Tag Archives: EDI and B2B Integration

Important Changes for X12 Version 5010 HIPAA Transactions

In my last blog I discussed the final rule adopting X12 Version 5010 for HIPAA transactions.  There are key differences that should be noted besides the many changes to segments and elements.  Three of the important changes for version 005010 are Version/industry group ID (GS08), ST03 element, and the 999 Implementation Acknowledgment.  The three sections to follow will address each of these areas. Continue reading

Fundamentals of the EDI Shipping Notice

Traditional EDI integration, in its’ simplest form, involves an exchange of core business transactions between two trading partner entities. The Shipping Notice or “ASN” (the “A” being for “Advanced”, although that’s not always the case) is a type of electronic document that is sent (for example) from a supplier (manufacturer) to a buyer, and precedes the shipment (and arrival) of products at the buyer’s location.  The products on the shipment would represent one or more purchase orders made by the buyer of the supplier, often combined into a single shipment.  The ASN notifies the buyer of the contents of the shipment; the buyer reconciles the received products against original purchase orders by using the ASN.  Primary advantages include the improvement of the ordering cycle and improved efficiencies in managing stock.

The Electronic Data Interchange (EDI) X12 document associated with the ASN is the 856. This transaction is structured using Hierarchical Levels (HL) where each level represents shipping and packaging levels.  For example, a shipment might consist of one or more orders; each order might have one or more cartons; each carton might have one or more items; and so on.  The ASN will detail contents of a shipment goods and contains information specific to the order, product descriptions and attributes, physical characteristics, type of packaging, markings, carrier information, configuration of goods within the equipment, and/or many other specifics to the shipment and representing purchase orders.

This information is generally sent electronically at (or about) the time the physical shipment departs, as it must arrive prior to the actual shipment. This makes it possible for the trading partner to review all ASN data before the physical shipment actually arrives, allowing them to schedule the receipt at the distribution center and identify any possible shortages from the shipment.  Technology also exists making it possible to scan the incoming shipments, which would then update inventory and reconcile the purchase order(s) saving manual time and effort, and ultimately saving money. Automation and integration of these various processes provides advantages with business logistics. As one might expect, for all of this to function as intended the ASN must contain accurate data.  Just as accurate data and synchronized ASN processes will provide efficiencies in the movement of products, inaccurate data and/or untimely processes can result in lost revenue and potential customers.

While the ASN is not a mandatory transaction for trading partners, it can be a very useful tool in shipping and receiving systems.  If implemented properly and completely, it can reduce supply chain and administrative costs by utilizing automated integration to all systems within an organization.

The 997: It’s More “Functional” Than You Might Think

For many EDI analysts, the “997 Functional Acknowledgment” [EDI transaction] is a necessary, but little observed, piece of the overall EDI process…one that informs recipients that an EDI transaction has been received.  But, there is much more to the 997 than you might think as it is, after all, called a “Functional” Acknowledgement.  So what exactly are its’ functions?

The 997 acknowledges receipt of one or more transactions; it reports specifically based on X12 Syntax (not backend application) data compliance.  The 997 (could) use up to a total of six different segment types in the “body” of the transaction (between the ST and SE segments), and is dependent on the level of detail being reported.  At minimum, the AK1 (Functional Group Response Header) and AK9 (Functional Group Response Trailer) segments must be present.  These simply report that a specific Functional Group (GS/GE envelope) has been received.  This segment pair also includes the number of transaction sets received and accepted [e.g. Accepted, Accepted with Errors, or Rejected].  This is considered a simple or “Summary” 997 since it references an entire group of transactions (e.g. IN-Invoices) rather than to individual transactions (e.g. 810-Invoices). Continue reading

Why is Testing so Critical for Production?

After having supported many customers for the past several years, I look back at some of the more critical issues and quickly recognize that most of these could have been resolved (or certainly avoided downtime) had the customer employed reasonable and simple testing.

The one recurring theme is the amount of implementation work that is performed without equal efforts applied to testing that work.  One would expect that any configuration with impact on company reputation and revenue would be tested to its’ fullest potential before it is ever promoted to a production status.  Schedules and deadlines do not always allow for intense sessions of testing and debugging, however, there are many important yet unrecognized advantages to the testing process. Continue reading

Why Should Your Company Consider EDI?

Being somewhat of a concerned environmentalist, I think that helping save the planet for future generations should be the priority for everyone. One small step would be to switch your company to the ecologically friendly technology called “EDI” (Electronic Data Interchange).  Workers around the world discard millions of tons of office paper every year.  Producing this paper kills an innumerable amount of trees each year.  Converting this huge quantity of paper to an electronic form would help save paper and energy.  So think green: Reduce your carbon footprint by using less paper while saving money.

EDI would save your company money by providing an alternative to data streams that require a great deal of human interaction and costly materials.  Overhead costs will be reduced by eliminating such tasks as mailroom sorting, circulation, data entry, the manual reconciliation of different documents, document mailing, faxing of information, distributing, filing and storage of documents and transportation costs.  You will save money on paper, envelopes, business forms, stamps, printing and processing fees.   Excess inventory costs would be lowered by reducing inventory levels achieved by shortening the order processing cycle time.  Companies could save money by taking advantage of early payment discounts offered by vendors for quicker supply chain turnaround.  Other cost reductions would include the handling of errors and exceptions – this could be many times more expensive than correctly processing the document in the first place.

EDI improves customer satisfaction and strengthens supplier relations.  EDI improves customer satisfaction because information is available “real time” and is more accurate. Concerns and questions of customers can be addressed in a more timely fashion.  EDI will help strengthen relations with suppliers. The mutual work required to implement EDI tends to build a good working relationship between trading partners.  The sharing of EDI information strengthens the ties between partners and encourages stronger levels of commitment.

When information is copied from one location to another there is an opportunity for error.  Electronic data transfer eliminates the need for copying information from a paper document to another format, or re-keying it into your system.  Once the information is entered correctly, there is no additional opportunity for error since it is electronically entered into all other applications without further human intervention.

One very important advantage of EDI over paper documents is the speed in which the trading partner receives and enters the information into their system.  This greatly reduces cycle and turnaround times.  For this reason, EDI can be an important component of “Just-in-Time” production systems.  Better responses to customer concerns may lead to increased sales.  Transmitting data via EDI across the country or around the world will only take a few seconds or minutes as opposed to days, when sent through manual delivery service.  Once the data is received, the information is available immediately without any time-consuming human intervention.

EDI gives companies the ability to exchange business documents electronically via a wide array of communication protocols.  This form of e-commerce is widely used throughout the world.  EDI carries millions of dollars of transactions every day for all types of businesses and government agencies.  EDI plays a very important role in the world’s economic make-up.  Many companies will not do business with vendors that cannot exchange business documents through EDI.  (Good luck trying to do business with the big retailers without EDI.)

EDI has been available for decades.  It is reliable, proven, stable, and supported by long-established standards developed and maintained by respected governing bodies (such as ANSI, EDIFACT, and ISO…to name a few).  It is highly unlikely that this will change in this lifetime.  Being EDI-capable is no longer an option; it is a business necessity!