Now that we know what EDI is, and how and why it came into being, it is time to take a more in-depth look at how it works. In this second chapter of EDI Academy, we shall see the components necessary to implement this system.
The essence of an EDI relationship is the stakeholders taking part in it. Although, as we explained, EDI was created to provide a solution for business partners in the automotive industry, today it extends to all kinds of sectors. Moreover, EDI is not only used by private companies, as the technology is also increasingly implemented in administrations, institutions and other public bodies.
Standard language is what mainly defines electronic data interchange Indeed, it was the development of common rules which led to the creation and spread of this technology, as the huge variety of processors and operating systems had previously hampered communications.
There are different types of EDI standards worldwide, some of them intentionally developed for specific industries and other generic ones, such as EDIFACT (the most widely used in Europe) or ANSI X12 (more common in the US).
Among other aspects, the standards state the information required for each type of document, the order in which it is presented, the format and meaning of the data (for example, in X12 “TO” stands for “ton”).
To be able to construct and manage the messages, both sender and receiver must have an EDI solution. In general, this type of platform should include the following functions:
Mapping or conversion The solution must be able to translate the messages sent into the EDI standards recognizable by each partner.. The same goes when receiving messages.
Integration with the ERP To facilitate and automate transactions, the EDI platform should be integrated with the company’s internal management system so that each message sent or received becomes part of it. Integration is one of the most costly process when it comes to rolling out a solution of this kind. This is why, for smaller companies, alternative non-integrated EDI web platforms have been developed that require no installation, but in which the process is more manual.
Security There are several ways to ensure data confidentiality and integrity. Everything depends on the degree of security the company needs to deploy. In this sense, we are talking about everything ranging from basic user and password checks, as in EDI web solutions, to the data encryption, electronic signature or rejection of received messages included in advanced EDI platforms.
Data management and maintenance Ideally, the software should control the message flow automatically. In other words, once the message is created in the ERP, it should be able to recognize the recipient and adapt the message to their stated requirements. In reception, the process works in reverse, so the information is stored without human intervention.
Communications This is another of the more complex points of an EDI solution. For the platform to be truly successful, in addition to multistandard it must be multiprotocol and interoperable. We shall study this point in greater detail below.
We know who takes part in an EDI relationship, what the messages exchanged are like and how the software works, but how does sending take place? They are different options available, which vary depending on the type of message to be sent, the volume, security, speed… For example, privately leased point-to-point lines, public telephone networks or internet. Nevertheless, the option most widely used is value added networks, also known as VANs.
In this case, no direct communication with reception takes place; instead, each user has a mailbox where the message is deposited. Once it is ready, the recipient can access it. One of the main advantages of this communication system is that, with a single call, it is possible to send all the messages we want and also pick up all those received by the trading partners. In addition, all calls made by a VAN are local, even if the destination is abroad, so the cost is lower than for a phone line, for example.
The main drawback of added value networks is that they require thesender and recipient to be part of the same VAN to be able to communicate. In this sense, the interconnection capacity of the platform and the EDI service provider is crucial, since agreements with other networks are essential for this medium to work properly.
Nowadays, one of the most powerful VANs in the world is EDICOMNet, thanks to its high degree of interoperability. Through it, more than 13,000 customers exchange around 400 million business transactions every year.