Q: What is EDI?
Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents between companies, using a public standard format. Rather than preparing
paper and sending it through the mail, or using other communications methods such as fax, EDI users exchange business data directly between their respective computer systems.
The use of EDI is not limited by differences in computer or communications equipment among trading companies. It bridges the previous information gap that existed between companies with different computer systems.
EDI is also independent of users' internal computerized application systems, since it interfaces with those systems rather than being integrated with them. However, the degree of effectiveness of the EDI operation itself, as well as the internal management information available from its use, will certainly be greater if application systems are up-to-date and efficient.
EDI is based on the use of message standards, ensuring that all participants use a common language. A message standard consists of uniform formats for business documents which have been adopted for electronic transmission purposes. It also includes security and control elements, and other rules and conventions relating to the use of transaction sets that all users agree to follow.
Q: Why do I need to use EDI?
Many companies require their vendors to use EDI; however, there are many benefits associated with the use of EDI. Many of these benefits take effect immediately upon installation. These benefits include the elimination of paperwork, time, and human error in inputting the information such as purchase orders and invoices. With this option, you never have to worry about what has happened to an order, where it is at, and what is being done with that same order.
Q: Why is EDI so expensive?
When comparing the cost with the benefits associated with EDI you will quickly discover that EDI quickly pays for itself and then some. Typically a person would have to read a document and insert the information into the accounting system. This usually involved an extensive amount of time and usually ended up with errors. After the installation of EDI, the documents will automatically be read into the accounting system rapidly and error-free. No manual entry required.
Q: How do EDI standards actually work?
It is a one directional transmission of information, e.g., purchase orders are generated by a retailer to a supplier; subsequently, the supplier can send an invoice to the retailer.
EDI transmission typically involves the following process. The sender uses internal computer files to assemble the data needed for the transaction. This data file then becomes input to a software module that generates the transaction into the EDI standard format. The resulting data file is then transmitted to the receiver. At the receiving end, this data file is input to a software module that translates the data from an EDI format into a file that can be entered into the receiver's computer application systems.
The above process includes a number of control and security procedures. Data security is maintained through the use of user identification numbers and passwords. EDI generation/translation software that is available from commercial suppliers typically includes extensive data editing and error-checking routines. This facility ensures that the data is valid at the time of transmission, and that it is also valid when it is received. EDI standards also allow the receiver to acknowledge successful receipt of the transmission by sending an acknowledgement message back to the sender. EDI, then, is at least as secure and accurate as your present method of exchanging paper documents.
Q: What are the common standards?
The Uniform Code Council, Inc. (UCC), a not-for-profit organization, manages and administers the following EDI implementation guidelines.
UNIFORM COMMUNICATION STANDARD (UCS) - used primarily by the grocery industry.
VOLUNTARY INTER-INDUSTRY COMMERCE STANDARD (VICS) EDI - used by the general merchandise retailing industry.
WAREHOUSE INFORMATION NETWORK STANDARD (WINS) - used by public warehouses and their depositor customers.
GLOBAL EDI GUIDELINES FOR RETAIL (GEDI) - used by companies within North America for trade outside of North America
Q: What is a translator?
A software developed to send and receive EDI documents in any standard way. The software will take raw EDI data and translate it to a file format that is human readable. In return, it will take the readable material and translate it back into raw EDI data to be sent to your trading partner.
Q: What is a Bridge?
A software developed to import all EDI data received from trading partner directly into any ERP system. This process will eliminate all data entry of data into and from the ERP system.
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