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Internet Based EDI

Understanding the Basics of EDI


What is Internet Based EDI?

For most companies, the world of EDI is one that they have been exposed to for only the past five to ten years. EDI itself however is significantly older, going back to the days before the Internet was prevalent as a communication medium between businesses. During this time, EDI transactions were typically exchanged using third-party service providers known as Value Added Networks or VANs. Internet based EDI has begun to grow at significant rates over the past few years, spurred in large part by the adoption of key Internet based EDI technologies by companies like Walmart.

How Internet-Based EDI works

The basic operational aspect of Internet based EDI is simply to use already existing communication protocols available on the Internet to exchange EDI data. For this reason Internet based EDI uses the SMTP (email), HTTPS and Secure FTP communication protocols to exchange data. Because these communication channels are being used to send and receive Internet based EDI however they are often referred to through a set of acronyms that were established in the mid 90s. Accordingly, when using SMTP for Internet based EDI the common terminology is AS1, while HTTPS is AS2 and Internet based EDI through secure FTP is known as AS3.


Benefits of Internet Based EDI

Internet based EDI can have a number of benefits over using VANs. The reason is simple - VAN based EDI and other "aggregators" of EDI data charge based on the amount of data that is used and transmitted over their lines. By employing Internet based EDI you establish a direct link to your trading partners bypassing third parties and sending and receiving data directly. It was this benefit, coupled with the low cost of using the Internet, that convinced Wal-Mart to switch their entire supplier network to Internet based EDI. While they are the only one to require use of Internet based EDI other retailers have also made this option available. For businesses that rely on EDI for their operations using Internet based EDI can save a great deal of money and provide significant return on investment.


The Future of Internet-Based EDI

The future of this technology is very bright indeed. While in the early days software that allowed for AS1, AS2 or AS3 communications was extremely expensive there are solutions in the market place that make using Internet based EDI significantly more cost effective making it a viable technology not only for large organizations with hundreds of trading partners, but also for smaller businesses who trade with only one or two trading partners. Because of these developments many small businesses are beginning to convert to this technology and are seeking software solutions that either include this technology or that have it available as an add-on at reasonable prices. 


Internet-Based EDI and You

As you embark on the use of EDI you may question whether internet based EDI is right for your business. Ultimately the answer is going to depend on how heavily you use EDI. The more your use of EDI will grow, the more benefits you will get by using Internet based EDI. Over time, your business will find that internet based EDI is the most profitable, due to its low fees and high degree of compatibility with your trading partners.

Ready to get started with EDI? Get in touch!

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