Electronic data interchange (also known as EDI) is the electronic exchange of business documents between organizations. And EDI transactions are merely the electronic format companies use to send business transactions to one another.
EDI continues to grow in popularity, with the majority of companies in the supply chain industry using electronic data interchange. Most exchanges are based on ANSI ASC X12 standards. Learn more about what EDI is.
EDI integration software can be used to connect one business partner with another. Since an EDI solution should be based on a company’s trading partners, as well as their size, importance and transaction frequency, there are many different approaches to enabling EDI transactions with your trading partners. Keep reading to learn more about the various EDI solutions available for your company.
Direct EDI, also known as point-to-point, is prominent within the retail space and is a single direct connection between two trading partners. Direct EDI has been viewed as an alternative to a wide area network (WAN).
This method offers control for the business partners and is used primarily by large companies that exchange a high volume of transactions with another partner. If you plan to utilize direct connection, you’ll need a software platform that meets your implementation communication protocol guidelines.
Common direct communication protocols include AS2, SFTP and FTPS. Once you have agreed upon your trading partner communication method, you will then lay out the schedule and frequency of your transactions.
VAN/EDI is an alternative to the Direct EDI method. The majority of EDI transactions are currently done via a VAN/EDI network. This method protects you from the EDI complexities of a single connection.
The appeal of EDI networks lies in the value-added services that the EDI network service provider delivers. These often include back-office integration, management information, community and business partner enablement, as well as EDI outsourcing.
AS2 is an Internet communication protocol which enables data to be transmitted securely over the Internet. Electronic data interchange via AS2 delivers the functionality of EDI with the ubiquity of Internet access. Today, it’s one of the most popular methods for secure and reliable data transport (especially EDI data).
Many organizations opt to use an EDI network provider for AS2 connectivity. This allows for the constant ability to receive EDI transmissions.
FTP over VPN, SFTP and FTPS are each commonly used communication protocols for EDI transactions over the Internet. Any of these can be used to connect to business partners directly (Direct EDI) or through the use of an EDI network service provider.
Web EDI conducts EDI using a standard Internet browser, such as a web-based platform. Organizations use different online forms to exchange information with trading partners. Web EDI makes electronic data interchange easy and affordable for small- and medium-size businesses.
Web EDI works by replicating paper-based documents into web form. The form will contain fields where users can enter the pertinent information. Once completed, the information will be automatically converted into an EDI message and sent via secure Internet protocols.
Users have traditionally accessed EDI by a private network such as a VAN or the Internet to send and receive EDI documents. Mobile EDI has had limited adoption, in part due to security concerns with mobile devices across an EDI infrastructure, but mainly due to restrictions with the mobile device technology available.
The advent of tablet computers, however, has changed what can be achieved with mobile computing devices. Companies have begun to launch apps to mobilize their supply chains. The retail industry, in particular, has adopted Direct Exchange (DEX) to aid in the flow of products and information through the supply chain.
DEX allows delivery personnel to scan a barcode into a mobile device to create an electronic invoice.
EDI Outsourcing (also referred to as B2B Managed Services and B2B Outsourcing) is a fast-growing option that enables companies to use external specialist resources to manage their EDI environment on a day-to-day basis. This is in part driven by companies wanting to integrate with back-office business systems such as Enterprise Resource Planning (ERP) systems.
Many companies do not want to use their internal resources to undertake this ongoing type of work, so they outsource it instead.
Implementing EDI software behind a company firewall is sometimes the preferred option. This approach assumes that a company has the correct internal resources to be able to implement the software and maintain it on an ongoing basis.
Once the EDI software has been installed, an in-house IT team will need to maintain it daily. Because of this, many smaller-sized businesses that don’t have the resources to manage EDI will opt for a hosted or software-as-a-service-based EDI solution.
The adoption of EDI is vital for companies of all sizes to maintain their competitiveness in the marketplace. At 1 EDI Source, we can help with our comprehensive suite of EDI integration software products, setting you on the path to success with hassle-free EDI implementation and integration processes. Let our team recommend an EDI solution that meets both your needs and budget today.
Learn more about Amazon EDI integration and download our EDI 101 Guide to jump-start your EDI education. Have a question or need more information? Reach out to one of our EDI experts now.