Electronic data interchange


Electronic data interchange is the concept of businesses electronically communicating information that was traditionally communicated on paper, such as purchase orders, advance ship notices, and invoices. Technical standards for EDI exist to facilitate parties transacting such instruments without having to make special arrangements.
EDI has existed at least since the early 1970s, and there are many EDI standards, some of which address the needs of specific industries or regions. It also refers specifically to a family of standards. In 1996, the National Institute of Standards and Technology defined electronic data interchange as "the computer-to-computer interchange of a standardized format for data exchange. EDI implies a sequence of messages between two parties, either of whom may serve as originator or recipient. The formatted data representing the documents may be transmitted from originator to recipient via telecommunications or physically transported on electronic storage media." It distinguished mere electronic communication or data exchange, specifying that "in EDI, the usual processing of received messages is by computer only. Human intervention in the processing of a received message is typically intended only for error conditions, for quality review, and for special situations. For example, the transmission of binary or textual data is not EDI as defined here unless the data are treated as one or more data elements of an EDI message and are not normally intended for human interpretation as part of online data processing." In short, EDI can be defined as the transfer of structured data, by agreed message standards, from one computer system to another without human intervention.

History

Like many other early information technologies, EDI was inspired by developments in military logistics. The complexity of the 1948 Berlin airlift required the development of concepts and methods to exchange, sometimes over a 300 baud teletype modem, vast quantities of data and information about transported goods. These initial concepts later shaped the first TDCC standards in the US. Among the first integrated systems using EDI were Freight Control Systems. One such real-time system was the London Airport Cargo EDP Scheme at Heathrow Airport, London, UK, in 1971. Implementing the direct trader input method, it allowed forwarding agents to enter information directly into the customs processing system, reducing the time for clearance. The increase of maritime traffic and problems at customs similar to those experienced at Heathrow Airport led to the implementation of DTI systems in individual ports or groups of ports in the 1980s.

Standards

EDI provides a technical basis for automated commercial "conversations" between two entities, either internal or external. The term EDI encompasses the entire electronic data interchange process, including the transmission, message flow, document format, and software used to interpret the documents. However, EDI standards describe the rigorous format of electronic documents, and the EDI standards were designed, initially in the automotive industry, to be independent of communication and software technologies.
EDI documents generally contain the same information that would normally be found in a paper document used for the same organizational function. For example, an EDI 940 ship-from-warehouse order is used by a manufacturer to tell a warehouse to ship a product to a retailer. It typically has a 'ship-to' address, a 'bill-to' address, and a list of product numbers and quantities. Another example is the set of messages between sellers and buyers, such as request for quotation, bid in response to RFQ, purchase order, purchase order acknowledgement, shipping notice, receiving advice, invoice, and payment advice. However, EDI is not confined to just business data related to trade but encompasses all fields such as medicine, transport, engineering and construction, etc. In some cases, EDI will be used to create a new business information flow. This is the case in the Advanced Shipment Notification which was designed to inform the receiver of a shipment, the goods to be received and how the goods are packaged. This is further complemented with the shipment's use of the shipping labels containing a GS1-128 barcode referencing the shipment's tracking number.
Some major sets of EDI standards:
Many of these standards first appeared in the early to mid-1980s. The standards prescribe the formats, character sets, and data elements used in the exchange of business documents and forms. The complete X12 Document List includes all major business documents, including purchase orders and invoices.
The EDI standard prescribes mandatory and optional information for a particular document and gives the rules for the structure of the document. The standards are like building codes. Just as two kitchens can be built "to code" but look completely different, two EDI documents can follow the same standard and contain different sets of information. For example, a food company may indicate a product's expiration date while a clothing manufacturer would choose to send colour and size information.

Transmission protocols

EDI can be transmitted using any methodology agreed to by the sender and recipient, but as more trading partners began using the Internet for transmission, standardized protocols have emerged.
This includes various technologies such as:
When some people compared the synchronous protocol 2400 bit/s modems, CLEO devices, and value-added networks used to transmit EDI documents to transmitting via the Internet, they equated the non-Internet technologies with EDI and predicted erroneously that EDI itself would be replaced along with the non-Internet technologies. In most cases, these non-internet transmission methods are simply being replaced by Internet protocols, such as FTP, HTTP, telnet, and e-mail, but the EDI documents themselves still remain.
In 2002, the IETF published RFC 3335, offering a standardized, secure method of transferring EDI data via e-mail. On July 12, 2005, an IETF working group ratified RFC4130 for MIME-based HTTP EDIINT transfers, and the IETF has prepared a similar RFC for FTP transfers. EDI via web services has also been standardized by the OASIS standards body. While some EDI transmission has moved to these newer protocols, the providers of value-added networks remain active.

Internet

As more organizations connected to the Internet, eventually most or all EDI was pushed onto it. Initially, this was through ad hoc conventions, such as unencrypted FTP of ASCII text files to a certain folder on a certain host, permitted only from certain IP addresses. However, the IETF has published several informational documents describing ways to use standard internet protocols for EDI.
As of 2002, Walmart has pushed AS2 for EDI. Because of its significant presence in the global supply chain, AS2 has become a commonly adopted approach for EDI.

Specifications

Organizations that send or receive documents from each other are referred to as "trading partners" in EDI terminology. The trading partners agree on the specific information to be transmitted and how it should be used. This is done in human-readable specifications. While the standards are analogous to building codes, the specifications are analogous to blueprints. Larger trading "hubs" have existing Message Implementation Guidelines which mirror their business processes for processing EDI and they are usually unwilling to modify their EDI business practices to meet the needs of their trading partners. Often in a large company, these EDI guidelines will be written to be generic enough to be used by different branches or divisions and therefore will contain information not needed for a particular business document exchange. For other large companies, they may create separate EDI guidelines for each branch/division.

Transmission: Direct EDI and VANs

Trading partners are free to use any method for the transmission of documents. Further, they can either interact directly or through an intermediary.

Direct EDI: peer-to-peer

Trading partners can connect directly to each other. For example, an automotive manufacturer might maintain a modem-pool that all of its hundreds of suppliers are required to dial into to perform EDI. However, if a supplier does business with several manufacturers, it may need to acquire a different modem and different software for each one.
As EDI and web technology have evolved, new EDI software technologies have emerged to facilitate direct EDI between trading partners. Modern EDI software can facilitate exchanges using any number of different file transmission protocols and EDI document standards, reducing costs and barriers to entry.