The ability to quickly and efficiently exchange data between trading partners is crucial. This is where Elektronischer Datenaustausch (EDI) comes in. EDI is a system for transmitting business documents electronically between trading partners, using standardised data formats and communication protocols.
While EDI has been around for decades, organisations still rely on it as a vital tool. In the past, electronic data interchange was used primarily by large companies in industries such as Automobil, retail, and Gesundheitswesen. However, with advancements in technology and the growing need for real-time information, EDI is now used across a wide range of industries and by businesses of all sizes.
Now an essential tool in today’s landscape, the need for speed and accuracy of data exchange between trading partners can impact operational efficiency and customer satisfaction. It transformed the traditional paper-based document exchange process by enabling businesses to transmit electronic documents quickly and securely in a standardised format. As a result, EDI is now used extensively across various industries and has become an integral part of modern business.
How does EDI work?
Electronic Data Interchange (EDI) works by using a standardised process to exchange business documents between trading partners. The process involves several components, including data formats, communication protocols, EDI translation software, EDI mapping, and EDI document standards.
Data formats
EDI data formats ensure that electronic business transactions are conducted in a consistent and reliable manner, allowing different organisations to communicate and exchange information seamlessly. These formats use a series of data elements that are combined to create a standardised message that can therefore be read by both the sending and receiving systems.
Communication protocols
Communication protocols are used to transfer the EDI documents between trading partners. There are several communication protocols used in EDI, including AS2, FTP, SFTP, and HTTP. Consequently, these protocols ensure that the documents are transferred securely and efficiently.
EDI translation software
EDI translation software is used to convert the data formats of the EDI documents to a format that can be read by the receiving system. Furthermore, the translation software maps the data elements in the EDI document to the data fields used by the receiving system.
EDI document standards
EDI document standards are used to ensure that the EDI documents are consistent and can be read by all parties involved in the transaction. The most commonly used EDI document standards include ASC X12, EDIFACT, and TRADACOMS. These standards specify the format, structure, and also the content of the EDI documents.
The role of EDI in supply chain management
In supply chain management, EDI is used to facilitate the efficient exchange of information and documents between trading partners. As a result of automating and standardising the exchange of information, EDI can help to improve supply chain efficiency. This is in addition to reducing lead times and enhancing collaboration between businesses. EDI can be used to transmit a wide range of supply chain-related documents. This can include purchase orders, invoices, advance shipping notices, and bills of lading. As supply chains become increasingly global and complex, the role of EDI in supply chain management is likely to continue to grow in importance.
If your business is considering implementing EDI, there are several factors to consider. Firstly, determine if your trading partners are already using EDI. Then understand your needs for the volume and frequency of transactions. Finally, assess your current systems and determine if they can be integrated with EDI. Above all, these questions will allow your business to begin evaluating different EDI providers. With careful planning and execution, implementing EDI can be a valuable tool for businesses hoping to streamline its operations.
Find out more
Download our whitepaper on EDI for businesses either looking to move to EDI for the first time, or those wanting to migrate away from legacy systems.
Über B2BE
B2BE liefert weltweit elektronische Supply-Chain-Lösungen, die Unternehmen dabei helfen, ihre Supply-Chain-Prozesse besser zu verwalten und ein höheres Maß an Transparenz, Prüfbarkeit und Kontrolle zu erreichen. Unsere Leidenschaft für das, was wir tun, inspiriert uns zu Innovationen und untermauert unser umfangreiches Wissen. Die B2BE-Teams verfügen über mehr als 20 Jahre Erfahrung und sind weltweit tätig.
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