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Understanding The Basics of EDI.png

EDI Format

Understanding the Basics of EDI

EDI Format

To understand EDI you must understand EDI format.  EDI or electronic data interchange is a process by which businesses communicate to make their trades as efficient, effective, and as profitable as possible.  To ensure that two businesses can communicate in this way there have been universal EDI format standards that have been accepted and used by a wide variety of companies.  Without these EDI format standards it would be difficult for businesses who are in different cities, states, and even countries from one another to do business together.  The critical nature of the EDI format is the underlying foundation of EDI and how it is used on a global scale.

The Basics of the EDI Format

When EDI was first created the question of standards quickly become an issue.  As the technology evolved, three key standards become prevalent, each with its own EDI format.  The ANSI X12 standard is an EDI format that was adopted by the American National Standards Institute and is the prevalent means of exchanging EDI in the United States.  Globally, the US/EDIFACT standard is the EDI format that is most frequently used for trades outside of the US.  The only exception to these two is the Tradcoms standard used in the United Kingdom.

What Does EDI Format it Mean to You?

Why should the EDI format matter to a business owner?  Over the long term the answer is that it won't.  But initially understanding which EDI format your business will need to support, and ensuring that your software or service provider supports these formats is going to be a critical decision for your business.  While it's also important to understand which EDI format your solution will support, you should also understand how that software or service will support the standards in question.  Specifically, if you are dealing with a software solution, will it require you to manually code each transaction type according to the EDI format in question? Or does it give you options to purchase pre-built "kits" that understand and deal with the EDI format with minimal involvement on your part?  As a business owner you want to ensure that your dealings with issues like an "EDI Format" take place at the very beginning of your adoption of EDI and subsequently as little as possible.

Where is the EDI Format Going?

One question that may come up as you begin to adopt EDI is the question of longevity of the standard.  Over the past few years some academic researches have proposed switching from the EDI format to an XML based one for the sake of "simplicity."  While over the course of the next several years the XML format will gain some traction you should not worry.  The vast majority of US and global retailers and large manufacturers have been using EDI for years and have no intentions of switching to a new EDI format any time soon.  The benefits of any XML based standards would have to be dramatic for some of these companies to justify the replacement costs of systems that in some cases have been operational for years.  As the old saying goes, "...if it ain't broke, don't fix it ..." This saying has never been more true than it is in the world of EDI.  As these businesses continue their growth and continue to bring new vendors on-board, the use of EDI will continue to be safe.

How to Stay on Top of EDI Format

One of the last issues to consider is how to keep your understanding of EDI format fresh and consistent as it may evolve.  One of the best ways of doing this is to keep in touch with your vendor; they are experts in EDI format and can keep you updated on any EDI format changes.  A second and equally ideal source of information is the standards bodies responsible for the EDI format.  Their web sites have current information on the EDI format and how it might be changing over time.


An Introduction to EDI

The in-depth guide to understanding the world of EDI.
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