EDI 101 – Optimizing Business Communications

How are standards such as EDI used by businesses? Businesses today rely upon getting the components of their products brought together or supplies to keep their business running. A warehouse needs to keep its inventory accurate. A car factory needs bolts, metal frames, and many other components. Each business must relay their needs quickly and efficiently while also mitigating mistakes due to numbers getting switched or orders being lost. That is why EDI, or Electronic Data Interchange, became a business standard. Having a program that keeps stock of inventory and makes business transactions flow faster keeps everyone working without delay.

EDI stands for Electronic Data Interchange which refers to the transfer of data and business documents from one computer system to another. EDI is fast, reliable, and replaces the mailing and faxing of documents. There are three different steps to break down how EDI works.

Step 1:

Acquire and organize the data to prepare the documents that need to be sent. The sources of data can include exporting PC based data from spreadsheets or databases, reformatting electronic reports into data files, enhancing existing applications, and purchasing application software that has built-in interfaces for EDI files. An example of this could be sharing necessary information to your system for it to create an electronic file.

Step 2:

Translating documents into the EDI format is the second step of the process. This stage requires feeding electronic data through translator software to convert into the internal data format. You have the ability to purchase software that allows you to manage and maintain your specific needs. The other option is to use translation services of an EDI service provider. In this case, you would send your data to the provider to handle the translation.

There are multiple EDI formats today: UN/EDIFACT, TRADACOMS, ODETTE, etc. and that means it can be difficult to choose the right one. Some formats are specific to region or even industry. Those just getting into using EDI should consult a business that specializes on the subject. Having people who know these systems and keep their software up to date makes inventory control and communications effortless.

Step 3:

This stage is where your EDI files transmit to your business partner. Once the business documents are in the EDI file format, you must connect to each of your partners directly using either a secure internet protocol, an EDI Network provider (aka VAN provider), or a combination of both. This gives you and your business partner the direct, point to point communication necessary for exchanging information.

The internet can now connect people from one end of the world to the other and this has led to a business having more options on suppliers. So, how are standards such as EDI used by businesses? By having a standard EDI and translator it allows for miscommunication to be mitigated by eliminating the need for information to constantly be entered into a different computer system. Radley’s comprehensive technology platform offers a variety of flexible and affordable EDI solutions. Contact a product specialist today to get started.