EDI-Blog

EDI System Components

noreply@blogger.com (Steve Brewer) — Wed, 25 Oct 2006 22:21:00 +0000

An EDI system consists of all of the components necessary to exchange EDI transactions with trading partners who are EDI capable. The major components are EDI translation software, user or system interfaces, hardware, maps, EDI guides, a communication network and EDI experienced personnel. A company that wants to be EDI capable will have to either buy the components or outsource all of the EDI system components to a third party.

EDI transactions are very compact and difficult to read and manipulate. EDI translation software provides the ability to translate EDI data into a file format that can be interfaced with a company’s in-house systems or translated into forms that can be used by users.

EDI translation software supports the development and maintenance of maps. Maps are required to manipulate each transaction type. Every transaction type with every partner will be formatted differently. The map translates the EDI transaction into a useable file format.

EDI guides are provided by EDI trading partners to communicate how each transaction type will be formatted. The EDI guides must be followed exactly in order to be EDI compliant with a particular EDI partner. The EDI guides are used to develop maps. Follow this link to see an example of an EDI guide.

Hardware is required to run EDI translation software. The computer hardware must be sufficiently powerful and reliable to support exchange of EDI transactions 24 X 7 in compliance with trading partners’ transmission schedules.

A communication network is necessary to send and receive EDI transactions. A company can elect to either communicate EDI transactions using a direct AS/2 connection to a trading partner if the trading supports such a connection, or communicate with trading partners using a VAN. A VAN is a third party network provider that is a communications intermediary with other trading partners.

And perhaps most importantly, expertise is required to implement each of the EDI system components and maintain each of the specific maps for all of a company’s EDI trading partners.

eCommerce Best Practices Interview

noreply@blogger.com (Steve Brewer) — Thu, 12 Oct 2006 21:21:00 +0000

Recently Scott Koegler of eCommerce Best Practices interviewed me about CovalentWorks EDI services. I had the opportunity to explain our focus and key initiatives for continuous improvement as well as the key challenges our clients are facing. We talked about how CovalentWorks helps our clients save time and grow their business. Scott was also interested in our approach to testing so we spent some of our time toward the end of the interview talking about the best practices we employ to make testing as fast and efficient as possible. Click here to read the complete interview eCommerce Best Practices interview

A brief EDI VAN History – Part II

noreply@blogger.com (Steve Brewer) — Wed, 27 Sep 2006 13:49:00 +0000

As EDI use became more wide spread, each company followed EDI standards so that communication with their trading partners was facilitated. However, each company still had the flexibility to implement EDI transactions that fit its business requirements. Large companies had the ability to dictate to their suppliers exactly how a particular EDI transaction should be formatted.

During the 1980's, EDI became even more popular and proliferated with companies who could afford to employ a VAN and who had the technical expertise to implement EDI transactions that integrated with their back office systems. The first EDI software companies provided assistance with translating EDI transactions into and out of the format used by in-house applications so that custom EDI applications did not have to be built from scratch. EDI continued to grow in popularity as an expanding number of companies saw the benefits for themselves and their trading partners. Mainframe or mini-computers were used to run EDI systems.

PC based EDI software began to emerge in the early 1990's as an alternative and at a lower price point, although EDI was still a significant investment. Competition among VANs had reduced the cost of EDI communication somewhat, but it was still expensive.

Emergence of the internet in the 1990's provided the first real competition for VANs. The obvious question was "why use a VAN for communication when the internet was free"? And innovative companies did start to do point-to-point communication over the internet. Standards emerged for this communication and the most popular became AS/2 communication . Even though the transportation of the data was free, reliable and secure communication had to be maintained for each trading partner with whom EDI transactions were exchanged.

The demise of VANs was widely predicted because the internet was "free". However, in the late 1990's and the 2000's VANs reduced their pricing in order to stay competitive with the internet alternative. In fact, prices changed so much that it again became cheaper for many companies to outsource their point-to-point communication to a VAN rather than doing it themselves with AS/2. Many of their trading partners still used a VAN for the same reason. Some VANs began offering connections to trading partners that used AS/2 communication, while others resisted the trend. Today a competitive VAN offers their customers one point of communication regardless of their trading partners' communication preferences.

A Brief EDI VAN History - Part I

noreply@blogger.com (Steve Brewer) — Wed, 13 Sep 2006 21:58:00 +0000

Today, a company that is new to EDI or a company that wants to reduce their expenses can arrange for cost effective service with an EDI VAN that will provide EDI communication with their trading partners regardless of whether the trading partner wants to use AS/2 communication or wants to use their own VAN. However, this has not always been the case.

EDI started in the 1960’s when a relatively few companies wanted to exchange data electronically in order to become more efficient. The focus of EDI since its inception has been on the replacement of paper-based business documents with carefully defined machine-processable electronic forms. In the 1960’s, companies had no choice at that point in time except to transmit their data directly with each other using point-to-point connections. However, they soon realized that maintaining point-to-point connections with a growing number of trading partners, all of whom had different computing platforms, was an expensive proposition.

In the early 1970’s, companies in several industries banded together to develop the first set of EDI standards and they decided that a for-profit company would be the best avenue for administering the communication among them. The first EDI value added network company, or VAN, then came into existence. The value added network provided one point of connection for each company and then managed the communication with other companies. Now a company could outsource the secure flow of EDI transactions to many other companies while maintaining just one point of communication. EDI had become much easier and less expensive.

EDI standards became more formalized throughout the 1970's, additional EDI VAN companies were formed and those VAN companies developed interconnections among themselves so that it did not matter which VAN a particular company chose. EDI communication with other companies was now possible regardless of which particular EDI VAN any one company used and EDI started to flourish.

Federated EDI requirements

noreply@blogger.com (Steve Brewer) — Thu, 13 Apr 2006 22:16:00 +0000

There are extensive and sometimes complicated requirements for Federated EDI. Federated mandates EDI compliance for suppliers to all of its stores including Macy's, Bloomindales, Famous-Barr, Foley's, Hecht's, Kaufmann's, L.S. Ayers, Marshall Fields, Meier & Frank, Robinsons-May, Strawbridges, and The Jones Store.

Federated grew considerably with the acquisition of Marshall Fields from Target in May of 2004 and then went on to become the largest operator of department stores in the U.S. during August of 2005 when the acquisition of the May stores was completed. Federated is now moving all May Store suppliers to the Federated EDI standards. Federated has a sophisticated supply chain and EDI transactions are an important link between them and their suppliers.

Federated EDI requirements include the 810 Invoice, 820 Remittance Advice, 846 Inventory Inquiry/Advice, 850 Purchase Order, 852 Product Activity Data, 856 Advanced Ship Notice and 997 Functional Acknowledge. If EDI seems too complicated and expensive, you can have CovalentWorks take care of all the headaches associated with Federated EDI.

Federated has three kinds of Advance Ship Notice EDI transactions. The Standard Carton Pack specifies shipment, tare, order, pack and item. The Pick and Pack specifies shipment, order, pack and item. The Drop Ship Advance Ship Notice is simpler because it describes a shipment that goes directly to a consumer rather than to a distribution center or specific store. Most suppliers to www.macys.com must support the Drop Ship Advance Ship Notice and special packing slips forms.

Macys EDI requirements and Bloomingdales EDI requirements all fall under the Federated EDI standards umbrella and are the same.

Office Products EDI requirements

noreply@blogger.com (Steve Brewer) — Fri, 07 Apr 2006 17:27:00 +0000

Led by the largest retailer of office products, Office Depot, EDI is a requirement for virtually every supplier in the office products supply chain.

Other major retailers such as Staples, and Office Max require EDI capability. So do wholesale companies like S. P. Richards and United Stationers; buying groups like Independent Stationers and Tri Mega; as well as manufactures including Ampad.

Retailer Office Depot mandates that their suppliers exchange EDIpurchase orders, advance ship notices and invoices with them. Learn more about Office Depot EDI requirements at Office Depot and about an easy-to-use EDI solution at Office Depot EDI .

Wholesale company S. P. Richards’ EDI requirements include the same three transaction types for their suppliers. However, smaller volume suppliers may get an exemption and not have send advance ship notices. More about S. P. Richards EDI can be found at S. P. Richards EDI.

Manufactures have also been adopting EDI. Ampad, for example, sends their suppliers EDI purchase orders and requires EDI advance ship notices be sent to them. They pay on receipt though and suppliers do not have to send EDI invoices.

Transmission of EDI transactions is done via VAN (Value Added Network) with all of the companies discussed so far. Some, such as Office Depot and Staples also offer suppliers the option of communication via AS/2, which is a secure communication method over the internet.

Of course other retailers with efficient supply chains such as discount retailers Wal-Mart, Target, and CostCo, grocery stores Albertsons, Kroger, Meijer, Publix, and Shaws; and drugstores CVS and Walgreens all require their office products vendors to be EDI compliant. I will discuss these stores' EDI requirements in future blog posts.

Target EDI

noreply@blogger.com (Steve Brewer) — Thu, 06 Apr 2006 15:17:00 +0000

We are frequently asked about Target EDI requirements. As America’s second largest retailer, Target runs a very efficient supply chain and Target EDI capability can be demanding.

Target requires almost all of their suppliers to support five EDI transaction types – 850 purchase orders, 856 advance ship notices, 810 invoices, 864 text messages and 997 functional acknowledgments. International suppliers that are paid with letters of credit do not have to submit EDI invoices. Several different kinds of 856 advance ship notices are mandated based on supplier product category and domestic or international shipping method.

Additional transactions that supplies may have to do with Target include the 820 payment remittance advice, 824 application advice, 830 planning schedule, 852 product activity data, 860 purchase order change, and 870 order status report.

Target offers two options for EDI transmissions. Suppliers can arrange for a VAN (Value Added Network) that will interconnect with Target’s VAN or they can do encrypted transmissions over the internet using AS/2 software and digital certificates.

You can find our more about Target EDI and how a third party EDI provider can take care of all of the EDI requirements for you at Target-EDI. You can learn more about supplier EDI technical specifications at Target.

EDI standards sources

noreply@blogger.com (Steve Brewer) — Sat, 25 Mar 2006 20:10:00 +0000

There is a tremendous amount to learn if you want to do EDI yourself rather than outsource your EDI system. Here are some EDI standards sources to get you started.

ANSI ASC X12 (American National Standards-X12) X12 is a standard that defines many types of business documents, including purchase orders, invoices, and shipment notices. It is the oldest and the most widely used standard.

The ANSI (American National Standards Institute) delegated responsibility for EDI standards to the ASC (Accredited Standards Committee) X12 organization back in 1979. X12 was initially used in the shipping industry by the TDCC (Transportation Data Coordinating Committee) and in the food distribution industry by the UCC (Uniform Code Council). X12 has since been adopted by many other industries.

You can find out more about X12 standards at X12 Accredited Standards Committee and American National Standards Institute .

UN/EDIFACT (United Nations/Electronic Data Interchange for Administration Commerce and Transport) is another set of EDI standards. UN/EDIFACT is managed by the United Nations Trade Data Interchange Directory (UNTDID) and is used primarily in Europe with the notable exception of the US auto industry.

UN/EDIFACT standards were originally based on ANSI X12 and TDI (Trade Data Interchange, a generic EDI standard used in Europe. You can find out more about UN/EDIFACT standards at UNECE.

Over time the ANSI X12 and UN/EDIFACT have become quite different. Both of the standards include syntax rules, message design formats, data element definition parameters, code set practices, and implementation guidelines.

What is new in EDI VAN service?

noreply@blogger.com (Steve Brewer) — Mon, 20 Feb 2006 16:30:00 +0000

Communication service providers have seen tremendous changes in the last ten years. Capabilities have expanded and costs have plummeted. EDI VAN service has not been an exception. EDI VAN services have been impacted primarily by three factors – 1. the EDI market has expanded, 2. AS/2 communication has become an alternative to EDI VAN communication in some cases, and 3. web-based EDI has reduced costs.

EDI (Electronic Data Interchange) has been in use since the last 1960’s. For over 45 years the number of companies using EDI solutions has continued to grow. Economies of scale have had a positive impact on prices as the infrastructure necessary to support EDI VAN service has grown. Increased market size has brought increased efficiencies.

AS/2 communication is way of sending and receiving EDI transactions securely over the internet between companies. Although there is not a need for an EDI network, there is a need for software, hardware and expertise to support AS/2. Large companies are finding that their size makes AS/2 a better choice than EDI VAN communication. Smaller companies frequently outsource their AS/2 needs to web-based EDI solution providers who maintain the infrastructure necessary and who can then pass the savings on to their clients.

Web-based EDI has made is possible for small companies to have an affordable EDI solution. Internet access makes it easy to either view web forms that have EDI transactions translated into an easy-to-read format or to import and export EDI transactions into back office systems.

Changes in EDI VAN service have made EDI (Electronic Data Interchange) affordable and useable for companies of any size. Companies that choose the right EDI VAN can reap the benefits of an affordable EDI solution and compete effectively with companies that make large investments in software, hardware and EDI expertise in order to meet their EDI trading partners’ EDI compliance requirements.

What is new in EDI service?

noreply@blogger.com (Steve Brewer) — Fri, 17 Feb 2006 22:44:00 +0000

Thousands of companies around the world require their supply partners to be EDI compliant and EDI service continues to evolve in order to keep pace. EDI system requirements are constantly updated to meet the increasingly demanding information system needs of companies who must improve every year in order to remain profitable in today’s brutally competitive world economy.

EDI service includes updates to the version of EDI that leading companies require. For example, Wal-Mart requires version 5010 for EDI transactions. 3M recently upgraded their internal systems to SAP and now mandates that their suppliers upgrade their EDI systems to be EDI capable with version 4010. The new versions enable both companies’ internal systems to process information needed to improve their competitive position.

New EDI transaction types are being added all of the time. For example, more and more retailers are providing product sales activity transactions so that suppliers will know how fast their products are selling and when to plan additional shipments. Payment information is also being sent to EDI capable suppliers so that accounts payable costs are reduced for the buyers and so that payment is made faster and more accurately to suppliers.

Effective EDI service providers invest the resources necessary to keep up with EDI trading partners’ constantly evolving requirements for new versions of EDI and new EDI transaction types.

Could you tell me a little about EDI?

noreply@blogger.com (Steve Brewer) — Fri, 08 Jul 2005 21:49:00 +0000

The initials EDI stand for Electronic Data Interchange. EDI is used for sending and receiving electronic business documents between companies.

EDI is commonly used to replace the faxing and mailing of paper documents. It improves the efficiency and accuracy of communicating documents such as Purchase Orders, Invoices and Advance Ship Notices. Other frequently used EDI documents are Functional Acknowledgements, Purchase Order Changes, Product Data Activity Reports, Payment Remittance Advices and Order Status Inquiries.

Recent research about EDI in 2005 has shown that over 80,000 companies use EDI to improve their efficiency with their supply chain partners. Many companies require their business partners to have EDI capability and to be compliant with their EDI standards.

There are two basic ways to implement EDI. You can use a web based EDI provider or you do everything your self which includes buying and installing software, communicating with a VAN, and implementing EDI maps for each trading partner. EDI services can be purchased if you wish to outsource. Web based EDI saves you time so that you can concentrate on growing your business.

If you have a very large number of trading partners, or if you enjoy implementing new technology, then buying your own software may be the right choice for you. Finding the right EDI vendor for your needs is important because both you and your customers will depend on your EDI transactions for important business documents.

You can outsource all of your EDI services needs to a web based EDI provider, do it all yourself by buying each of the components from a different EDI vendor, or arrange for consultants to help with a portion of the EDI services work.

Follow this link for more about EDI.

Why outsource EDI?

noreply@blogger.com (Steve Brewer) — Tue, 01 Mar 2005 00:15:00 +0000

Although EDI can be complex and expensive, some companies choose to handle all of their EDI needs in-house (see my post in this blog called “What does it take to do EDI in-house?” for an explanation). Other companies choose to outsource both the personnel and all of the necessary components to a third party EDI company. Reasons to outsource EDI to an EDI provider include:

• Lower cost
• Faster implementation of new EDI partners
• Access to an easy-to-use EDI system
• 24 hour/7 days per week monitoring and maintenance
• Fewer distractions from the company’s main mission

An EDI company that specializes in outsourcing solutions can take care of all of the components of EDI. The EDI provider takes care of the software, VAN transmission, hardware, communications, labor, special expertise and constant monitoring. Frequently the cost is less because the EDI provider can pass along savings due to the economies of scale associated with providing EDI to a number of clients.

And outsourcing EDI can help a company more quickly achieve the benefits of EDI such as:

• comply with their customers EDI capabilities and requirements
• lower costs for their customers by reducing the administrative burden on their customers
• increase their efficiency by automating business to business processes
• improve the speed and accuracy of documents received from customers
• support selling to their customers in the way they want to buy.

What does it take to do EDI in-house?

noreply@blogger.com (Steve Brewer) — Tue, 01 Mar 2005 00:07:00 +0000

Many companies choose to have an in-house EDI department or EDI specialists within their Information Technology department. EDI capability requires knowledgeable personnel as well as the following components:

• Software for communications
• VAN service for EDI transmission
• Software for mapping EDI documents

Software for communications is required to send and receive EDI information with reliability and proper security. VAN, ASYNC, BISYNC, AS/2, direct connection and Internet communications will be mandated by various EDI partners. EDI VAN service is necessary to interconnect with business partners who may use the same VAN or another VAN.

A server or PC, communication devices and peripherals will be needed as well as secured office space, monitored security, backups and redundant power. Additional software will be needed if integration of the EDI transactions with back office systems is desired. An EDI VAN will need to be contracted for transmissions. Personnel must be trained in how to use the software and communication devices. Maps will then need to be developed.

Maps are one of the most difficult components of EDI. EDI documents themselves are very difficult to read. Maps are used to relate each field of an EDI document to another format, such as a file or a web form that is easy to read. Maps must be perfectly constructed to be useful. Frequently, logic must be programmed to decode the EDI information within EDI documents. And EDI partners will sometimes change their EDI documents which will necessitate changing the maps.

EDI capability must be monitored 24 hours a day, 7 days a week because EDI business partners expect to be able to send and receive EDI transactions all the time. Monitoring and maintaining EDI compliance is a full time responsibility for one or more people in most companies that choose to do EDI in-house.

Do I need an EDI VAN?

noreply@blogger.com (Steve Brewer) — Fri, 18 Feb 2005 18:10:00 +0000

Yes, an EDI VAN is needed for EDI with most business partners to send and receive EDI.

A VAN is a Value Added Network. A VAN is responsible for the secure and reliable communication of EDI documents.

Your business partner probably already has one. However, you do not need to use the same VAN that your business partners uses because most VANs interconnect with other VANs.

The interconnects allows VANs to easily exchange EDI transactions on behalf of their clients with other VANs. This enables customers to choose the VAN that best fits their needs. It also ensures that VANs compete to keep down the cost of EDI.

Some business partners do not use an EDI VAN and instead use the internet for the transmission of EDI documents via AS/2. Wal-Mart is an example of a major retailer that uses AS/2 instead of a VAN for EDI transportation.

AS/2 is a set of standards for the transportation of EDI documents between two parties. AS/2 requires special software to encrypt and decrypt EDI. If your business partner requires AS/2, then you will either need to buy special software or arrange to outsource it to a third party provider.

Why does my business partner require EDI?

noreply@blogger.com (Steve Brewer) — Fri, 18 Feb 2005 17:56:00 +0000

The exchange of business information through EDI solutions is much less expensive than the manual handling of paper documents such as purchase orders and invoices.

The results of many studies have revealed that on average the processing of a paper-based order can easily cost $70 while processing of an EDI based order costs a dollar or less. Much less labor time is required when using EDI software and EDI solutions. And fewer errors occur because computer systems process the electronic order documents instead of manual processing of the documents by hand.

EDI transactions between companies flow more reliably and faster than paper business documents. Paper purchase orders may take up to 10 days from the time the buyer prepares the order to when the supplier ships it. Order processing and fulfillment using web-based EDI solutions can take as little as one day. This is one of the main reasons your business partner may require you to use a web-based EDI solution.

Faster business transactions support reductions in inventory levels, better use of warehouse space, fewer out-of-stock occurrences, and lower shipping costs through fewer last minute, expensive shipments.

A web-based EDI solution is a way for small and mid-sized businesses to meet the EDI requirements of their business partners without having to buy and maintain expensive EDI software. All you will need is a fast Internet connection, email and a web EDI service. No EDI software is required at all.

With web-based EDI, notifications of new EDI transactions are sent via email. The EDI documents are translated by a third party provider into easy-to-read web forms on a secure internet site. User name and password are required to access and process EDI documents.

Web EDI solutions enable users to see EDI documents at their office or at home or anywhere they have internet access.

What is EDI anyway?

noreply@blogger.com (Steve Brewer) — Fri, 04 Feb 2005 00:35:00 +0000

EDI is an acronym for Electronic Data Interchange. EDI is a computer record format that companies use to exchange business documents with each other.

EDI enables the computers of one company to “talk” to the computers at another company. Faxing and mailing of paper documents are replaced with fast and efficient electronic documents.

EDI uses standards to define how EDI records will be formatted. However, companies can use the flexibility that is included in the standards to fit their particular business needs.

The variation of EDI transaction formats from one company to another makes EDI more of a challenge for small and mid-sized businesses that do not have information technology departments with dedicated staff resources.

EDI is used by a large number of companies and in a wide variety of industries. In 2005, over 80,000 companies use EDI to improve their efficiency and to help their business partners. It is very typical for many of these companies to insist that their partners also use EDI.

EDI frequently replaces paper purchase orders, purchase order changes, purchase order acknowledgements, packing slips, advance ship notices, and invoices.

Other common EDI documents include production planning releases, payment remittance advices, requests for quote, responses to requests for quote, organization changes for shipping addresses and product activity data reports.

Companies that require their partners to use EDI will provide an EDI guide. The EDI guide will describe exactly how the EDI transactions should be formatted.

EDI records must be perfectly formatted in order to pass the company’s validation requirements for input into their EDI system. But once EDI transactions have been thoroughly tested, they flow between business partners automatically, without human intervention and far quicker than faxes or mailed documents.