WHAT IS ELECTRONIC DATA INTERCHANGE (EDI)?

EDI is simply exchanging business transactions such as orders, shipping notices, and invoices
directly from your computer to your trading partner’s computer. To enable each computer to
interpret the transaction data, all transactions are in specific formats utilizing standards
established by the American National Standards Institute, (ANSI).

EDI translation software is required to convert your data into the formats used by each trading
partner. Since there are several standards in use and since these can be modified by implementation
conventions adopted by each trading partner, the EDI software has to be “mapped” during implementation
to conform to the specifications being utilized.

Due to security and capacity considerations, major EDI users do not allow their many suppliers to
dial directly into their computer systems. Instead, transactions are exchanged through Value Added
networks, (VANS), which enable them to send and receive all their transactions through a single
contact point. All the major VANs are interconnected like the phone companies to enable transactions
to be exchanged between trading partners which may used different VAN services.

To establish an EDI capability requires the following:

  1. EDI translation software
  2. “Mapping” this software to trading partner specifications
  3. Subscribing to a VAN service to provide the interconnections for transmitting and receiving EDI transactions.
  4. To gain the full benefits from EDI, EDI data should flow between your EDI translation software and your application software. This eliminates duplicate key entry of data, but requires that an interface be programmed with your applications software.
  5. If your trading partner requires special bar code labels, it is usually cost effective to also have data from the EDI transaction flow to the label generation software.
  6. In many cases, trading partners will require an EDI Agreement which gives legal status to EDI transactions without signatures.
  7. Once an EDI capability is established, some maintenance capability should be in place to handle specification changes which may be implemented by trading partners and to add new EDI trading partners.
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