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What Is It Electronic Data Interchange?

Apr 19

Business papers may now be exchanged electronically thanks to EDI, a computer-based communications system. These systems translate business data from one company to universal standards, transfer them across the network to other partners, and create meaningful documents in their technology systems and tools. EDI systems

Everything from automatic purchase orders and invoicing to health insurance codes and shipping are handled via EDI, a vital B2B communications technology.


What Exactly Is EDI Integration?

An EDI integration is the process of integrating EDI systems from different trading partners into a single, integrated system. It addresses a wide range of significant issues, such as:

  • If you're going to be exchanging business documents over EDI, you need to know who your trading partners are.
  • Your ERP, sales system, and so on, are all examples of endpoints, which are the IT systems that send, receive, and process EDI data.
  • Which EDI documents and transactions do you have to exchange with your business partners?
  • What EDI standards do you need to adhere to in order to communicate effectively?
  • Your EDI messages will need to be sent using what type of technology?

An EDI process may be built by defining all of these components, then setting up an EDI software or technology to meet your workflow needs. There are several variations on this set-up.

  • In order for EDI data to be exchanged between your IT systems and those of your partners, EDI software must be used.
  • The actual transactions are handled by an EDI intermediary provider.

It's your choice whether or not to take on this endeavor.


With the aid of an EDI software and integration systems integration partner

You may also mix and match the various tactics depending on the specifics of each trading agreement. In this article, we explain the EDI integration process and break it down into four crucial stages so that you can get started and make informed decisions.


With your business partner, determine EDI objectives

EDI is designed to help you interact effectively with your trading partners. Talk to your EDI partners about the most critical aspects of your EDI interactions, which should entail identifying the following:

Look at each of these components one by one to see how they fit together.



When it comes to your technical setup, you must know at the very least which endpoints you want to use with EDI data. If you're exchanging buy orders and invoices with your business partners via EDI, you'll either have to supply items or complete a financial transaction in order to pay an invoice. For example, EDI can be integrated with a logistics system or an accounting program.

For successful EDI integration, you'll need to sketch out the transactions and procedures involved. A natural extension of EDI integration is increased data integration across your organizations, ensuring that all of your data is up to date.


Specifications for Electronic Data Interchange

One or more EDI standards will be used by your trade partners to connect with one other, providing a standard set of EDI transactions. Healthcare, pharmaceuticals, manufacturing, retail, aviation, and automotive all have their own set of standards. Depending on your industry, the transactions you require, and your partners, you may need to set up an EDI system that conforms with a variety of EDI standards. Some of the more popular examples are as follows:

  • Europe's Association of National Commercial Associations (EANCOM)
  • Regulation of Electronic Data Interchange for the Purposes of Transparency and Accountability in Health Care
  • HL7 is a healthcare consortium with a global reach
  • Aviation The XML format for IATA-CARGO
  • This is a network of high-tech companies called ROSETTANET
  • Everything from global trade to finance to autos is covered by X12

Electronic Data Interchange (EDI)

EDI goes to the heart of what you're aiming to do with this method. There are hundreds of such transactions, all of which are geared on delivering data in a logical and systematic way. Decide which documents or transactions will be exchanged over EDI before you begin the process of setting up an EDI system. In the event that you're dealing with a large business (or a group of large organizations), you may have access to a list of EDI transactions that you should begin with.

In the following, we'll look at several EDI documents and transactions:

  • Purchasing requests for products
  • Invoices
  • Notices of delivery
  • The patient's medical history
  • Prescriptions
  • Product Specifications and Costs
  • In the stock market
  • Flight schedules for Waybills
  • It's also possible to select among thousands of EDI transactions

The EDI Protocols

A variety of modes of transportation are available for you to go from your house to your place of employment, such as driving, taking the train, riding the bus, cycling, or even flying. It's the same thing when you're sending EDI data from one place to another.

An EDI protocol is a type of technology that is used to physically transport messages from trading partners. EDI has been around since the 1960s and is still in use today. Aside from FTP, EDI has evolved to include a variety of different methods for transmitting data.

In addition to EDI-specific technologies like AS2, there are now more than a dozen other ways to transmit and receive EDI messages, including online EDI technologies like HTTPS and web forms, and EDI application programming interfaces like AS4.

Verify your software and your partner's software use the same communication method to correctly integrate EDI.


Direct EDI vs. VANs

You must determine whether to utilize direct EDI with each trade partner or to use a Value Added Network, or VAN, when constructing any EDI setup using any protocol.


Electronic Data Interchange (EDI) (Electronic Data Interchange)

Direct EDI, also known as point-to-point EDI, allows you to establish a direct connection with each business partner using an agreed-upon protocol, such as AS2.


Extra-Valuable Networks (VANs)

EDI messages are translated by VANs between protocols and partners, allowing you to utilize one protocol independent of the protocols used by your partners. VANs act as a bridge between the two.



The only option to send EDI messages securely in the past was through VANs, but as online EDI technology improved and EDI software became more readily accessible, more organizations began to utilize direct EDI instead. Why? Financial considerations are the most critical.

On the other hand, VANs frequently save money on the initial setup, but often charge a fee for every document, or even line item*, that they handle. A direct EDI system can help save you money over time, depending on how often you trade with a given partner or use a specific protocol.


The Specifics

An EDI company requires ongoing management and maintenance when it is initially set up. It may be costly for some companies to perform this maintenance and requires EDI expertise, either from inside the company or through a partner. Several considerations should be taken into account, including your ability to manage your system, the demands of your various EDI partners, and any tweaks you may require to improve communication with your IT solutions.


B2B Managed File Transfer (MFT) software helps firms set up, use, maintain, and perform continuous EDI transactions by transferring files in control. Multiple protocols and translations may be handled by MFT software, which is strong enough to manage it all. At ArcESB, we offer MFT capabilities that can help with this issue.


Systems Integrators and Managed Services Providers

An increasingly popular alternative to in-house EDI management is EDI outsourcing, often known as B2B managed services or B2B outsourcing.

Businesses, in particular, should consider the following:

  • We can help if you don't have an in-house expert in electronic data interchange (EDI) or if they're already overloaded.
  • An advanced degree of competence in EDI integration is required for these specific integrations.
  • ERPs, sales tools, and more need to be integrated with the company's other back-office systems.
  • Implementing and maintaining an EDI platform is not an easy task for any business. You'll need a wide range of talents and a large investment in hardware and
  • For many companies, EDI integration and maintenance are too time consuming and expensive to handle on their own, so they outsource the work to third parties.

A B2B systems integrator can provide managed services, which are EDI programs that are outsourced to a third-party provider. To save money on EDI infrastructure and to acquire access to the required, specialized capabilities, outsourcing is most usually used. 


Management service providers need to be able to keep up with the latest technological advancements.

As a result, it is simple to add new partners from around the world with the help of the provider.
A more flexible company model that makes it easier to expand into new geographies and markets.
An increase in output due to better data about your systems, supply chain, and business partners' operations.

You don't have to worry about setting up and maintaining EDI software since managed services host, run, and administer it for you.

Map data from native enterprise application formats, such as SAP and Oracle, to EDI and XML to onboard new business partners, such as customers, suppliers and banks and logistics and insurance companies. Keep an eye out for irregularities and provide technical support by keeping track of transactions between business partners. In addition, they stay on top of the most recent versions of AS2, FTP, EDI, and XML.

It is becoming increasingly common for the world's leading organizations to outsource B2B integration projects to external service providers.