What is EDI? Explanation and Common Terms

EDI stands for Electronic Data Interchange.  A great, detailed explanation and history is available on the EDI Wiki Page.

In short, it is a document standard implemented to enable businesses to communicate electronically.  Typically the documents traded would be the same documents companies traditionally traded in paper - such as Purchase Orders, Requirements, Ship Notices and Invoices.

Electronic data exchange saves companies money by greatly reducing or in some cases eliminating manual data entry, as well as the cost of generating, distributing and managing paper documents.

Below is a Glossary of Terms associated with managing EDI communications.

ANSI - The American National Standards Institute or ANSI is a private non-profit organization that oversees the development of voluntary consensus standards for products, services, processes, systems, and personnel in the United States.

ASN – Advance Ship Notice/856, an electronic document transmitted to a customer to notify them of shipping information (dates/parts/qtys/order number/weights/etc)

Delimiter - A delimiter is a sequence of one or more characters used to specify the boundary between separate, independent regions in plain text or other data streams. An example of a delimiter is the comma character, which acts as a field delimiter in a sequence of comma-separated values

EDI – See Electronic Data Interchange

EDIFACT - (Electronic Data Interchange For Administration Commerce and Transport) An ISO standard for electronic data interchange (EDI) that was proposed to supersede both X12 and TRADACOMS as the worldwide standard.

Electronic Data Interchange – (1)The electronic communication of business transactions, such as orders, confirmations and invoices, between organizations. Third parties provide EDI services that enable organizations with different equipment to connect. Although interactive access may be a part of it, EDI implies direct computer-to-computer transactions into vendors' databases and ordering systems.

(2)  Data exchanged by two businesses electronically, either directly from server to server, or through the use of a VAN (Value Added Network).  Requirements received through email/fax/verbally and entered manually into EDI Software are not EDI, though they may be input into the EDI system for use in building shippers, keeping a record of requirement history, etc.

Electronic Invoice – 810, an electronic document transmitted in place of or in addition to a paper invoice to bill a customer. 

Envelope – (EDI) Segments ISA, GS, ST, SE, GE and IEA are all part of the EDI “Envelope”.  They are common to all X12 files and message types.  An EDIFACT envelope is comprised of segments UNB, UNH, UNT and UNZ.  The EDI Envelope contains important information to identify you and your trading partner (Sender ID, Receiver ID), it also contains interchange, transaction group and transaction control numbers, counts, transmission dates and times, etc.

Epayment – Toyota’s manifest system that requires a 3 way match between the Toyota issued manifest, the ASN and the Electronic Invoice.  Troubleshooting tools include 824 ASN error rejections, as well as the toyotasupplier.com website.

Mailbox - A mailbox is an area within a Value Added Network where electronic documents are placed, either temporarily until picked up/delivered by/to a trading partner, or indefinitely for storage and/or tracking. When contracting for VAN services, a company/entity will be assigned a mailbox (or multiple mailboxes) for the storage and movement of the Electronic documents between the entity and its Trading Partners.

Proprietary Data - Internally generated data or documents that contain technical or other types of information controlled by a firm to safeguard its competitive edge – engineering info, volume, pricing, etc

Protocols - rules determining the format and transmission of data (X12, EDIFACT, HTTP, XML, etc)

Raw Data - Data that has not been processed in any manner. It often refers to uncompressed text that is not stored in any proprietary format. It may also refer to recently captured data that may have been placed into a database structure, but not yet processed.

Shipper – shipping document/packing list/pick list/etc.  A printed document sent with a shipment, a copy of which is usually signed by the truck driver and kept at the shipping point/mfg plant.

Syntax – (in Computer Science) The rules governing the formation of statements in a programming language.

Trading Partner – a company or entity with which you trade documents electronically

Trading Partnership - the electronic relationship between two trading partners

Value Added Network - A VAN is a hosted service that acts as an intermediary between business partners sharing standards based or proprietary data via shared business processes.  A VAN can not only transport messages but also adds audit information to them and may upon request modify the data in the process of automatic error detection and correction or conversion between communications protocols.

VAN – see: Value Added Network

X12 - A standard for Electronic Data Interchange (EDI) from the American National Standards Institute (ANSI) Accredited Standards Committee (ASC). X12 is popular in North America. The competing UN/EDIFACT international standard is predominant outside of North America. EDI standards specify data formats, character sets, and data elements.