EDI Capabilities Overview

General EDI Information - What is EDI?

Electronic Data Interchange (EDI) is computer-to-computer communication of business documents between companies. It is a paperless way to send and receive Purchase Orders, Invoices, Charge backs etc. EDI replaces human-readable documents with electronically coded documents. The sending computer creates the document and the receiving computer interprets the document. Implementation of EDI streamlines the process of exchanging standard business transactions. Companies save by eliminating cost due to errors and double entry of data. The transmissions are accomplished by connecting to a mailbox. The most common mailbox is a Value Added Network's (VAN) electronic mailbox such as GEIS. Each user, identified by a unique EDI ID, accesses his mailbox to send and receive all EDI transactions. To standardize the documents communicated between many companies, the Transportation Data Coordinating Committee, in 1975, published its first set of standards. EDI standards are formats and protocols that trading partners agree to use when sending and receiving business documents. Around 1979, The American National Standards Institute (ANSI) designated an accredited standards committee for EDI. More information can be found by visiting the ASCX12-Website. The standards continue to evolve to address the needs of the member companies. In the 1980's, the UN/EDIFACT standards were announced for international trade. The ANSI standards, however, are still the most commonly used standards inNorth America. The VICS (Voluntary Interindustry Commerce Standards Association) standards are used by some retailers and are a subset of the ANSI standards. The VICS standards are maintained by the VICS-Association.

How EDI Works

Typically, an EDI document begins in a trading partner's business application computer system. A document is produced and sent to a specialized computer application (Mercador) that translates the document into a standard EDI format. The EDI file is then transmitted, usually via the trading partner's VAN. When the VAN receives the transmission, it is sent to the intended recipient's mailbox, identified by its EDI ID. The trading partner receives the document from its VAN when it connects and empties its mailbox. Through the use of an EDI translation program, the document is translated into a file that will be processed by the trading partner's business application system (ASW , BaaN) . During the inbound translation process, a new EDI document is transmitted back to the sender to acknowledge receipt of the document EDI997. This new document, the functional acknowledgment (FA), assures the sender that its transmission has been received.

EDI Document Structure

A single EDI transmission constitutes an ISA/IEA envelope, which isolates one group of transmitted data from another. Each envelope contains EDI documents to (outbound) or from (inbound) a single EDI trading partner. These envelopes contain one or more GS/GE envelopes, which contain one or more documents of the same type. The use of separate GS/GE envelopes allows for several different document types to be communicated within the same ISA/IEA envelope. Within the GS/GE envelope is the ST/SE envelope that isolates one document from another. A Transaction Set is wrapped in the Transaction Set Header/Trailer (ST/SE) envelope. Data Segments (similar to a record in a data file) are used to make up Transaction Sets. Data Segments are roughly equivalent to a single line on a document. Data Elements (similar to a field in a record) contain the basic units of information and are used in various combinations to make up Data Segments.

The Interchange Header (ISA), commonly known as the Communications envelope, starts an interchange of one or more functional groups. It contains: the syntax identifier, Sender and Receiver EDI ID's, unique control number, acknowledgment requested, test indicator, date and time sent, recipient reference or password, and version of Standard being used. The Functional Group Header (GS) indicates the beginning of a group of transaction sets and provides a second level of Sender and Receiver IDs. It usually includes an identifier for the type of transaction set, application sender identifier, application recipient identifier, date and time sent, unique functional group reference, agency responsible for specification of structure (i.e. X12, VICS), message type version, and password.

The Detail area contains the details of the business transaction. In a PO document, the ST includes elements such as: Purchase Order Number, Date and PO Type, Item Numbers for Products Ordered and Product Descriptions, Prices, Method of Shipment and Delivery Dates, Terms of the Order, and, for some orders, a Distribution List by Item by Location.

The Trailer Envelope Segments contain control information such as total ST Segments and total GS Segments and unique control numbers that must be identical to the values in the ISA and the GS.

Health Industry Business Communications Council (HIBCC) is an industry-sponsored and supported nonprofit organization. As an ANSI-accredited organization, our primary function is to facilitate electronic communications by developing appropriate standards for information exchange among all health care trading partners.

Benefits of EDI

• Closer relationships with your trading partners.
• Reduction of data entry errors.
• Shorter ordering cycle.
• Competitive advantage when selling to large, EDI capable customers.
• Potential for faster payment process.
• Decrease of on-hand inventories.

Standards

EDI standards help facilitate EDI by providing a common format or rules of data structure and transmission protocols. The objective is to use an agreed upon structure for communicating the data in business documents. Each organization that maintains a set of standards provides a full set of documentation and definitions of each version of their standards. The standards say which pieces of information are mandatory for a particular document and which pieces are optional. These standards are necessary because so many trading partners conduct transactions with several other trading partners. It would be difficult to conduct business if every trading partner had completely different rules. As the standards have grown, they have become more general and able to be interpreted in many different ways. If you trade with 5 EDI partners, you will probably have 5 different documents for eachPO, Invoice, etc. Because of the standards, they will at least have the same basic structure. Each partner with whom you trade will have a detailed set of EDI specifications. The documents you trade must adhere to these specifications. Some trading partners will assess a charge against your invoice for mistakes or missing documents. Therefore your understanding and compliance with your partner's specifications is very important.