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What is EDI, And How Can It Help My Store?

Electronic Data Interchange (EDI)

What is EDI?

EDI is the abbreviation for Electronic Data Interchange.  It is simply the computer-to-computer electronic transfer or exchange of business information (data) between different companies, called trading partners. This information is exchanged through the internet or over networks, such as VAN’s (value-added networks). A  VAN is a private network provider hired to facilitate electronic data interchange (EDI) or provide other network services.

EDI documents use specific, standardized computer record formats; however companies can be flexible within these standards to meet their particular needs. The standard formatting used is called ASC X12; it was developed by the American National Standards Institute (ANSI). The Data Interchange Standards Association (DISA) manages ASC X12 organization and serves as an EDI educational resource.

EDI messages contain strings of data, each representing a single piece of information, such as a price, unit of measure, UPC, model number, etc.  Each piece of information is separated by delimiter (this is usually a tab space or a comma). The entire string of facts is called a data segment. One or more of these data segments bracketed between a header and trailer makes up a transaction set, which is the EDI unit of transmission.  These transaction sets or messages can be encoded.

Why Use EDI?

  • Saves Time:  Sending an electronic message around the world takes only seconds instead of days. Once received, the information is available for immediate use without hand preparation.
  • Improves accuracy:  There are fewer errors occur because computer systems process the documents rather than processing by hand. Integration of your store’s POS system with EDI invoicing from your suppliers will insure that you are always up-to-date on product price increases and are charging the proper amount when you resell the products.
  • Reduces Cost:  Overhead costs are cut by eliminating or reducing human document handling, data entry, faxing, mailing, etc. It also reduces postage, handling and printing costs.
  • Improves Customer Service:  Since information is ‘immediately’ available, and more accurate, customers’ concerns and questions can be dealt with more effectively.
  • Strengthens Supplier Relationships:  The coordination and cooperation needed for EDI can build trust between trading partners. Information sharing can strengthen the ties between these partners.
  • One drawback is that companies must ensure that they have the resources in place to make an EDI program work; however, the need for buying and hiring these resources or outsourcing them may be offset by the increased efficiency that EDI provides.

 EDI process

What Do You Need to Begin Using EDI?

Almost any business document exchanged between one company and another can be sent via EDI; however each EDI document must be exchanged in the exact specified format. Maps are needed to translate the EDI documents from one trading partner’s format into the format used by the receiving party. Meeting all of a trading partner’s EDI requirements is known as being EDI compliant.

EDI compliance will require the following:

  1. Software for communication
  2. Possibly VAN service for transmission
  3. Creating a mailbox for transactions
  4. Mapping software
  5. Software upgrades, as needed
  6. Mapping labor
  7. Testing with trading partners
  8. Upgrades for new versions, as required by trading partners

Most of these steps are included in the purchase and set-up of your EDI software. The others require coordination between you and your trading partners, to insure that your two different systems can communicate with each other.

Are You ready For EDI?

EDI can provide a secure efficient way to transfer business documents to and from your store. Using EDI can help save you time and money, and improve the timeliness and accuracy of your pricing and purchasing.

If you’d like to learn more about how EDI can save you time and money, and make your store more profitable, ask your Hibbert & McGee sales representative or contact us at HibbertMcGee.com.

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