Components of EDI
Grow your business by knowing the essential components of EDI for success
EDI has been a hot topic in business these days. But what exactly is EDI, and how does it work? How can business owners use EDI to be more successful?
Recently we had James Roth, Sales Engineer for TrueCommerce EDI Solutions discuss the critical factors related to EDI success. Check out our exclusive Q&A below.
Q: Could you give a brief overview of what EDI is and what it does?
EDI stands for electronic data interchange. What EDI does is provide a common language so that different businesses can communicate with each other, no matter what their backend system may be. It provides a common language that’s translatable, across the board, for all businesses.
Q: How does EDI work with global or multi-national trading?
There are different standards of transmitting data electronically. The North American standard of electronic data interchange is X12 and it requires a specific structure that is governed by ANSI, the American National Standards Institute.
Throughout Europe and Asia, the most commonly used EDI standard is EDIFACT. Here at TrueCommerce, our network can support both standards. While most US-based suppliers will work with retailers, grocery chains, or dotcoms and need to comply with the EDI mandate via the X12 format, it’s a good idea to consider an EDI provider’s ability to handle global customers as well.
Q: How does an EDI solution ensure compliance with the trading partner’s unique requirements?
The first step to ensure compliance is connectivity. When using EDI, one needs to have a network, which would be the way, method, or mode of transportation for the data. The network is necessary to make the connection happen between one mailbox and another. Let’s use transactions with Amazon.com as an example.
Consumers are accustomed to buying items directly through Amazon.com. However, in order for Amazon to have those products readily available, they will use EDI to communicate with thousands of suppliers. Because Amazon has a mailbox on its end, EDI can be set up with each supplier to allow the exchange of data over a secure network. This is a great example of how EDI is used to quickly and easily place orders to fulfill the needs of consumers.
There are also different ways that businesses can connect. The trading partner will ask, “Do you use a VAN, a Value-Added Network? Can you connect via AS2? Can you connect via FTP?” So there are just different protocols that the trading partners mandate.
In order to be EDI compliant, one needs to have the proper connection protocols outlined by the trading partner. An EDI provider should have their own network and comply with any type of connectivity need.
The second factor related to compliance would be the mapping of the documents. Even though EDI is a standard, each trading partner requires different fields — consider it the standard of standards. For instance, for a Bed Bath & Beyond® order, there might be six fields at the header level, but for an Amazon or Walmart® order, there may be 30 fields on the header level.
Here at TrueCommerce, we have a trading partner team that takes care of all the mapping requirements and changes — because changes do happen quite a bit. We have a dedicated team that manages the trading partner connectivity and also the mapping specifications.
Q: What are EDI customers responsible for as far as entering in orders and such? What will EDI providers take care of?
Every EDI provider would need to have software that translates the data, because when looking at raw data — the X12 or the code that’s going over the network — it’s not friendly to the human eye.
Here is an example of a Walmart purchase order before it is translated:
Translation software allows a user to view an incoming order as if it was received via fax or as a pdf attachment in an email. This is the heart and soul of what EDI solutions and services offer. TrueCommerce EDI offers Transaction Manager™, a web-based EDI translator which looks very similar to an email application where users can view incoming orders without ever looking at raw data.
Transaction Manager converts raw data once it hits the mailbox. The user can then open the order, or transaction, as if it were a pdf file. From there it can be viewed or printed, and quickly turned around so that an invoice is sent back to the trading partner.
Without an EDI translator (such as Transaction Manager) users would have to print out the order, log into Acctivate, and manually enter the data to create a sales order. This significantly increases the risk of running into errors, which is why the integration between the EDI translator and the backend system is extremely important.
Q: How can EDI customers ensure their EDI and backend system are integrated?
A business owner would need to select an EDI provider that integrates with their backend system. Since we partner with Alterity, we already understand the requirements of an Acctivate sales order. As you can imagine, choosing an EDI provider who already understands the backend system’s needs is important to a successful EDI implementation. We have an out-of-the-box Acctivate integration so that when orders are received, the raw computer code hits Transaction Manager. From there, we export it, which in turn creates the Acctivate sales order.
Let’s say a business has 100 orders from 100 different customers in Transaction Manager. By having an integrated system, users can automate order processing so that orders are exported each hour or every day at a specified time, saving hours of manual labor. Also, as I mentioned before, not only are mapping specs key to successfully communicating with EDI customers, but we use additional mapping standards to ensure that customer data is properly mapped to the backend business system, Acctivate. This ensures that incoming data from the customer is accurately converted to match the requirements of Acctivate.
Q: What are the most important EDI transaction files?
Everything starts with a purchase order — that’s an 850. Every EDI document has a number associated with it so a purchase order is known as an 850. Whether one’s talking to Walmart or Amazon or Home Depot®, an 850 document file will be known as a purchase order. That doesn’t mean there are 850 different purchase orders, 850 is the identifier.
The 855, or a purchase order acknowledgement, is what the user would send back to Amazon, acknowledging that the 850 was received. They require it within 24 hours of the purchase order being sent.
The third would be the Advanced Ship Notice: the 856. It’s also known as an ASN, ship manifest, and also known by a variety of other names.
The invoice, or the 810 transaction, is also integral to EDI transactions.
And then the fifth to me would be the 997, which is a functional acknowledgement. A 997 is literally a date and time stamp, letting both parties know when something was received on the network.
The 997 is a critical requirement used among retailers following the X12 EDI standard. Here at TrueCommerce, we do it automatically and we don’t charge for it. We also notify our customers if they sent an invoice out to Amazon and it wasn’t acknowledged by Amazon (i.e., maybe their network went down).
If we don’t receive a date/time stamp from Amazon, we’ll alert the customer with an email to let them know that an invoice was never received by their customer. It’s just a nice way to get visibility of everything sent and received.
Q: What kind of support should EDI customers expect to receive from their providers?
When using US or North American standards, one would want to have a provider who offers North American support.
Also, a business owner would want accessible support: being able to call, email, or escalate immediate needs is important to running a smooth business. For instance, if a business owner is running their business on “Small Business Saturday” and they’re busy handling orders, printing labels, and preparing packages, they would need to have EDI support that is available 24/7 to help address any emergencies that may arise.