If you are new to Electronic Data Interchange, and if you’re in conversations with EDI experts, then it will be difficult to grasp the meaning and context when terms such as EDIFACT or an EDI Protocol, such as AS2, come up.
We understand that as EDI solution providers, and we are hoping to guide you every step of the way. To-Increase offers an embedded Electronic Data Interchange (EDI) solution for Microsoft Dynamics 365 for Finance and Operations (F&O) and Supply Chain Management (SCM) – EDI Studio. Our solution has helped hundreds of companies streamline their communications with their customers, and trading partners through electronic data interchange (EDI).
Therefore, we have compiled this glossary with a list of the most common EDI terms that you might come across in your data transformation journey. Consider it a beginner’s guide to help you get started and also a blog you can come back to when a new term comes up in the midst of your EDI journey. We have covered everything from EDI messages to EDI protocols, so we recommend you bookmark this blog and share it with peers that are new to the world of EDI.
Let’s get started with the basics.
What is EDI?
Electronic Data Interchange or EDI is the electronic exchange of essential documents (also referred to as messages) between businesses using a standardized format. Therefore, it replaces the practice of sending out paper-based documents that were earlier sent out by post, fax, and/or email.
What is an EDI standard?
A standard format ensures companies have to follow set guidelines for EDI communication. There are several standard formats in practice today. Let’s look at each of them and the regulatory bodies that govern and decide on EDI standards.
What are the most common EDI standards and the organizations that maintain and govern them?
Some standards might have different versions. We have covered some of the most common standards and the organizations that are the most active in EDI Standard development and maintenance.
Electronic Data Interchange for Administration, Commerce and Transport or EDIFACT is an international standard. It is an UN-approved standard developed by the UN Economic Commission for Europe (UNECE). UNECE lists a set of syntax rules which allow the use of certain characters, numbers, and alphabets. Based on the syntax rules, the document needs to follow groups of segments within a message and the message design guidelines shared by UNECE. Since EDIFACT is an international standard, it can be used for multi-country and multi-industry messaging.
X12 and ANSI
X12 is a non-profit organization chartered by the American National Standards Institute (ANSI). The organization develops and maintains EDI standards for multiple industries and currently has over 320 standards available for use. Along with the X12 standards, the organization also maintains XML schemas and has two committees driving the process – the Accredited Standards Committee (ASC) and the Registered Standards Committee (RSC).
American National Standards Institute is the governing body that regulates and approves standards for the United States. The organization is also responsible to ensure that US standards are compatible with other global standards for international trade and business. It is important to note that documents are usually referred to by their ANSI code such as 856 (ASN) instead of the type of document in the US. (We have covered some of the most common EDI documents transmitted later in the blog.)*
A standard that was used in Europe for retail EDI transactions and developed by GS1 (earlier known as ASA). Although this standard was used dominantly in the 80s and 90s and has not been maintained since 1995, it is still in use by the retail industry in the UK.
GS1 and EANCOM
The Uniform Code Council (UCC) and EAN International merged together to form GS1 which stands for Global Standards One. Other than being instrumental in the development of TRADACOMS, GS1 has developed several other standards which are predominantly in use in supply chain management. Some GS1 standards namely are - EANCOM, EPCIS, GS1 XML, GDSN.
GS1 standards use bar code and radio-frequency identification (RFID) data carriers on a physical object that can be read by any device which can transfer the data to business applications.
EANCOM stands for European Article Number Communication and is what came after EDIFACT. A widely used international standard that is based on the GS1 numbering system for product details.
Odette is a well-known European organization that develops standards, protocols and offers services for the automotive supply chain industry. Odette stands for Organization for Data Exchange by Tele Transmission in Europe and they are equivalent to the Automotive Industry Action Group (AIAG) in North America. The ODETTE File Transfer Protocol 2 (OFTP2) is a trusted protocol for secure information exchange over the internet. Some of the standards developed by Odette are FORDIS (ready for dispatch advice), DELINS (delivery forecast), and STOACT (inventory report).
XML and ebXML
XML stands for eXtensible Markup Language and eb stands for e-business. It is a relatively newer standard format. It is referred to as the family of XML-based standards and includes XML Namespaces, Efficient XML Interchange (EXI), XML Schema, XML, XSLT, and other related standards.
HL7 or Health Level Seven International (HL7) is an international organization working on standards for the healthcare industry. Their standards are accredited and supported by several international bodies such as ANSI/ISO/HITSP.
The health insurance portability and accountability act or HIPAA, in the United States, states that any individual medical records shared by health care providers must do so following the stipulated national standards to ensure data security.
A subsidiary of GS1 (US), RosettaNet is a non-profit organization that has been working towards the deployment of open standards globally. The consortium also has several regional affiliate organizations across APAC, including Thailand, China, Malaysia, Singapore, and many more nations.
What is an EDI Protocol?
EDI Protocol is the method by which the EDI message is transmitted. Initially, the sender and receiver had to agree on the protocol, but with the boom of the world wide web, more and more organizations prefer using the internet for EDI transmission and since then a lot of standardized protocols have become commonplace.
What are the most common EDI Protocols in use?
EDIINT working group: AS1, AS2, AS3, AS4
EDIINT stands for electronic data interchange internet integration. Different protocols were developed to secure the transmission of EDI messages in accordance with various data security laws. Additionally, it is important that EDI messages are sent using the agreed standard and version to support exchanges via certain protocols to ensure interoperability of EDI documents being transmitted.
The TRANSPORT protocol is what differentiates the Applicability Statement/AS protocols. Let’s look at each of them in some detail:
AS1 - Applicability Statement 1 was developed by a working group of the Internet Engineering Task Force (IETF) to reduce costs, improve processing time and also add a layer of security to EDI messaging. AS1 is based on email tech and uses SMTP (Simple Mail Transfer) and S/MIME (Secure/Multipurpose Internet Mail Extensions) technologies. It allows the sender the option of requesting MDNs (Message Disposition Notifications), and sharing encrypted, and signed messages to secure the EDI transfer process.
AS2 – Applicability Statement 2 was developed by the IETF to replace AS1 and is used worldwide by major giant retail chains, healthcare, and government messages. AS2 is an open standard and uses the HTTP/S (hypertext transport protocol secure) for secure data transmission over the Internet. Just like AS1, AS2 uses an S/MIME tech to secure EDI messages in an ‘envelope’. The EDI message is secured using digital certifications and encryption. The receiver of the document can send a signed message as a notification containing a Message Integrity Check (MIC).
AS3 - Applicability Statement 3 is used to transfer XML and MFT documents using FTP (File Transfer Protocol). AS3 makes FTP transfer secure with the use of MDNs for message verification and encryption. Organizations that have FTP scripting infrastructure or that have to transmit sensitive information use AS3 for EDI messaging.
AS4 - AS4 uses SOAP (Simple Object Access Protocol) over HTTP to transmit EDI messages. It is an open standard for the secure exchange of EDI documents using web services. Just like the other AS protocols, AS4 uses XML encryption and digital signatures for an added layer of security.
Simple Object Access Protocol is a protocol used in conjunction with application layer protocols or transport protocols such as HTTP and SMTP. It uses the XML information set for message transmission which means you will need to convert the EDI message to XML using an EDI translator and will also need EDI to XML mapping.
The official website defines SSH or Secure Shell as “a multi-purpose protocol for secure system administration and file transfers, invented by SSH.COM founder, Tatu Ylönen.” The network protocol can help devices connect and share data by establishing a secure channel that needs authentication for access. This protocol allows secure remote login from one device to another and provides options to authenticate and secure communications using encryption.
HTTP, HTTPS, SMTP
HTTP – HTTP or HyperText Transfer Protocol is a transport protocol to send and receive files using the internet or a network. It is used as the means for B2B communication protocols such as AS2.
HTTPS – As the name goes, HyperText Transfer Protocol Secure or HTTPS is a more secure version of HTTP. It uses a combination of HTTP and SSL/TLS security to provide encryption and security for EDI message transmission.
SMTP - Simple Mail Transfer Protocol defines a set of guidelines that facilitate the transmission of data using electronic mail over the internet. The program uses email between users over a shared network and outside the network. SMTP is used to set up guidelines between servers.
What are the most common terms associated with message transmission?
MIME stands for Multipurpose Internet Mail Extensions and is an Internet standard. It is used to extend the format of email messages and can be used to transfer text in character sets and attachments. These attachments include video, audio images, and application programs. Messages with MIME formatting are transmitted with legacy protocols such as SMTP.
When a notification is shared with the acknowledgment that the expected document was received without errors.
Store and Retrieve or Forward
The service enables the storage of the message in a mailbox until the receiver can access the message and retrieve it. And in the case of forward, the message is only sent when the sender is ready to transmit the message.
A file that has no set fixed length and can vary between the minimum and maximum character limit. However, the file comprises segments containing data elements. The end of each segment and element will need to be called out with a data delimiter.
Validation is a process that authenticates whether compliance standards have been followed in EDI messaging.
What are the most common documents transmitted through EDI?
Most common EDI Messages in the US
- 850 - Purchase orders
- 855 - Purchase order acknowledgment
- 830 - Planning schedule
- 862 - Shipping schedule
- 865 - Purchase order change acknowledgment/request
- 810 - Invoice
Most common EDI messages in Europe
- ORDERS - Purchase order message
- INVOIC - Invoice
- DELFOR - Delivery forecast
- DESADV - Dispatch advice or shipping notification
- IFTSTA - Status of transport
- INVRPT - Inventory report
- ORDRSP - Purchase order response message
Which services benefit from EDI?
Vendor Managed Inventory (VMI)
The management of inventory replenishment and maintenance by an external vendor. The vendor monitors and manages the customer’s inventory based on the information shared by the customer. EDI helps streamline the VMI process and drives communication between the vendor and customers.
Supply chain includes the movement, storage, and transmission of goods and services. EDI helps supplement and drive the supply chain demand and supply process.
3PL stands for third party logistics and it is the outsourcing of your logistics operations and is instrumental in maintaining a steady supply chain for a company. EDI messaging can streamline communication between 3PL and your business and your customer.
Navigate the world of EDI with ease
We have a list of other blogs that will help you understand and navigate the world of EDI. You could read our beginner’s guide to EDI that shares what is EDI, the history and evolution, and the benefits of using integrated EDI. Or you could read about EDI integration with your ERP to help you understand how you could truly benefit from streamlined EDI processes by maximizing the potential of your ERP through integration.
We also have a toolkit that you could download that offers answers to the most basic questions about EDI and will guide you on your path to improved business communications and streamlined processes.