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October 5, 2011

What is EDI and the advantages of EDI Translation Software?

Interpreting EDI Data

EDI translation software provides the interface between internal systems and the EDI format sent/received. For an “inbound” document the EDI system will receive the file (either via a Value Added Network or directly using protocols such as FTP or AS2), take the received EDI file (commonly referred to as a “mailbag”), validate that the trading partner who is sending the file is a valid trading partner, that the structure of the file meets the EDI standards, and that the individual fields of information conforms to the agreed upon standards.

For an “outbound” transaction, the EDI process is to export a file (or read a database) from a company’s back-end ERP, transform the file to the appropriate format for the translator. The translation software will then “validate” the EDI file sent to ensure that it meets the standard agreed upon by the trading partners, convert the file into “EDI” format (adding in the appropriate identifiers and control structures) and send the file to the trading partner.

Communications Methods

There are several methods available for sending and receiving EDI transmissions. These methods include:

A VAN (value-added network) acts as a regional post office. They receive transactions, examine the ‘from’ and the ‘to’ information, and route the transaction to the final recipient.

AS2 (Applicability Statement 2) is the draft specification standard by which vendor applications communicate EDI or other business-to-business data (such as XML) over the Internet using HTTP.

The ODETTE standard used within the European automotive industry.

Other methods include FTP and HTTP via the World Wide Web.

All of these standards first appeared in the early to mid 1980s. The standards prescribe the formats, character sets, and data elements used in the exchange of business documents and forms.

Advantages of EDI

EDI systems save a company money by providing an alternative to, or replacing, information exchanges that require a great deal of human interaction and materials such as paper documents, meetings, faxes and data entry. EDI systems allow a company to take advantage of the benefits of storing and manipulating data electronically without the cost of manual entry.

Deciding if EDI is Right for your Business

The key is to determine what type and level of integration is right for your business which will directly correlate to the cost of implementation. For a business that only receives one P.O. per year from a client, fully integrated EDI may not make economic sense. In this case, businesses may implement inexpensive “rip and read” solutions or use outsourced EDI solutions provided by EDI “Service Bureaus”.

Contact Us Today to learn more about the innovative EDI software solutions from 1 EDI Source and how we can help you make your business operations more efficient.