Tag Archives: EDIFACT

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!

Integrating Multiple Data Types

Integration of data is the process of combining different data types into one or more shared universal formats.  This process is integral to business as each unit within an organization can use different data types and therefore lack a unified view.  Data itself can be of various types such as flat files defined externally or delimited by a common data separator.  Data can also be stored in various kinds of databases, each with a unique method for defining and storing data.

For users of differing applications to view and use each others’ data it must be converted to the format of the other applications or to a universally defined format as is done through EDI transmissions.  A data integration product makes this process seamless and fully integrated into a user application system.  The software can either convert each application data type into every other type (a many to many conversion) or from one data type to a universal format – then from the universal format to a specific data type (a many to one conversion).

The use of a universal format is preferred as this makes it possible for each user to create applications and conversions based on an agreed upon standard (such as EDI: X12, EDIFACT, etc.).  This will also removes the requirement that each system be aware of the file formatting or application setup/configurations used by the remote system.  Each user employs the Integration software to map their data into a common and agreed upon standard…and vice-versa.

B2B to Be

For my inaugural post on this blog, I want to revisit one of those “solved problems” that still dogs many of the companies we talk with, namely, how to handle B2B integration requirements that don’t involve standard EDI. Companies still find it difficult to cope with the full range of B2B connections and content types needed to integrate with large and small trading partners, including:

  • Standard EDI (and in some cases, EDI that does not fully conform to standards)
  • “Standard” XML, which ranges from well-developed, horizontal standards like RosettaNet to hundreds of loosely-defined vertical transaction sets
  • EDI-like flat file standards (most of these are older, vertically-focused cases)
  • EDI-based web forms
  • Proprietary, partner-defined flat files
  • Proprietary, partner-defined spreadsheets
  • Proprietary, partner-defined web portals
  • Proprietary, partner-defined documents sent by email or fax

Did I miss any? Probably. But the point is that standard EDI is just one of numerous conventions used for B2B integration.  Of course, standard X12 and EDIFACT EDI are still the mainstay of B2B integration. And there is little evidence to suggest that companies are ready to invest in replacing all of their EDI connections with something “better”.  In fact, EDI adoption is increasing.

Continue reading