EDI Communication: All About Electronic Data Interchange

Are you a retailer who wants to take your business to a whole new level? Do you want a secure placement of your products and optimization of your business processes? EDI communication can handle all of this. In addition, you don’t need to pay attention to the processes, but rather focus on the core of your business.

However, you might be asking yourself – what really is EDI communication and how does it work? If you want to enhance your processes and implement a new way of data communication, then here is how EDI can help you out.

What Is EDI (Electronic Data Interchange)?

EDI is a computer to computer exchange of business documents in an electronic form between partners. This type of communication between businesses is replacing the paper exchange.

Some of the benefits of Electronic Data Interchange are:

• Reduced costs
• Increased processing speed
• Reduced errors
• Improved partner relationships

EDI doesn’t only remove the need for any paper, it also replaces postal mail, email and fax. Even though email is an electronic approach, computer-to-computer EDI handles it, instead of people doing it manually.

When people handle these processes, the processing of documents slows down, and also errors may occur. On the other hand, EDI documents go straight to the application on the receiver’s computer, where processing begins automatically.

So, why do you really need EDI?

• Communicate with your business partners quickly, accurately, and cheaply.
• Safely transfer data to your information system.
• To easily handle all of your documents.

If you’re wondering how an EDI communication looks like, then, check out the following standard format.

EDI Standard Form

Since all the EDI documents have to be processed by computers instead of humans, there has to be a standard format to enable easy reading of the documents. The format is all about matching the sender’s and receiver’s company’s specific format.

Some of the most common EDI standard formats are the following: ANSI, EDIFACT, TRADACOMS, ebXML. Also, for each of these standards there are different versions, for instance ANSI 5010. Therefore, when a documentation exchange happens, the document agreement has to be in the type and the version. In order for a match to happen, most businesses are using an EDI translator.

EDI translator is used through an in-house software or an EDI service provider that translates the EDI format. Therefore, the data translated by the EDI translator can be used by their internal applications and straightforward processing of documents.

Traditional Dial-up Based EDI Communication VS Internet-Based EDI Communication

The traditional and oldest form of EDI is through dial up and dedicated networks. The closest association of this type of communication is with VANs. In fact, right before the Internet became a primary means of communication, VANs operated as a closed network with direct dial-up communications. Even though the traditional form of EDI communication is the oldest, it is still the number one communication between trading partners.

Various EDI communication ways are associated with the Internet. There are three EDI communication ways that we are going to elaborate:

• FTP is an EDI communication form that is usually used by smaller organizations. This EDI communication in particular is easy to use, affordable and also easy to implement. The drawback of this type of EDI is the lack of security.
• The second form of Internet-based EDI communication is AS2 which uses the HTTPS protocol in order to establish a connection between two trading partners. Larger retailers use the AS2 method mostly. The drawback of this type of communication is the fact that it can be quite challenging to implement this method.
• The third method of EDI communication, AS3, is quite widely used. This form of EDI communication is based on a secure FTP protocol and it provides the benefits of the FTP EDI communication method, including added security and encrypted EDI communication.

How Have We Implemented EDI Communication for our Clients?

For some of our clients we have established EDI communication as a part of their services automation. Through the EDI system, all of our clients have automated their processes. Therefore all the communication with their business partners happens with EDI files. For instance, companies that sell certain products, connect with their shipping company through an EDI file. So, thorugh the EDI system, a customer will automatically receive a certain product.

Also, the EDI system will automatically transfer the payment of invoices to your business partners, just so you don’t need to access that issue manually.

Final Thoughts

Implementing EDI communication into your company is going to bring a variety of potential benefits:

• Lower operating costs
• Improved business cycle speed
• Reduce human error
• Improve record accuracy
• Increase business efficiency
• Transaction security
• Paperless and environmentally friendly

However, the list doesn’t just end there. The benefits that EDI communication offers you are endless. So, why don’t you try out EDI communication and see what it can offer you?