What is EDI?
Electronic Data Interchange (EDI) is how business partners/companies exchange documents via computer-to-computer in a standard format. Exchanging these documents electronically majorly benefits a company with reduced costs, reduced errors, improved relationships with partners, and increased processing speeds.
By utilizing computer-to-computer EDI, postal mail, fax and email are replaced. Emails, while electronic, are still handled by people and not computers. When people are involved, the processing of documents is slowed down and errors can occur.
How does EDI work?
You know EDI is essential to your business, but you’re not exactly sure how it works. You would like to know more about commonly transmitted EDI documents, the difference between raw EDI vs. human-readable formats and the components of a successful EDI implementation. Find these answers and more, in this short video.
When sending EDI documents, there are 3 critical steps to follow:
Step 1: Prepare the documents
Collect and organize data. Use an electronic file rather than a printout of the Purchase Order. In order to generate the electronic document, there are some options available:
- Purchase application software that has interfaces for EDI files built-in
- Enhance any existing applications to create output files automatically ready for EDI translation
- Reformat electronic reports into data files
- Export data from spreadsheets and/or databases
- Human data entry
Step 2: Translate documents to EDI format
Feed your electronic data through translator software to convert into the EDI standard format with the correct segments and data elements. Translation software can be purchased. However, this requires mapping expertise to define how the data will be mapped. Another option is using the translation services of an EDI service provider. In this case, you send the provider your data and they handle the translation to and from the EDI format.
Step 3: Connect and Transmit your EDI documents to your business/trading partner
After the documents are translated appropriately, they’re ready to be transmitted/sent to your partner. In order to transmit, you must agree on how you will connect with each partner. There are 3 common ways:
- Connect directly using AS2
- Connect to an EDI Network provider (VAN)
- Use a combination of both
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An On-Premise EDI Model
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Reliable, Secure Communication
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Transfer Securely and Efficiently
Secure Client Document Portal
Effective Data’s Web Portal lets you easily view, filter, download and share your data, so you know exactly what was sent and received by your customers real-time.
Types of EDI
If you need help selecting the best solution for your company's needs, contact our edi specialists today to learn more!
Establishes a single connection between two business partners. Each business partner is connected to individually. This approach can offer control for the partners and is often used between large customers and suppliers with many daily transactions.
EDI via VAN or EDI Network Services Provider
Many businesses prefer this network model in order to protect them from the continued complexities that come with supporting the varying communication protocols that are required by different business partners.
EDI via AS2
This communication protocol enables data to be transmitted over the Internet in a secure manner.
EDI via FTP/VPN, SFTP, FTPS
These are communication protocols most commonly used for the exchange of EDI documents over the Internet. Any of the options can be used in order to connect directly to business partners or through an EDI Network Services Provider.
This protocol conducts EDI using a standard Internet browser. Web EDI makes EDI affordable and easy for small/medium-sized companies that do not need this service as much as others might.
The screen quality and the size of devices are not ideal but with the development of ‘apps’ continuing to grow, it will not be long before you are able to download supply chain and EDI related apps.
This can also be referred to as B2B Managed Services and B2B Outsourcing. This is a fast-growing option that allows companies to use external resources to manage their EDI.
This is sometimes the preferred option when working behind a company firewall. With this option, the company is assumed to have the correct resources in order to implement and maintain the software consistently.
Effective Data is a professional, knowledgeable and dependable EDI support company that has the client's best interest at hand. B.B., Director of IT, High Sierra