of requirements & expectations with respect to EDI. You then have a choice. You can either outsource your EDI requirements to a third-party provider such as Commport Communications, or you can build an in-house EDI solution.
For the vast majority of businesses, building an in-house EDI solution from scratch is both a daunting & expensive process. This process involves developing the software needed to securely exchange EDI documents. After your EDI solution is all set-up, you’re ready for the final step: testing. You must test your EDI solution to ensure that the documents can successfully be exchanged in the proper format with your trading partner(s). After testing is done with the trading partner, you’re ready for business!
EDI Compliance Requirements
- The ability to exchange the basic EDI document set
- The timeline for EDI data testing
- Connection requirements
- Functional acknowledgment expectations
Why do you need an EDI solution?
To answer the question of why you need an EDI solution, first you may want to ask yourself how much time and money you are spending on your current manual paper process. If the calculation of time and expense justifies the investment for migrating to an EDI solution, then it’s something you need to strongly consider.
Consider the hundreds of pages you have to create and pile through every day in order to run your business. Consider all of the time it takes to interface all of these documents with other businesses and systems in order to keep moving forward. Are you as efficient as you need to be to succeed?
EDI solutions (Electronic Data Interchange) are designed to help you manage this massive amount of paperwork. The considerations for savings in time, potential errors from mistyped or incorrectly logged information, not to mention the impact on the environment—all of these are important considerations when you’re looking into an Edi solution for your business.
If your business model is based on having a series of processes that are labor intensive—yet completely necessary—in regards to a huge amount of work required to keep things running, then you will want to consider an EDI solution.
Manage Hundreds of Pages
One of the major benefits to an EDI solution is the automation of the otherwise manual process of managing hundreds of pages of paperwork and documentation that would otherwise be done by a human agent. There is a great deal of work that goes into creating the documentation and pushing it through to the next stage, not to mention managing that documentation at the various links throughout the process. At every stage, there is the potential for errors, and these errors all limit your productivity and present potential costs.
If your business relies on paper documentation and needs to process hundreds of similar paper orders daily, an EDI system can save you considerable time and money. The other consideration is the savings in time by being able to take multiple steps out of your process.
There are various levels of EDI system integration the system VAN be customized on the basis of how your company operates. It can be as simple or as complex as you need it to be.
Commport’s Integrated EDI solution can be scaled up or down depending on your needs. We have developed solutions for companies in various industries, including healthcare.
Who Can Use EDI (EDI Use Cases)?
EDI (Electronic Data Interchange) refers to the process of exchanging form information electronically. In many cases, it has saved thousands of hours (and countless dollars) for businesses with scores of documents to complete and file.
EDI has been used in the past primarily by automotive and retail businesses, however, in the past few years, the format has been more widely adopted. Manufacturing, healthcare, pharmaceutical, utility, and construction companies are good examples of EDI clients.
Here is the list of EDI use cases in various industries,
Supply Chain (Retail, Manufacturing, Automotive)
- Order fulfillment
- Shipping confirmations
- International orders
- Parts order fulfillments
- Exchanging patient health information
- Health insurance processing
- Prescription information exchanges
- Scheduling shipments
- Tracking goods
- Generating invoices
- Providing audit trails
- Flight information exchanges
- Passenger name records (PNRs)
- International compliance and standardization
Basically, any type of business that deals with large amounts of identical paperwork/form data can directly benefit from adopting an EDI solution
Security of information is critical. The adoption of EDI infrastructure is also largely due to the convenience and security of EDI. EDI used over a VAN (Value Added Network) is an even more secure way to ensure the data is reaching its destination and is being managed properly.
A retailer attempting to implement a “just-in-time” inventory philosophy (that is, cutting down on overstocked inventory and replacing inventory in demand) would do well to implement an EDI solution.
There are two common forms of translation for Electronic Data Interchange a machine to readable format, also known as "rip and read" that creates a printed report, and the automatic translation of Electronic Data Interchange into an ERP or accounting system, also known as Integrated Electronic Data Interchange.
Electronic Data Interchange can be used in a variety of information transactions, including but not limited to:
Transportation management. Major retailers – Walmart, 99 Cents Only Stores, Lowes, Office Depot, and Costco, to name a few – use EDI to manage their transportation and routing instructions.
Purchase order management it’s possible to use EDI to integrate purchase orders into the sales order system simply and efficiently. Files can then be archived for accurate accounting and reporting, as well as for future reference during the drafting of additional documents.
Invoice management. Invoice processing is an essential component of effective business practice – EDI ensures accurate and fast invoicing, eliminating inaccuracies and facilitating fast payment.
Warehouse management. EDI can extract data from an Advanced Shipping Notice infrastructure and produce a clear graphic depiction of sequential processing steps. Furthermore, EDI is commonly used for remote and third-party warehousing fulfillment processes.
Product management. EDI solutions can expedite the delivery of current products and pricing information to any and all partners, providing individualized information pertinent to the specific needs of the particular partner, in their required format.
EDI for Small and Medium Size Businesses
EDI was invented for the benefit of companies that needed to transfer thousands of documents on any given day between trading partners and suppliers.
Over time large retailers often mandate the use of EDI to small and medium-sized suppliers forcing them to comply with EDI standards to continue to do business with them. Small businesses tend to adopt the most affordable web-based internet EDI solutions over other expensive integrations like integrated EDI solutions.
While small business owners may not prioritize information transfer solutions, exploiting the efficiencies of EDI may help small to medium-sized organizations compete in challenging markets.
Benefits for small and medium business to switch to EDI,
EDI reduces labor costs
EDI can replace some of the manual office tasks such as processing purchase orders, updating inventories, and sending invoices, thus saving thousands of dollars in salaries and wages.
EDI systems handle high volume
As the business grows it can be difficult for small business to handle the processing of documents manually which can significantly impact customer relationships and delays the overall process. With an effective EDI solution, small businesses can drastically improve productivity by implementing a fully automated EDI system.
EDI grows with you
The best part of using an effective EDI solution is that the system gets adapted to changes with respect to the business process as your company begins to grow.
Small businesses may find Electronic Data Interchange integration a challenge, but those that want to build relationships and partner with large organizations should consider incorporating EDI into their current supply chain strategy.
What do you need to get started with EDI?
So what do you need to get started? First of all, lay out your process for handling documents from one side of the chain to the next. What is the process? Does it require a great amount of manual intervention? Think of how many places in the process where a human agent is necessary to move the process to the next stage.
Step 1: How much variation exists between documents
Think about how much variation exists between documents. Consider that with an EDI solution, there should be seamless migration from one system to another. The less human intervention required, the better the system will perform.
Step2: identify your internal network
Next, identify your internal network. What are you currently using to move your processes forward? How would you benefit from having an EDI solution in place? What would it replace? Have you considered the time and energy considerations for implementing an EDI solution?
Step3: Plan out your workflow
Once your documents have been brought to a certain level, how are they to be passed to the next stage?
Once you have identified these steps, you will be that much more prepared to integrate an EDI solution to manage a lot of the legwork currently going into your document tracking and submitting process.
Step4: Type of infrastructure you need
What type of infrastructure do you need to have in place? The great thing about modern EDI solutions (Commport offers several solutions, including EDI software solutions like CyberLiNK) you do not have to have more than an Internet connection and the proper software installed to make use of the many advantages of EDI.
The nature of Commport’s solutions is to apply optimum security right out of the gate, so you don’t even have to think about it.
Know your goals with EDI
The main thing to consider is that you identify the goal and purpose for integrating the EDI solution. Once you have that, integrating the physical system is made easy with Commport’s Integrated EDI solutions.
So really, all you need to ensure you are prepared for EDI is a requirement to save time and money in your document creating, compiling and submitting process.
How EDI Works?
In this chapter, we will be explaining 'How EDI Works'
We will also cover why EDI standards are important and are the basis of EDI conversations
Then, as we go in detail, '60 benefits of EDI', EDI costs, EDI implementation
Lets get started,
Chapter 3 summary,
All EDI transactions get defined by EDI message standards. It is vital to have proper governance processes for data quality. When information is missing or in the wrong place, the EDI document might not be processed correctly.
Standards are the basis of EDI conversations.¹ Several organizations define the EDI message standards, including ODETTE, TRADACOMS, GS1, Peppol and the Accredited Standard Committee X12 (ASC X12).
In general, there are two basic types of EDI transmission:
- Point-to-point or direct connections: Two computers or systems connect with no intermediary over the internet, generally with secure protocols.
- Value-added network (VAN): A third-party network manages data transmission, generally with a mail boxing paradigm.
EDI internet transmission protocols include Secure File Transfer Protocol (SFTP), Applicability Statement 2 or AS2, an HTTPS-based protocol, Simple Object Access Protocol (SOAP) and others. EDI data elements include items such as sender ID and receiver ID. Data segments combine two or more related elements to give them greater meaning. For example, FNAME and LNAME can combine to form CUSTOMERNAME. Envelopes structure different types of data and carry the sender and receiver address information. EDI document flow or message flow describes the movement of EDI messages to various inbound and outbound addresses and departments to execute a business process or transaction.²
There are three steps in the process of sending the EDI documents,
- Document preparation
- EDI document translation
- Connect & Transmit EDI documents
We will consider a real-time scenario to Illustrate the EDI process for purchase orders and invoices.
Step 1: Document preparation
Following the example of a PO and invoice, this is where a buyer prepares an order in a purchasing system.
- The buyer collects and organizes the data so it will work with EDI
- For example, instead of printing a PO, the system creates an electronic file with the necessary information to build an EDI document
So how would you properly prepare documents? There are several approaches, including:
- Exporting computer-based data from spreadsheets or databases
- Reformatted electronic reports into data files
- Enhancing apps to create output files ready for EDI standard translation
- Purchasing EDI software that can turn documents from your systems into EDI files
- Human data entry
Ideally, you would want your system to eliminate as much human data entry as possible to save time and improve accuracy.
Step 2: EDI Document Translation
The next step is to feed your document through EDI translation software to convert your internal data format into the EDI standard format using the appropriate segments and data elements. Alternatively, you can send your data to an EDI service provider, who handles translation to and from the EDI format on your behalf.
In our example, the PO is translated into an EDI 850 purchase order document.
Step 3: Connect & Transmit EDI Documents
Once the PO is translated to the EDI 850 purchase order format, it's ready for transmission to the supplier. There are several ways to connect to a partner via EDI. The most common of include:
- Direct, point-to-point EDI connection via a secure Internet protocol, such as AS2
- Connect to an EDI network provider, also referred to as a Value Added Network (VAN) provider
- A combination of both Direct EDI and VAN, depending on the partners involved and the transaction volume
In the case of an EDI network provider, or value-added network (VAN), the buyer uses their preferred communications protocol, ensuring reliable, secure EDI transmission. Then, the network provider connects to the supplier using the supplier's preferred communications protocol, ensuring the supplier receives the order. VANs can reduce setup and maintenance in some cases but tend to be more expensive than point-to-point integration for many use cases, as they charge a fee for each transaction or even line item.
EDI allows companies to easily adapt document transfers based upon the specific requirements of each retailer or supplier, like unique pricing structures or ship-to-ship address requirements. Depending on the configurations used, the entire process can be electronic. By eliminating the reliance on paper, businesses can reduce to cost of transactions by more than 50%.
60 Benefits of EDI
- Documents flow into and out of your business system without any human interaction.
- No delays between your customer sending an order and you receiving it
- Reduce manual effort
- Eliminate manual data entry errors
- Improve cash flow
- Achieve seamless translation, converting business system documents into documents that are global standards compliant.
- Mappings and translation are managed by EDI system, so there is no software to install or maintain.
- Exceed your trading partner’s needs with documents that are formatted to meet their specific business requirements.
- Connect directly with your trading partners using protocols such as AS2 or sFTP.
- Management capabilities for hundreds of trading partners
- MH10 shipping labels
- Access to a dedicated, experienced and knowledgeable service team
- Proactive notification email alerts
- Business rule validations
- Duplicate checking
- Reports for all inbound transactions
- Retrievable archive
- Document import and export to enable partial integration
- Purchase Orders (850)
- Invoices (810) and Credits (812)
- Advanced Ship Notices - ASNs (856)
- Remittance Advices (820)
- Text Messages (864)
- Purchase Order Changes (860) and Acknowledgements (855)
- Planning Schedules (830)
- Functional Acknowledgements (997)
- EDI can speed up business cycles by 61 percent
- EDI enables transactions in minutes instead of days or weeks spent on postal mail or back-and-forth email communications
- Automating paper-based tasks frees up your staff for higher-value tasks and provides them the tools to be more productive
- Quick processing of accurate business documents leads to fewer re-worked orders, stock outs and cancellations
- Automating application data exchange across a supply chain ensures critical data is sent on time and tracked in real time
- Shortening order processing and delivery helps organizations reduce inventory
- EDI reduces the transaction costs of paper, printing, reproduction, storage, filing, postage and document retrieval, saving businesses more than 35 percent on transaction costs
- For buyers that handle numerous transactions, using EDI can also result in millions of dollars of annual savings due to early payment discounts
- In some cases, EDI is just 1/20th the cost of manual order processing, slashing costs by a factor of 20
- EDI also eliminates costly errors due to illegible faxes, lost orders or incorrectly taken phone orders
- EDI reduces error transactions by 30-40 percent
- EDI eliminates human errors from illegible handwriting, lost mail and keying errors
- Sellers benefit from improved cash flow and reduced order-to-cash cycles
- In fact, EDI can reduce the order-to-cash cycle time by more than 20%, improving business partner transactions and relationships
- Reducing errors also saves partners valuable time and frustration handling data disputes
- EDI provides real-time visibility into transaction status, enabling faster decision-making and better responsiveness to customer and market demands, helping businesses adopt a demand-driven approach
- Product enhancements and delivery enjoy shorter lead times
- Streamlines the process of entering new territories, as EDI provides a common worldwide business language
- EDI promotes sustainability and reduces CO2 emissions by replacing paper-based processes with electronic alternatives
- EDI increases operational efficiencies, leading to fewer errors and less energy waste
- EDI Implementation Results in Significant Cost Savings
- EDI Increases Business Efficiency
- EDI Supports the Development of Business Strategies
- EDI Assists Businesses in Reducing CO2 Emissions
- EDI Enhances Transactional Security
- EDI integration improves traceability and reporting
- EDI automation supports positive customer experiencesby enabling efficient transaction execution and prompt, reliable product and service delivery
- Great accuracy by eliminating data entry errors.
- Less network complexity
- Reduce lead times and inventory levels
- Improve supplier relationships
- Position yourself for success by automating your processes and improve business efficiency
- EDI enhance speed and establishes security
- EDI ensures order accuracy and elevates strategic decisions
What are the costs of doing EDI?
Here are the hard and soft costs to consider before consider buying a EDI solution
EDI Hard Costs
Hard EDI costs, which have an immediate impact to your bottom line, can come in the form of compliance charges if the problem you’re having means your outbound documents aren’t meeting your trading partners’ requirements. Often charged per document, these can add up quickly if the problem is a systemic one that isn’t caught, and the mapping process that translates data from your ERP, Accounting or other business system into the EDI document that is sent is not corrected. Seemingly one-off problems can be easily caught by a conformance checking process, if that’s something your EDI system enables.
Other hard costs can arise as a result of either missed orders that get lost in ‘the cloud’, or invoices that are never delivered to your customers. Missed orders may not only mean that you miss out on that specific revenue, but can also aggressively sour your customer relationship, which in turn can contribute to declining sales. Invoices that don’t make it to your customers on time can have a serious impact on your cash flow, as payments become delayed.
EDI Soft Costs
Soft EDI costs are those that you don’t see on your monthly expense reports, but chew up your resources, distracting them from contributing to your business growth. These costs result from problems that take employee time to identify, work around, and/or resolve, such as performing track-and-trace with your provider or VAN, manually matching functional acknowledgments (aka 997s), and manual steps involved in ‘doing EDI’ if your system isn’t fully automated. These issues are tedious and time-consuming for employees, meaning that energy is misallocated here opposed to being spent on building customer relationships, processing orders and other functions that ultimately helps the business thrive.
Evaluating the EDI cost (electronic data interchange) for implementation will be determined by the type of solution you choose for EDI in order to ensure that it will deliver real financial and business benefits to your company.
When choosing an EDI provider it is important to understand what your contract covers and what your future EDI costs are likely to be. Your organization can either decide to take an in-house approach or work with a third-party EDI provider for an outsourced solution.
Calculating the cost of EDI implementation is vital in determining the real financial and business benefits for your organization.
List of key considerations that we recommend thinking about in terms of EDI costs,
- Are there any costs associated with software or hardware
- What internal resources required
- How are the EDI costs billed
- Are the EDI costs fixed or variable
In-House EDI Solution
Things to consider before investing in building your own in-house EDI solution,
- IT infrastructure hosted internally or externally. Ask yourself where will your data be stored and accessed from?
- An IT person or service to manage ongoing upgrades, support and technical maintenance.
- Integration to back-office systems or ERP. This includes time and investment for seamless integration and rules and alerts for your most valuable documents.
- EDI software for mapping and translation; this should be purchased from an EDI software provider.
- Types of communication methods.
- EDI roles, such as an EDI analyst or EDI specialist. Understand that this may be noticeable if your organization is required to add a role.
Third Party EDI Providers
Switching to a 3rd party EDI provider can save you a great deal of time, internal resources and implementation costs.
EDI providers can offer a wide range of pricing models such as
- Pay as you go
- Annual Subscription
When going with 3rd party provider you also need to consider some key additional business factors,
- Take into account the total number of trading partners who are compliant and network-ready.
- Does the provider cover the range of locations you operate within? ANSI X12 standards are used within North America while EDIFACT is used globally. Most providers can support both methods of communication on a large scale.
- What level of training and support will be provided to your organization and your trading partners? For the highest quality of support and training, seek organizations that offer EDI courses and in-house support.
- Consider the variety of options the provider can offer you and you’re trading partners to exchange different versions of documents or communication methods.
- Will your data set be hosted by the EDI provider or hosted internally within your organization?
- Will the EDI provider give you access to the rules and reporting you want to be integrated with your back-end systems?
- Does the provider have cost-per-transaction fees or any underlying fees that need to be understood?
Often these models operate within price bands based on anticipated volumes of KCs or documents. You should also be aware of hidden charges such as minimum record lengths. Some providers specify a record length of 128 to 512 characters. The result is that if you were to send 10 documents of 10 characters you would be charged for up to 5120 characters for sending only 100. If you have a large volume of small transactions this can add a substantial amount to your monthly charge. It is important that you understand the volume and nature of your business transactions before selecting a provider. That way you can select the pricing model that best meets your business needs. And, look carefully at the small print of any provider that claims to offer a “free” EDI VAN service, as it is unlikely to be the case.
Your other option is to completely outsource the entire EDI operations to a 3rd party provider.
EDI outsourcing is also suitable if you have implemented a fully integrated EDI compliant system but still have partners who want to send you faxes. Managed EDI Service Bureau can be your clearinghouse for fax automation. We can process all of your paper-based documents and generate their electronic equivalents in the format of your preference for electronic integration.
By outsourcing your EDI to 3rd party providers like Commport Communications you set yourself free to focus on your business and what you do best. EDI outsourcing means that you will not need to make any investment in EDI software, nor will you have to directly manage the EDI aspect of your relationship with your customer, including large retail clients.
EDI Implementation – Setup and Compliance
For some enterprises, EDI can be difficult to implement. One reason is the need to keep pace with shifting government regulations, standards and updates. It is also inherently complex, as it needs to accommodate the complexities of global business needs. For example, each trading partner in a B2B network can present individual requirements.
To Achieving EDI compliance we need three things,
- Setting up the right EDI infrastructure
- Align your EDI setup with your trading partner EDI systems
- Adhering to Common EDI standards
We need following key components to setup the EDI infrastructure,
- EDI software for communications
- Mail boxing of EDI transactions
- EDI mapping and EDI translations
- Internet communications, VAN etc. as required by various partners
- Hardware requirements: a server or PC, communication device and peripherals
- Secured office space and monitored security.
- Data backups and redundant power for reliability
- Software for any integration of EDI transactions with back office systems
- Maps for each EDI document type exchanged with each partner to map EDI records into useable business documents
In addition, you'll need to train your team in how to use your EDI software and communication devices or select an EDI integration partner to set it all up and train your team.
Aligning with Your Partners
Your EDI is only as valuable as your integrations with your partners' systems. Big keys include:
- Determining which EDI protocols you'll use to send and receive EDI documents (e.g. AS2, SFTP, etc.) - See our guide to the types of EDI protocols
- Selecting and implementing exchanges for the correct EDI documents, or transactions (e.g. 850 purchase orders) - See our exhaustive EDI transactions library
- Nailing down the use cases when you'd send and receive each EDI document
- Tying EDI into your other operational, logistics or 3PL, accounting and order fulfillment systems - you may want solutions that help with broader process implementations
- Properly integrating EDI mapping, translation and testing with your partners
Depending on your setup, this can include mutually selecting EDI solutions and EDI integration providers.
Adhering to Common EDI standards
Common, certified standards are,
- American National Standards Institute (ANSI) - certifies the X12 EDI standard used in the U.S.
- UN/CEFACT- certifies the popular international EDIFACT standard
- GS1- certifies several industry-specific international EDI standards (built on EDIFACT)
- Drummond- certifies EDI software through rigorous interoperability testing, ensuring that different EDI tools can successfully communicate with each other
What is EDI Document?
An EDI document is comprised of three core pieces: envelopes, segments and data elements, formatted to follow a specific EDI standard.
EDI Envelopes for Transmission
EDI document transmission uses a system of three envelopes to house transaction sets:
- Message envelope
- Group envelope
- Interchange envelope
A segment in an EDI transaction set is a group of like data elements.
The data elements in an EDI transaction set are the individual data in the document, such as the item being purchased, quantity of items purchased, etc.
EDI Document Types and Transaction Codes?
In this chapter, we will be explaining ' EDI X12 Document Types'
We will also cover details of each document EDI transaction type and its use cases for different industries
Companies and trading partners exchange these documents using EDI standards
Lets get started,
EDI X12 (Electronic Data Interchange) is data format based on ASC X12 standards. It is used to exchange specific data between two or more trading partners.
EDI transactions are standardized electronic business documents used by trading partners to send and receive business information, such as when one company wants to electronically send a purchase order to another organization.
EDI transactions were designed to be standardized and are independent of the communications used by companies or the software technology that sends and receives the EDI data.
Companies and trading partners exchange these documents using EDI standards to automate and streamline purchase orders, invoices, acknowledgments, payments, tracking, and other reports.
Any EDI transaction document must contain a certain minimum amount of vital data. Without these EDI compliance requirements, an EDI document becomes useless. Adhering to strict EDI
Feed formatting rules helps define precisely how and where each part of data on the document will be found and used. Each document is assigned one of the dozens of transaction numbers from the EDI public format.
EDI Transactions Document Types – List of EDI Codes
EDI Codes: Transportation and Logistics
EDI 104: Air Shipment Information
EDI 106: Motor Carrier Rate Proposal
EDI 107: Request for Motor Carrier Rate Proposal
EDI 108: Response to a Motor Carrier Rate Proposal
EDI 109: Vessel Content Details
EDI 110: Air Freight Details and Invoice
EDI 120: Vehicle Shipping Order
EDI 121: Vehicle Service
EDI 125: Multilevel Railcar Load Details
EDI 126: Vehicle Application Advice
EDI 127: Vehicle Baying Order
EDI 128: Dealer Information
EDI 129: Vehicle Carrier Rate Update
EDI 160: Transportation Automatic Equipment Identification
EDI 161: Train Sheet
EDI 163: Transportation Appointment Schedule Information
EDI 204: Motor Carrier Load Tender
EDI 210: Motor Carrier Freight Details and Invoice
EDI 211: Motor Carrier Bill of Lading
EDI 212: Motor Carrier Delivery Trailer Manifest
EDI 213: Motor Carrier Shipment Status Inquiry
EDI 214: Transportation Carrier Ship. Status Message
EDI 215: Motor Carrier Pick-up Manifest
EDI 216: Motor Carrier Shipment Pick-up Notification
EDI 217: Motor Carrier Loading and Route Guide
EDI 219: Logistics Service Request
EDI 220: Logistics Service Response
EDI 222: Cartage Work Assignment
EDI 223: Consolidators Freight Bill and Invoice
EDI 224: Motor Carrier Summary Freight Bill Manifest
EDI 225: Response to a Cartage Work Assignment
EDI 227: Trailer Usage Report
EDI 228: Equipment Inspection Report
EDI 240: Motor Carrier Package Status
EDI 250: Purchase Order Shipment Management Document
EDI 300: Reservation (Booking Request) (Ocean)
EDI 301: Confirmation (Ocean)
EDI 303: Booking Cancellation (Ocean)
EDI 304: Shipping Instructions
EDI 309: Customs Manifest
EDI 310: Freight Receipt and Invoice (Ocean)
EDI 311: Canada Customs Information
EDI 312: Arrival Notice (Ocean)
EDI 313: Shipment Status Inquiry (Ocean)
EDI 315: Status Details (Ocean)
EDI 317: Delivery/Pickup Order
EDI 319: Terminal Information
EDI 322: Terminal Operations and Intermodal Ramp Activity
EDI 323: Vessel Schedule and Itinerary (Ocean)
EDI 324: Vessel Stow Plan (Ocean)
EDI 325: Consolidation of Goods in Container
EDI 326: Consignment Summary List
EDI 350: Customs Status Information
EDI 352: U.S. Customs Carrier General Order Status
EDI 353: Customs Events Advisory Details
EDI 354: U.S. Customs Auto. Manifest Archive Status
EDI 355: U.S. Customs Acceptance/Rejection
EDI 356: U.S. Customs Permit to Transfer Request
EDI 357: U.S. Customs In-Bond Information
EDI 358: Customs Consist Information
EDI 359: Customs Customer Profile Management
EDI 361: Carrier Interchange Agreement (Ocean)
EDI 404: Rail Carrier Shipment Information
EDI 410: Rail Carrier Freight Details and Invoice
EDI 412: Trailer or Container Repair Billing
EDI 414: Rail Carhire Settlements
EDI 417: Rail Carrier Waybill Interchange
EDI 418: Rail Advance Interchange Consist
EDI 419: Advance Car Disposition
EDI 420: Car Handling Information
EDI 421: Estimated Time of Arrival & Car Scheduling
EDI 422: Equipment Order
EDI 423: Rail Industrial Switch List
EDI 424: Rail Carrier Services Settlement
EDI 425: Rail Waybill Request
EDI 426: Rail Revenue Waybill
EDI 429: Railroad Retirement Activity
EDI 431: Railroad Station Master File
EDI 432: Rail Deprescription
EDI 433: Railroad Reciprocal Switch File
EDI 434: Railroad Mark Register Update Activity
EDI 435: Standard Transportation Commodity Code Master
EDI 436: Locomotive Information
EDI 437: Railroad Junctions & Interchanges Activity
EDI 440: Shipment Weights
EDI 451: Railroad Event Report
EDI 452: Railroad Problem Log Inquiry or Advice
EDI 453: Railroad Service Commitment Advice
EDI 455: Railroad Parameter Trace Registration
EDI 456: Railroad Equipment Inquiry or Advice
EDI 460: Railroad Price Distribution Request or Response
EDI 463: Rail Rate Reply
EDI 466: Rate Request
EDI 468: Rate Docket Journal Log
EDI 470: Railroad Clearance
EDI 475: Rail Route File Maintenance
EDI 485: Ratemaking Action
EDI 486: Rate Docket Expiration
EDI 490: Rate Group Definition
EDI 492: Miscellaneous Rates
EDI 494: Rail Scale Rates
EDI 601: U.S. Customs Export Shipment Information
EDI 603: Transportation Equipment Registration
EDI 715: Intermodal Group Loading Plan
EDI 854: Shipment Delivery Discrepancy Info.
EDI 858: Shipment Information
EDI 859: Freight Invoice
EDI 920: Loss or Damage Claim: Gen. Commodities
EDI 924: Loss or Damage Claim: Motor Vehicle
EDI 925: Claim Tracer
EDI 926: Claim Status Report and Tracer Reply
EDI 928: Automotive Inspection Detail
EDI 980: Functional Group Totals
EDI 990: Response to a Load Tender
EDI 998: Set Cancellation
EDI Codes: Manufacturing and Retail
EDI 101: Name and Address Lists
EDI 140: Product Registration
EDI 141: Product Service Claim Response
EDI 142: Product Service Claim
EDI 143: Product Service Notification
EDI 159: Motion Picture Booking Confirmation
EDI 170: Revenue Receipts Statement
EDI 180: Return Merchandise Authorization & Notification
EDI 244: Product Source Information
EDI 290: Cooperative Advertising Agreements
EDI 503: Pricing History
EDI 504: Clauses and Provisions
EDI 620: Excavation Communication
EDI 625: Well Information
EDI 753: Request For Routing Instructions
EDI 754: Routing Instructions
EDI 816: Organizational Relationships
EDI 818: Commission Sales Report
EDI 830: Planning Schedule w/ Release Capability
EDI 832: Price/Sales Catalog
EDI 840: Request for Quotation
EDI 841: Specifications/Technical Information
EDI 842: Nonconformance Report
EDI 843: Response to Request for Quotation
EDI 845: Price Authorization Acknowledgment/Status
EDI 846: Inventory Inquiry/Advice
EDI 847: Material Claim
EDI 848: Material Safety Data Sheet
EDI 850: Purchase Order
EDI 851: Asset Schedule
EDI 852: Product Activity Data
EDI 853: Routing and Carrier Instruction
EDI 855: Purchase Order Acknowledgment
EDI 856: Ship Notice/Manifest
EDI 857: Shipment and Billing Notice
EDI 860: Purchase Order Change Request: Buyer Initiated
EDI 861: Receiving Advice/Acceptance Certificate
EDI 862: Shipping Schedule
EDI 863: Report of Test Results
EDI 865: Purchase Order Change Acknowledgment/Request: Seller Initiated
EDI 866: Production Sequence
EDI 867: Product Transfer and Resale Report
EDI 869: Order Status Inquiry
EDI 870: Order Status Report
EDI 873: Commodity Movement Services
EDI 874: Commodity Movement Services Response
EDI 875: Grocery Products Purchase Order
EDI 876: Grocery Products Purchase Order Change
EDI 877: Manufacturer Coupon Family Code Structure
EDI 878: Product Authorization/De-authorization
EDI 879: Price Information
EDI 881: Manufacturer Coupon Redemption Detail
EDI 882: Direct Store Delivery Summary Information
EDI 883: Market Development Fund Allocation
EDI 884: Market Development Fund Settlement
EDI 885: Retail Account Characteristics
EDI 886: Customer Call Reporting
EDI 887: Coupon Notification
EDI 888: Item Maintenance
EDI 889: Promotion Announcement
EDI 890: Contract & Rebate Management
EDI 891: Deduction Research Report
EDI 893: Item Information Request
EDI 894: Delivery/Return Base Record
EDI 895: Delivery/Return Acknowledgment or Adjustment
EDI 896: Product Dimension Maintenance
EDI 940: Warehouse Shipping Order
EDI 943: Warehouse Stock Transfer Shipment Advice
EDI 944: Warehouse Stock Transfer Receipt Advice
EDI 945: Warehouse Shipping Advice
EDI 947: Warehouse Inventory Adjustment Advice
EDI Codes: Finance and Mortgage series (MOR)
EDI 197: Real Estate Title Evidence
EDI 198: Loan Verification Information
EDI 199: Real Estate Settlement Information
EDI 200: Mortgage Credit Report
EDI 201: Residential Loan Application
EDI 202: Secondary Mortgage Market Loan Delivery
EDI 203: Secondary Mortgage Market Investor Report
EDI 205: Mortgage Note
EDI 206: Real Estate Inspection
EDI 245: Real Estate Tax Service Response
EDI 248: Account Assignment/Inquiry & Service/Status
EDI 259: Residential Mortgage Insurance Explanation of Benefits
EDI 260: Application for Mortgage Insurance Benefits
EDI 261: Real Estate Information Request
EDI 262: Real Estate Information Report
EDI 263: Residential Mortgage Insurance Application Response
EDI 264: Mortgage Loan Default Status
EDI 265: Real Estate Title Insurance Services Order
EDI 266: Mortgage or Property Record Change Notification
EDI 810: Invoice
EDI 811: Consolidated Service Invoice/Statement
EDI 812: Credit/Debit Adjustment
EDI 814: General Request, Response, or Confirmation
EDI 819: Joint Interest Billing and Operating Expense Statement
EDI 820: Payment Order/Remittance Advice
EDI 821: Financial Information Reporting
EDI 822: Account Analysis
EDI 823: Lockbox
EDI 824: Application Advice
EDI 827: Financial Return Notice
EDI 828: Debit Authorization
EDI 829: Payment Cancellation Request
EDI 831: Application Control Totals
EDI 833: Mortgage Credit Report Order
EDI 844: Product Transfer Account Adjustment
EDI 849: Response to Product Transfer Account Adjustment
EDI 872: Residential Mortgage Insurance Application
EDI 880: Grocery Products Invoice
EDI Codes: Student Information Series (STU)
EDI 130: Student Educational Record (Transcript)
EDI 131: Student Educational Record (Transcript) Acknowledgment
EDI 132: Human Resource Information
EDI 133: Educational Institution Record
EDI 135: Student Aid Origination Record
EDI 139: Student Loan Guarantee Result
EDI 144: Student Loan Transfer and Status Verification
EDI 146: Request for Student Educational Record (Transcript)
EDI 147: Response to Request for Student Educational Record (Transcript)
EDI 155: Business Credit Report
EDI 188: Educational Course Inventory
EDI 189: Application for Admission to Educational Institutions
EDI 190: Student Enrollment Verification
EDI 191: Student Loan Pre-Claims and Claims EDI 194: Grant or Assistance Application
EDI Codes: Communications and Controls
EDI 102: Associated Data
EDI 242: Data Status Tracking
EDI 815: Cryptographic Service Message
EDI 864: Text Message
EDI 868: Electronic Form Structure
EDI 993: Secured Receipt or Acknowledgment
EDI 997: Functional Acknowledgment
EDI 999: Implementation Acknowledgment
EDI Codes: Healthcare and Insurance
EDI 100: Insurance Plan Description
EDI 111: Individual Insurance Policy & Client Info.
EDI 112: Property Damage Report
EDI 124: Vehicle Damage
EDI 148: Report of Injury, Illness, or Incident
EDI 186: Insurance Underwriting Requirements Reporting
EDI 187: Premium Audit Request and Return
EDI 252: Insurance Producer Administration
EDI 255: Underwriting Information Services
EDI 256: Periodic Compensation
EDI 267: Individual Life Annuity & Disability Application
EDI 268: Annuity Activity
EDI 269: Health Care Benefit Coordination Verification
EDI 270: Eligibility, Coverage or Benefit Inquiry
EDI 271: Eligibility, Coverage or Benefit Information
EDI 272: Property and Casualty Loss Notification
EDI 273: Insurance/Annuity Application Status
EDI 274: Health Care Provider Information
EDI 275: Patient Information
EDI 276: Health Care Claim Status Request
EDI 277: Health Care Information Status Notification
EDI 278: Health Care Services Review Information
EDI 362: Cargo Insurance Advice of Shipment
EDI 834: Benefits Enrollment and Maintenance
EDI 835: Health Care Claim Payment/Advice
EDI 837: Health Care Claim
EDI Codes: Government
EDI 103: Abandoned Property Filings
EDI 105: Business Entity Filings
EDI 113: Election Campaign & Lobbyist Reporting
EDI 149: Notice of Tax Adjustment or Assessment
EDI 150: Tax Rate Notification
EDI 151: Electronic Filing of Tax Return Data Acknowledgment
EDI 152: Statistical Government Information
EDI 153: Unemployment Insurance Tax Claim or Charge Information
EDI 154: Secured Interest Filing
EDI 157: Notice of Power of Attorney
EDI 158: Tax Jurisdiction Sourcing
EDI 175: Court and Law Enforcement Notice
EDI 176: Court Submission
EDI 179: Environmental Compliance Reporting
EDI 185: Royalty Regulatory Report
EDI 194: Grant or Assistance Application
EDI 195: Federal Communications Commission (FCC) License Application
EDI 196: Contractor Cost Data Reporting
EDI 249: Animal Toxicological Data
EDI 251: Pricing Support
EDI 280: Voter Registration Information
EDI 283: Tax or Fee Exemption Certification
EDI 284: Commercial Vehicle Safety Reports
EDI 285: Commercial Vehicle Safety and Credentials Information Exchange
EDI 286: Commercial Vehicle Credentials
EDI 288: Wage Determination
EDI 500: Medical Event Reporting
EDI 501: Vendor Performance Review
EDI 511: Requisition
EDI 517: Material Obligation Validation
EDI 521: Income or Asset Offset
EDI 527: Material Due-In and Receipt
EDI 536: Logistics Reassignment
EDI 540: Notice of Employment Status
EDI 561: Contract Abstract
EDI 567: Contract Completion Status
EDI 568: Contract Payment Management Report
EDI 650: Maintenance Service Order
EDI 805: Contract Pricing Proposal
EDI 806: Project Schedule Reporting
EDI 813: Electronic Filing of Tax Return Data
EDI 826: Tax Information Exchange
EDI 836: Procurement Notices
EDI 838: Trading Partner Profile
EDI 839: Project Cost Reporting
EDI 996: File Transfer
EDI Communication Standards
In this chapter, we will be explaining the importance of the 'EDI Communication Standards'
10 common EDI communication standards used
Importance of each communication standards
Lets get started,
EDI communication standards are the requirements for the format and composition of EDI documents. EDI standards delineate the correct order and location of units of data in a given EDI document.
EDI standards began to emerge in the mid-1980s, and were purposely designed to be entirely separate (not dependent upon) changes in communication and software technologies
Because EDI documents must be processed by computers rather than humans, a standard format must be used so that the computer will be able to read and understand the documents.
10 Common EDI Communication Standards
- ANSI ASC X12
ANSI ASC X12
In 1979, the American National Standards Institute (ANSI) chartered the Accredited Standards Committee (ASC) X12 to develop uniform standards for inter-industry electronic exchange of business transactions, namely electronic data interchange. ANSI X12 was originally conceived to support companies across different industry sectors in North America however today there are more than 300,000 companies’ worldwide using X12 EDI standards in daily business transactions. ASC X12 also contributes to UN/EDIFACT messages that are used widely outside of the United States.
ANSI (American National Standards) ASC (Accredited Standards Committee) X12 goes by more than one pseudonym. This standard is also sometimes called ANSI X12 Standard or just simply X12. But regardless of the terminology, ANSI ASC X12 includes EDI standards used to communicate digital B2B transactions for various global business processes. EDI X12 standards allow consistency among business documents and other kinds of enterprise functionality.
There are more than 300 different types of X12 EDI standards, all delegated by a different three-digit number, for numerous industries such as finance, government, health care, insurance, transportation, and others. ANSI ASC X12 also develops standards for CICA (Context Inspired Component Architecture) and XML schemas.
This is an early standard for EDI and was primarily used in the UK retail sector. It was originally introduced in 1982 as an implementation of the UN/GTDI syntax, one of the precursors of EDIFACT, and was maintained and extended by the UK Article Numbering Association, now called GS1 UK. The standard is more or less obsolescent since the development of it effectively ceased in 1995 in favor of the EDIFACT EANCOM subsets. Despite this it has proved durable and the majority of the retail EDI traffic in the UK still uses it today.
TRADACOMS (TRAding DAA COMmunicationS) is the primary EDI standard for domestic trading in the United Kingdom, specifically the UK retail industry. While somewhat similar to the EDIFACT standard, TRADACOMS uses multi messages instead of relying on a format of single messaging. TRADACOMS communication is comprised of 26 messages structured in a hierarchy.
Each TRADACOMS message, much like EDIFACT, is given a six-letter application reference. For example, an invoice message is INVFIL, a payment order is PAYORD, a utility bill is UTLHDR, and so on.
United Nations/Electronic Data Interchange for Administration, Commerce and Transport is the international standard that was developed by the United Nations. The work of maintenance and further development of this standard is done through the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT) under the UN Economic Commission for Europe. The EDIFACT standard provides a set of syntax rules to structure, an interactive exchange protocol and provides a set of standard messages which allow multi-country and multi-industry exchange of electronic business documents. EDIFACT is widely used across Europe, mainly due to the fact that many companies adopted it very early on. EDIFACT has seen some adoption in the ASPAC region, however, there are currently more XML-based standards being used in this particular region today.
UN/EDIFACT, which is short for United Nations rules for Electronic Data Interchange for Administration, Commerce, and Transport, is a set of internationally standardized communication guidelines for exchanged data tags and message types between computer systems in different networks. UN/EDIFACT standards structure data into segments, segments into messages, and messages into an interactive exchange protocol.
The syntax rules for EDIFACT describe the message (nesting, character sets, structures, etc.) The data tags detail the different types of data being exchanged and how each is represented. The message types are also known as UNSMs (United Nations Standard Messages).
ODETTE stands for Organization of Data Exchange by Tele Transmission in Europe and creates data exchange and communications standards for the European automotive industry. It is similar to North America’s AIAG (Automotive Industry Action Group). ODETTE develops protocols such as OFTP and the more advanced OFTP2, which provides enhanced security through encryption methods and digital certificates for EDI data exchange.
Deploying B2B and MFT (managed file transfer) solutions that are ODETTE-certified for OFTP and OFTP2 allows a company to securely and efficiently communicate with various software to successfully exchange data.
The Organization for Data Exchange by Tele Transmission in Europe is a group that represents the interests of the automotive industry in Europe. They are the equivalent of the Automotive Industry Action Group (AIAG) in North America. The organization develops tools and recommendations that improve the flow of goods, services product data and business information across the whole automotive value chain. ODETTE has been responsible for developing communications standards such as OFTP and OFTP2.0, constant improvement processes such as Materials Management Operations Guideline / Logistics Evaluation (MMOG/LE) and automotive-specific document standards as defined via the link below.
This standard was originally conceived in 1987 by the EAN General Assembly and was to be developed on the then emerging international UN/EDIFACT standard. The EANCOM messages, maintained by GS1, are more detailed in nature compared to the TRADACOMS message set. EANCOM was originally developed for the retail sector and has subsequently grown to become the most widely used UN/EDIFACT subset and is now found in a variety of other industry sectors such as healthcare, construction and publishing.
EANCOM provides a logical sequence of messages used in business. Trading companies agree together on messages adapted to their needs. Standard messages available in EANCOM can be divided into the following categories, Master Data, Commercial Transactions, Report & Planning and Transporter.
The Voluntary Inter-industry Commerce Standard is used by the general merchandise retail industry across North America. It is a subset of the ANSI ASC X12 national standard. VICS EDI is being utilized by thousands of companies, department and specialty retail stores, mass merchandisers and their respective suppliers. In 1988 GS1 US became the management and administrative body for VICS EDI. GS1 US also manages the ASC X12 derived Uniform Communication Standard (UCS) for the grocery industry and Industrial/Commercial Standard (I/C) for the industrial sector.
This organization develops standards and best practices to serve the needs of companies within the German automotive industry. The VDA has developed over thirty messages to meet the need of companies such as VW, Audi, Bosch, Continental and Daimler AG. Further information about these messages can be found via the link below.
VDA develops standards and best practices to serve the needs of companies within the German automotive industry. The VDA has developed over thirty messages to meet the need of companies such as VW, Audi, Bosch, Continental and Daimler AG.
The Health Insurance Portability and Accountability Act was enacted by the U.S congress in 1996. A key component of HIPAA is the establishment of national standards for electronic health care transactions and national identifiers for providers, health insurance plans and employers. The standards are meant to improve the efficiency and effectiveness of the North American health care system by encouraging the widespread use of EDI in the U.S health care system. The HIPAA EDI transaction sets are based on X12 and the key message types are described below.
This consists of a consortium of major computer, consumer electronics, semi-conductor manufacturers, telecommunications and logistics companies working together to create and implement industry-wide, open e-business process standards. These standards form a common e-business language, aligning processes between supply chain partners on a global basis. The RosettaNet document standard is based on XML and defines message guidelines, business processes interface and implementation frameworks for interactions between companies. Using RosettaNet Partner Interface Processes (PIPs), business partners of all sizes can connect electronically to process transactions and move information within their extended supply chains. Further information about RosettaNet PIP documents can be found from the link below.
The Society of Worldwide Interbank Financial Telecommunication was formed in 1973 and is headquartered in Brussels. SWIFT operates a worldwide financial messaging network which exchanges messages between banks and financial institutions. SWIFT also markets software and services to financial institutions, much of it for use on the SWIFTNet Network. SWIFTNet is the infrastructure used to exchange these documents and FIN, InterAct and FileAct are used to encode the SWIFT documents for transmission. The majority of interbank messages use the SWIFT network. As of November 2008, SWIFT linked 8740 financial institutions across 209 countries. The SWIFT document standard is split into four areas, Payments, Trade Services, Securities and Trading.
The Future of EDI
In this chapter, we will be exploring the future technologies thats going to transform the EDI industry
In future supply chains, EDI will be the core document exchange capability to support innovations such as the Internet of Things (IoT), blockchain and artificial intelligence
Lets get in to the future,
In future supply chains, EDI will be the core document exchange capability to support innovations such as the Internet of Things (IoT), blockchain and artificial intelligence. Future EDI will use:
IOT (internet of Things)
IoT sensors incorporated into a shipment’s packaging and tied to periodic EDI 214 messages to improve package condition visibility in near real time.
Blockchain and EDI
Blockchain technology underpinning EDI information flows for shipments to offer a shared version of the truth that can quickly resolve and even avoid chargeback disputes.
Blockchain is a ledger-based technology that records changes relating to anything of value (e.g. goods or currency). Once created, each block is essentially a read-only record of a change. This created, blocks then can’t be tampered with. Thus system ensures data accuracy whilst enabling maximum visibility for all parties.
So how exactly blockchain is going to change the EDI and supply chain data exchange? As the blockchain technology continue to evolve many business will move away from traditional one to one communication towards a more collaborative approach in search of faster, more reliable B2B communication and increased data visibility.
Even if EDI is done via blockchain moving forward, the need for integration between information in the blockchain and the ERP systems will remain. So, therefore, will the need for EDI.
Both EDI and Blockchain will paly a significant role in B2B interactions in the near future. Rather than merging, they will work in parallel with one another, to solve different problems.
An AI agent that monitors all relevant events and information connected to a shipment and can identify a non-compliant event. AI agents can also determine if a reshipment is required, analyze the most efficient source of replacement, initiate a new shipment and accept an authorized return.
Cloud technologies is another big trend in EDI, as many companies are adopting to cloud based applications because of ease of use, affordability, no additional software needs to be installed and no prior EDI knowledge is required to use the cloud based system. Also cloud solutions can provide high degree of security compared to other EDI solutions.
EDI and API
EDI and API Integration to support partners by adding API's to your EDI setup which allows your business partners more opportunities to validate information through APIs, you can help them avoid common EDI transaction errors. API's can also improve the quality of your own EDI processing by adding additional information to your incoming or outgoing transactions during processing.
EDI helps in exchange of information between business, in which standard business documents such as orders, delivery notes or invoices are exchanged electronically.
EDI communication standards needs to be applied before exchanging any documents. Which are the set of requirements for the format and the composition of EDI documents. It must be used, so that the computer will be able to read and understand the documents and delineate the correct order and the location of units of data in a given EDI document.
Many large retail chains are asking for using EDI as on of the main conditions of trade cooperation. This change is now adopted by many small to medium suppliers/business to implement a EDI solution to further scale their business growth and continue to do business with big retailers.
There are many different type s of costs associated when implementing an EDI solution into your business systems, which raises questions on what are the best possible solutions available. As discussed in this guide, there are many types of EDI solutions are available in the market among which the most affordable and easy to use solution is Internet EDI / Cloud EDI solutions which requires no software or prior EDI knowledge to use.
Overall an effective EDI solution helps reduce manual effort, eliminative human errors. improve cash flow and increase operational efficiencies.