Overview:

EDI (Electronic Data Interchange) is the widely used method of communicating important business documents or information such as Purchase Orders, Invoices and Advance Ship Notices electronically between businesses or trading partners. EDI documents generally contain the same information that would normally be found in a paper document used for the same organizational function.

Transmission Technologies:

EDI standards were designed to be independent of communication and software technologies. EDI can be transmitted using any methodology agreed to by the sender and recipient. This includes a variety of technologies, including modem (asynchronous, and bisynchronous), FTP, Email, HTTP, AS1, AS2.

• 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. VANs provide a number of additional services such as retransmitting documents, archiving transmissions for a period of time and acting as a call center.
• AS2 (Applicability Statement 2) is the standard by which vendor applications communicate EDI or other business-to-business data (such as XML) over the Internet using HTTP. AS2 provides security for the transport payload through digital signatures and data encryption.

Important to Understand when Choosing an EDI Service
Go to the Top

When two companies begin to electronically share information like Purchase Orders and Invoices, what they are really doing is starting to integrate their business systems. While EDI is a standard, each implementation of EDI is unique. Each partner has unique business rules and requirements, they may set up their Purchase Order data differently and they most likely use a different system to transmit and receive EDI data from other partners. This is where the value of using a standard such as EDI is apparent. The EDI standard was created to handle all of these differences. The key is that the source and destination systems need to be ready to handle the data that is required and if not rules need to be set up in the B2B system to handle these requirements.

Executing an EDI Project
Go to the Top

To properly execute a B2B EDI project, you need to know the organizations staff, understand their business processes and know their technical infrastructure and requirements. Once you have a firm grasp of this, you must then have the technology to support these requirements. This means infrastructure such as hardware, software and network connectivity and also integration tools to do the transformation of data, the development of the various data maps between the two companies and a solution to handle any business rules that need to be applied.

Questions to Ask When Preparing to Decide Next Steps:
Go to the Top

• Is B2B EDI my core business?
• Do I have the proper staff in place?
• Do I have the proper technology in place?

Important Terms
Go to the Top

Trading Partner is a term used to refer to any business that is conducting business electronically. Trading partners are B2B EDI partners where in a typical situation one partner is transmitting orders that are then fulfilled and invoiced.

Maps are used to map source system data such as an ERP system to the EDI format to be transmitted. Mapping software is typically visual and includes the ability to integrate business rules as the data is being put into the EDI format.

Business Rules allow certain rules such as carton size, SKU labeling or transaction routing to be handled electronically during the process of sending or receiving EDI transactions.