Lets talk about EDI

April 29, 2020 © 2006 Sterling Commerce. Confidential and proprietary. 1

What is EDI?

This is called as Electronic Data Interchange.

It’s a standard way to transfer business data electronically
in predefined formats from one organization to another
organization.

Organization Organization

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 Why EDI?
Customer Print and Paper Charges

Purchase Time Consuming and

Postal
Order Postal Charges
Service

Purchase Order sent through EDI directly

enters into Supplier's Order Processing
System from Customer’s Purchasing
system using EDI system.

Reentering of Purchase Order in

Local System.

• May cause errors.

• Leads to rework
• Cost incurred
Supplier • Time Consuming
Supplier

April 29, 2020 © 2006 Sterling Commerce. Confidential and proprietary. 3

How many business domains are using EDI?
EDI is used now by almost all the business domains

• Retail
• Healthcare
• Pharmaceuticals
• Automobile Industries
• Aviation
• Manufacturing
• Government
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Who uses EDI?                        

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What are the benefits of using EDI?

• Speeds up the business process.

• No paper work
• Accuracy.
• Reduces Cost & Increases Revenue
• Flexible
• Scalability

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What is History of EDI?
•EDI has been under development in the U.S. in one form or another since the mid-1960s. In
1968, a group of railroad companies concerned with the quality of inter-company exchanges of
transportation data formed an organization to study the problem and to improve it. This
organization was known as the Transportation Data Coordinating Committee (TDDC).
•At about the same time, individual companies such as General Motors, Sears and K-Mart were
also addressing the inefficiencies of inter-corporate document movement by using their own
electronic (but proprietary) systems with their major trading partners. By the mid 1980's, K-
Mart's system- EPOS was being used by over 500 companies.

•Where was the problem? The problem lay in the fact that each system was specific to the
company that in a proprietary sense had no standard except. A hypothetical company in the
late 1960s doing business with GM, Sears and K-Mart therefore needed three different system
interfaces.

•The story with the grocery industry was different. One EDI historical example is Super Valu, a
large American grocery chain. Because they had to first deal with larger "within-the-company"
EDI issues, they recognized early on the need for industry specific standards. They felt that a
universal standard was impractical and unnecessary for the technology levels that were
available and the extent of their needs.

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What is History of EDI? (continue)
•In the 1970's, several industries sponsored a shared EDI system that they usually turned over
to a third party network. In some cases, the shared system was developed by the third party for
the group of common companies or industry trade group.

•Examples of this early sharing include IBM IVANS, which the U.S. property and casualty
insurance industry sponsored. Another was ORDERNET, sponsored by the pharmaceutical
industry. These industry trade group systems had the same disadvantage as the company
proprietary EDI system: they were standard, but limited in scope, and unable to communicate
with other trade group EDI systems. (ORDERNET, for example, could not communicate with
the transportation carrier's EDI system.) In 1973, the TDCC decided to develop a set of
standards for EDI between companies and to invent a so-called "living standard"-ie: a standard
that included standards on how to change the standards! This resulted in the first inter-industry
EDI standard in 1975 covering air, motor, ocean, rail and some banking applications. What
evolved included generic formats for general business ANSI X12 , first published in 1981; a
WINS format for the warehouse industry; and a UCS format for the food and drug industry; and
for TDCC.

•European development of TRADACOMS, ODETTE and JEDI started around 1984. In 1985,
work started on EDIFACT (EDI for Administration, Commerce & Transport), an international
standard through the auspices of the United Nations.
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What do you mean by EDI Standards?

When we say standard, that means, something which

is common across the domain, country, organization,
group etc.

EDI standard are developed by many agencies for

Domain specific use as well as for common business
uses.

SPEC 2000 standards are X12 standard is defined

used by Aviation by ANSI (American
industry defined by iATA National Standard
(International Airline Institution) for general
Transport Association). business uses.
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Who govern EDI standards?

In EDI standards are defined by many organization like:

Agency Standard
ANSI X12
United Nations EDIFACT
SPEC 2000 iATA

Above are just few examples. These agencies releases versions time
to time according to the business requirements.

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Which EDI Standard is most commonly used?

ANSI - X12

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Show me one Communication scenario

VAN

Mail Box
VAN

Main Frame Enterprise

System Application
EDI Suite for
Translation

INTERNET

MQ Channel

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Show me one EDI use scenario
Customer Supplier

Purchase Order
Sales
Department
Purchasing
Order Ack.
Department

Inventory Shipping
Department Shipment Notice Department

A/C Payable Billing

Department Invoice Department

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 How EDI data gets into end application?
File System
INTERNET
Enterprise
Application

EDI Translator

FIREWALL
Server

End User
VAN

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 Show me one example
ISA*00* *00* *ZZ*MAXXMART
*ZZ*PETBLING *981018*1212*:*00404*000000001*0*P*>~
GS*PO*MAXXMART*PETBLING*19981018*1212*000000001*X*004040~
ST*850*00001~
BEG*00*NE*PO01000001**20021018*19~
Functional Group Envelope

REF*ST*STORE #826~
Transaction Set Envelope
Interchange Envelope

DTM*011*20050516~

Interchange
N1*ST*MAXXMART~
EDI Coded Data

N3*3000 MAXX DR~

N4*MAXXTOWN*NY*68463~
PER*OW*MAX OMILLIAN*TE*2145551212~
PO1*0001*10*DZ*60**BP*RAB00102*VN*RBC1234L~
PID*F****RED BASIC COLLAR LARGE~
REF*BC*7777777~
REF*PD*3333333~
SAC*C*D240***700*******06~
CTT*10*8050~
SE*79*00001~
GE*1*000000001~
IEA*1*000000001~

April 29, 2020 © 2006 Sterling Commerce. Confidential and proprietary. 15

 What are these lines, explain me one of them?

ISA*00* *00* *ZZ*MAXXMART *ZZ*PETBLING

*981018*1212*:*00404*000000001*0*P*>~
Element

Segment
Element Separator
Segment Separator

Sub Element Separator

Tag / Segment Identifier

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How a X12 EDI document forms?
• Element is the basic entity to build an EDI Document.

• Each element is separated by Element Separator.

• Composition of Elements called as Segment.

• Series of Segments forms an EDI Document.

• Each Segment is separated by Segment Separator.

• Every EDI Document is called as a Interchange.

• An EDI Interchange starts with line which has first word as ISA.

• Every line is called as Segment.

• ISA is the only fixed length segment in the entire interchange.

• ISA segment length is 106 characters.

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What is a Interchange Envelope?
• A X12 EDI Interchange consists 3 Envelopes.

• Top level of Envelope is called as Interchange Envelope.

• Interchange Envelope contains information related to the

Sender, Receiver, EDI standard, sequence number etc.

• One can understand this like a postal envelope, as Postal

Envelope have sender address and receiver address, similarly in
Interchange Envelope has Sender ID and Receiver ID.

• To route the document from source to destination address you

need Interchange Envelope.

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What is a Interchange Envelope?
ISA01 Authorization Information Qualifier
ISA02 Authorization Information
ISA03 Security Information Qualifier
ISA04 Security Information
ISA05 Interchange ID Qualifier
ISA06 Interchange Sender ID
ISA07 Interchange ID Qualifier
ISA08 Interchange Receiver ID
ISA09 Interchange Date
ISA10 Interchange Time
ISA11 Interchange Control Standards Identifier
ISA12 Interchange Control Version Number
ISA13 Interchange Control Number
ISA14 Acknowledgement Requested
ISA15 Usage Indicator
ISA16 Component Element Separator

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What is a Functional Group Envelope?
Second level of Envelope is called as Functional Group Envelope.

• Functional Group Envelope

• One can understand this like a postal envelope, as Postal

Envelope have sender address and receiver address, similarly in
Interchange Envelope has Sender ID and Receiver ID.

• To route the document from source to destination address you

need Interchange Envelope.

April 29, 2020 © 2006 Sterling Commerce. Confidential and proprietary. 20