EDI BASICS

EDI is a standardized format which companies use to exchange information electronically rather than with paper & the business entities who are involved are called as Trading Partners.


Before EDI, a typical Order-to-Cash scenario used to be like below -

Now, this is a typical EDI flow.

Major advantages of EDI were speed- faster data transfer, reduction in human failure.

Major B2B transactions used are RFQ- Request For Quotation, PO- Purchase Order, Sales order, Advance shipping notice, Invoice, etc.

Here is an example of O2C/P2P cycle - 

EDI STANDARDS - 

These standards are formats for the EDI documents. It specifies where what information goes in an EDI document. 

EDIFACT, ANSIX12 are some of the EDI standards most commonly used.

Below is a sample ANSI X12 File -

ST/SE ( Transaction Sets ) - It is the smallest meaningful set of information exchanged by trading partners such as a purchase order or a invoice.

GS/GE ( Functional Groups ) - Similar transaction sets are arranged into functional groups. 

For ex. if company A sends Company B 2 RFQs & 5 POs, then the 2 RFQs are combined into one functional group and the 5 POs into other.

ISA/IEA ( EDI Interchange ) - All Functional groups destined for a particular trading partner are combined into a informational unit called EDI Interchange which are then transmitted between partners.

SAMPLE ANSI X12 :

Below is a sample EDIFACT File -

                                                    AMOR FATI - LOVE OF FATE