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November 9, 2011

Electronic Data Interchange – EDI

EDI is a means of transferring data between organizations (Trading Partners) via electronic methods. It can include business documents or data files passed independent of human interaction.

It is more than email since actual purchase orders, ship notices, invoices, and payments can be passed within the relative transmission.

The Accredited Standards Committee (ASC) X12, created by the American National Standards Institute in 1979, works to develop and maintain electronic data interchange (EDI) standards and related documents for national and global markets with experts representing over 340 companies from multiple business domains, including communications, finance, government, insurance, supply chain and transportation.

A Short History of EDI

EDI initially was in its infancy when the telegraph came into use beginning in the 1840s. This usage was incorporated during the Civil War and later WWI to coordinate troop movements and supply management, later flowing into WWII which truly demanded global management of the logistical supply chain.

Unfortunately, after WWII, business data communication by electronic means was still in the telegraph age. Military development continued aggressively while business data was still exchanged via teletype, fax or telephone and then manually entered into incompatible database systems, which was indicative of a slow and tedious process with significant opportunities for error.

EDI Standards

EDI is considered to be a technical representation of a transactional exchange between businesses. EDI is also meant to supply a roadmap to the standardized format of electronic documents, helping businesses communicate utilizing similar maps or transactions to convey or receive information.

EDI documents normally contain similar information that is contained in their paper counterparts. For example an EDI 850 purchase order is used by a buying organization to notify a manufacturer to ship product to a retailer. It typically has a “ship to” address, “bill to” address, a list of product numbers (usually a UPC) and quantities. EDI is not confined to just business data related to trade but encompasses all fields such as medicine (e.g., patient records and laboratory results), transport (e.g., container and modal information), engineering and construction, etc.

There are four major sets of EDI standards:

  • The UN-recommended UN/EDIFACT is the only international standard and is predominant outside of North America.
  • The US standard ANSI ASC X12 (X12) is predominant in North America.
  • The TRADACOMS standard developed by the ANA (Article Numbering Association) is predominant in the UK retail industry.

Learn more about EDI and how it can streamline your business operations and Contact Us!