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EDI Systems

Understanding the Basics of EDI

 

What is EDI Systems?

EDI Systems describes the software involved in enabling the exchange of data between businesses using Electronic Data Interchange or EDI.  While some EDI Systems can be accessed remotely (through a hosting provider), most EDI systems are deployed and manage in-house.  EDI Systems have been in use for a number of decades and provide a fast, reliable an low-cost means of exchanging data with your trading partners.

Components of EDI Systems

EDI Systems vary greatly from provider to provider, but the majority of EDI systems have at least 2 components.  A most basic part of EDI systems is the translator; the job of the translator is to interpret EDI data received and transform it into a new format - either readable by humans or readable by a new computer system.  In EDI systems the translator is one of the most critical components.  While not directly tied to the translator, communication is also a key part of EDI systems.  The communication piece takes the EDI data created by the translator and sends it over secure protocols to its destination.  When selecting EDI systems it's critical to ensure that the communications piece has been accounted for.   While with many EDI systems the translator and communications software are enough, a third component is very useful.  "Kits", as they are often known, provide EDI systems with an easy means of setting up EDI for specific trading partners.

 

Key Features of EDI Systems

When comparing EDI systems there are several considerations.  Before even looking for EDI systems you should first decide if you wish to manage your EDI in-house or if you want it managed by a third party.  Often this decision is directly tied to how much you will use EDI; the more EDI you use, the more in house EDI systems will make sense.  A second consideration is whether you want EDI systems that can integrate with your in-house ERP system.  While many EDI systems provide such features, they are often limited when it comes to manual data entry.  Finally the EDI systems you review will only be as good as the companies behind them; be sure to inquire into an organizations support capabilities and if possible ask for a reference.

 

EDI Systems and Standards

One aspect of EDI systems that is often neglected is broad standards support.  Since many companies only trade with US organizations, the X12 standard, prevalent in the US, is the only one most buyers concern themselves with.  EDI systems, however, can also support a broad number of international standards like UN/EDIFACT and Tradcoms.  You should ensure that the EDI systems you are considering have support for all standards you may use today and in the future.

 

Integrated EDI Systems

A last aspect of purchasing EDI systems is to consider EDI system integration.  Through integration the EDI data generated by the EDI systems will be sent directly into your ERP or Accounting system.  Long-term this is the most financially beneficial form of EDI, however, initially you may want EDI systems that can provide manual data entry capabilities.  Regardless, be sure that the basic EDI systems you are reviewing can be upgraded seamlessly over time to integrated EDI systems to ensure that your long-term investment is safe.

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