Glossary

What is EDI?

The term EDI (English for "electronic data interchange") refers to the standardized, electronic exchange of business documents between the participating companies.

The various business documents (e.g. invoices, purchase orders, order confirmations, shipping notifications, etc.) are exchanged using certain message standards. There are many different exchange formats worldwide that define the structures for transferring data between partners. These are either industry-independent or closely interwoven with a specific industry.

Overview of possible message standards

• ANSI ASC X.12 (American standard)
• CSV (Comma Separated Values)
• FLATFILE (Structured text file used in some ERP systems)
• ODETTE (European Automotive Industry Standard)
• TRADACOMS (Trading Data Communications Standards)
• UN/EDIFACT (including industry-specific subsets such as EDIFICE, EANCOM)
• VDA (Recommendations and Standards of the Association of the German Automotive Industry)
• XML (Extensible Markup Language)

The agreement of a uniform standard format, such as UN/EDIFACT, accelerates processes and transactions in electronic data exchange and makes them available in machine-readable form. EDI meets the challenge of exchanging data of different formats from different systems with other companies regardless of the respective application systems and their standard formats.

Transport protocols

A number of different transmission protocols are available for the exchange. Here, too, there are transport protocols similar to the message formats, especially those common for industries.

• ANSI ASC X.12 (American standard)
• AS2 or AS4
• EMAIL
• FTP
• HTTP
• OFTP or OFTP2
• SOA
• TELEBOX

EDI replaces conventional data exchange

In times of digitalization and automation more and more companies rely on electronic data exchange with the help of an EDI software, such as i‑effect^®.

Whereas previously documents were sent by post, a large number of manual processes had to be carried out by employees. First, the respective document had to be created, processed and sent by the sender. The recipient received the message, interpreted it and processed it into a format that could be interpreted by him in order to use the information within his systems.

These traditional communication channels cause a multitude of manual interventions for the company, which increase the duration of the processes and unnecessarily use resources and competencies. Due to this fact, these processes have a high error potential. It is only possible to guarantee the quality of the data by means of an enormous control effort.

EDI solution simplifies business processes

In order to replace the conventional communication channels, a suitable EDI software is required. Using an EDI system, it is possible to create and send structured or standardized messages from unstructured messages using a message standard (EDIFACT, VDA, ODETTE). The messages are then in a uniform format for all business partners and thus suitable for direct automated further processing. Manual intervention is no longer necessary.

In a typical EDI workflow, source data in format A is converted to target format B by a conversion. This part of the EDI system is also known as the EDI converter. The underlying logic for the conversion between the formats is defined in a so-called mapping. After successful conversion by the respective EDI mapping, the data is available in the required format and is ready for dispatch. The EDI software then transmits the EDI standard message to the EDI partner on the selected transport route. The recipient receives the message and processes it automatically in the desired form.

Advantages of EDI at a glance

• Time saving
• Cost savings due to the elimination of paper, postage and toner
• Environmentally friendly
• Error reduction through optimized and automated processes
• Manual processes are eliminated by automation
• Reduced personnel expenses due to lower administration and processing costs
• Higher employee motivation by relieving routine activities
• Faster reaction time
• Reduction of waiting and wait times for documents
• Intensification of the relationship with business partners
• Increased transmission speed
• Achieve competitive advantages over competitors by offering better services
• No media breaks
• Sector and international functionality