1. Identifying required EDI standards
There are multiple EDI (Electronic Data Interchange) “standards” used around the world, which are different in syntax as
well as in usage. Two of the most common of those standards are “ANSI X12” and “UN/EDIFACT”.
- ANSI/ASC X12 - This is the most commonly used EDI standard in North America which was introduced by American
National Standards Institute in the 70s.
- UN/EDIFACT - This is the most commonly used EDI standard in Europe which was introduced by the United Nations in
In addition to these, there are few other industry-specific and region-specific standards, such as GS1 EDI, which is a
popular standard in global supply chains, and also VDA, which is used heavily in the German automotive industry.
Because of this variety of EDI standards, you will need to first understand which of these standards are relevant to
your organization. For example if you are a supplier for only US based retailers, the X12 standard will be the one you
will need to support. On the other hand if you are a global supplier, you may need to support both X12 and EDIFACT for
different partners. Getting this requirement cleared at the beginning of your EDI implementation will immensely help
you find the optimal solution for your organization.
2. Identifying required EDI Types
Once you have a clear understanding of the EDI standard/s you need to support, the next step is to identify which EDI
“types” are relevant to your use case. Each of these standards consist of hundreds of different EDI types catering to
various industries and use cases.
For example, the X12 standard has EDI types such as 850 (Purchase Order), 855 (Purchase Order Acknowledgement), 856
(Advance Ship Notice) and 810 (Invoice) which are mostly specific to the retail domain. At the same time, the same X12
standard has EDI types such as 204 (Load Tender), 990 (Load Tender Response), 214 (Shipment Status) and 210
(Motor Carrier Invoice) which are specific to the logistics domain.
Therefore, based on the industry you are in and your partner’s requirements, you will need to understand which of these
EDI types you should expect to receive from the partners and which types you are expected to send to the partners.
Depending on that information, you can choose the proper EDI implementation that caters to these requirements.
3. Ensure compliance
EDI standards generally have strict syntactical rules that fall into below categories.
- Specific order and position of segments, loops and elements
- Mandatory and optional segments, loops and elements
- Maximum repeat occurrences for segments and loops
- Minimum and maximum lengths for element data
- Data type based formatting of element data
In most cases, the EDI partners also tend to impose their own set of rules on top of the above-mentioned general rules
inherited from the EDI standard. Some large EDI partners even take strict measures such as imposing significant fines
for the EDIs sent to them by other parties that violate these rules.
Because of that, any EDI you compose and send must strictly adhere to the rules specified by the partner for it to be
valid and processable by the receiver’s system. Therefore, one of the most important aspects of your EDI implementation
should be its capability to validate the composed EDIs against the partner specified set of rules and ensure that they
are compliant before sending it to the partner. Also in the case of a validation failure, the EDI implementation should
be able to indicate the exact problem to the user, so that it can be swiftly corrected.
4. Integration with other systems
Nowadays almost all the organizations rely on different types of software systems to manage their business workflows.
Those can range from online sales portals to accounting applications and ERP systems. So most of the data you will be
receiving through EDIs such as purchase orders should be ultimately entered into these existing systems and similarly
most of the data you will be sending out through EDIs such as invoices, will be generated by these systems. Therefore,
it is very important for your EDI implementation to seamlessly integrate with these other systems, so that your team
does not have to manually transfer data between these systems and EDI implementation.
Finally, the most important fact you need to consider is the running and maintenance cost of the EDI implementation.
Most of the popular EDI software that can be installed on-premise, comes with a very high price tag. On the other hand
implementing your own EDI solution can also be costly as it requires a team who have in-depth knowledge on the EDI
domain and secure EDI transactions.
If you are a large organization with millions of EDIs exchanged per month with hundreds of partners, purchasing and
maintaining a popular EDI software or implementing your own solution can still be worthwhile.
But if you are a small to medium scale organization with few EDI partners and low amount of EDIs exchanged per month,
purchasing or maintaining such a solution can outweigh the monetary benefits you will be receiving by having such a
system. Therefore, in such a case you can look into a hosted SaaS solution such as EDI Generator that can be highly
cost-effective in comparison. It is also better to always have an understanding of how the cost of such a solution will
change if your EDI volume increases over the time with your business expanding.
If you’re interested in our EDI solutions, learn more about our EDI Generator. Don’t
hesitate to contact us at email@example.com!