Inbound Flow:
1) The inbound, EDI data needs to be collected.
2) The collected data should be De-enveloped (removing the headers) to get the message part also.
3) Using the header information (Interchange, Group, Message and version) the Envelope setup (Trading Partner setup) will be identified.
4) The Envelope setup contains (points) the Map which can be used to translate the data.
5) The translated data can be extracted to the specified directory.
Outbound Flow:
1) Collect the files.
2) Use the Typer map or Data extraction map to extract the data to identify the User and partner information.
3) These info can be used to identify the Envelope which points to a map.
4) The Map translates the data and Envelopes the data with the header segments.
5) The translated files can be extracted to the specified directory.
EDI And The Business Cycle
A typical business cycle may be as follows:
1. A buyer has a need for merchandise and creates a Request for Quote (RFQ) document.
2. The seller responds with a Quote providing the price and other pertinent information as to how the request would be
fulfilled.
3. Upon acceptance of the quote, the buyer sends a purchase order document to the seller requesting goods at quoted
prices.
4. The seller responds acknowledging that the goods can be delivered at the prices specified and in the time frame
indicated. A functional acknowledgment transaction may also be sent indicating successful receipt of any EDI transaction
without indicating any conditions or details of the business transaction.
5. The seller ships the goods and sends a shipping notice providing details regarding the carrier, product identification,
dates, and other information about the shipment.
6. The seller sends an invoice document, billing the buyer for the goods. There is also an EDI document that allows a
combined shipment and billing notice.
7. The buyer notifies his bank that payment is to be made (payment order) and uses another form of the same document
(remittance advice) to inform the seller that payment is being made.
Some Common EDI X12 Transactions
Transactions that could be used to implement previous example:
840 - Request for Quotation
843 - Response to Request for Quotation
850 - Purchase Order
855 - Purchase Order Acknowledgment
856 - Ship Notice/Manifest
810 - Invoice
820 - Payment Order / Remittance Advice
Other common ANSI X12 transaction sets:
811 - Consolidated Service Invoice/Statement
813 - Electronic Filing of Tax Return Data
832 - Price/Sales Catalog
857 - Shipment and Billing Notice
880 - Grocery Products Invoice
997 - Function Acknowledgment
Industry Acceptance Of EDI
The transportation industry was one of the first to use EDI concepts. It was Edward Guilbert who
conceived EDI after experiencing problems moving paper-based information during the Berlin Airlift.
Back in the U.S. he founded the Transportation Data Coordinating Committee (TDCC), an organization
that was among the first in using EDI standards as we know them today.
Since the transportation industry effects so many others, soon other industries, such as grocers, were
asking about the electronic paperwork in use by the TDCC. The grocery industry Uniform
Communication Council (UCC), founder of the familiar UCS bar code, adopted their own set of EDI
standards.
As EDI use grew and was recognized as essential to other industries, the American National Standards
Institute (ANSI) formed the X12 committee to address EDI standards. The United Nations sponsored
EDIFACT Boards (EDI for Administration, Commerce, and Transport) adopted a standard with a very
similar syntax to X12.
Transportation and EDI
Here we see an example of transaction flow for the transportation industry. The Ship Notice/Manifest
856 transaction soon became a major component of many EDI processes across industries. It supported
concepts such as Just In Time (JIT) and Continuous Flow Manufacturing (CFM).
Banking and EDI
Another industry that effects all others is the banking industry. Although the banking industry already
has specific industry standards for the formatting and transmission of electronic data, there are also a
number of EDI transactions that facilitate the communication of financial data to and from banks.
Banking standards rather than EDI, however, are generally used for bank-to-bank communications.
Retail and EDI
With high volumes of transactions, large inventories with millions of productions, and numerous
suppliers, the retail industry is one of the areas for high return on investment with EDI. Large retailers
are often EDI "hubs" forcing suppliers ("spokes") to accept purchase orders electronically in EDI format.
Vendor Managed Replenishment Systems (VMRS) allow vendors to supply retailers automatically, based
on electronic reports of product sales. This process eliminates purchase orders and reduces inventory
and retail "stock out" problems.
Quick response is a process that uses real-time transactions to trigger replenishment responses in the
supply chain for manufacturers or retailers. This improves inventory turns, product allocation and
replenishment times and helps retailers avoid running out of important stock.
"Enterprise Resource Planning" software solutions address interactions between the various functions
Sales, Distribution, Manufacturing, Materials, Finance, Human Resources, and Maintenance. They
provide a common, consistent system for capturing data organization wide, with minimum redundancy.
Throughout the process, bar codes may be used to capture product and process identification and often
are used to provide input to processes that produce data for EDI systems.
Vendor Managed Replenishment Systems
In the past a company's inventory was housed on-site. This often would be costly when supply
outweighed demand. In today's business environment it is become increasingly more cost effective to
rely on vendors to replenish a company's inventory as needed. Using this method, reliable transport is
essential to ensure a reliable supply based on supply and demand.
Healthcare And EDI
The use of Electronic Data Interchange permeates virtually all aspects of the healthcare system. In expediting the transfer of
important medical documents, EDI is vital in the health of the patient.
Examples of Healthcare Transactions
The diagram above shows the flow of information among the Healthcare Provider, the Policyholder, the Provider of Benefits, and
the Service Organizations and Banks.
Refer to the next visual for a list of these and other healthcare transactions.
Healthcare Transactions
Examples of Healthcare Specific EDI Transactions
270 - Eligibility, Coverage or Benefit Inquiry
271 - Eligibility, Coverage or Benefit Information
272 - Property/Casualty Loss Notification
273 - Insurance/Annuity Application Status
274 - Health Care Provider Information
275 - Patient Information
276 - Health Care Claim Status Request
277 - Health Care Claim Status Notification
278 - Health Care Services Review Information
279 - Health Care Services Review Request
834 - Benefit Enrollment/Maintenance
835 - Claim Payment/Advice
837 - Healthcare Claim
EDI Today
Virtually all industries have adopted some form of EDI today. Examples of EDI documents include purchase orders, invoices,
power of attorney, and price information. Many industries use specific EDI documents such as motor carrier rates, student
records, tax returns, vehicle shipping orders. Companies want to achieve 100% electronic transaction volumes.
What Does EDI Involve?
Application
"Business documents"
Translator
"Standard format"
Communications Vehicle
"Electronic Exchange
Application Document Formats
In the traditional business environment, there are no agreed upon standards for
paper documents or file formats
Applications produce different document formats and require different information
Locating and interpreting information on different document formats reduces
productivity
Multiple Application File Formats
When computer applications create business documents, the files that generate the documents are in different formats
Different file formats require that the receivers reformat or translate the file before it can be used in their own system
Dealing electronically with many trading partners can be complex
Translation
Most companies purchase or lease translation software
Translation software translates business documents into a common EDI standard for transmission
to a trading partner
Translation software also translates EDI Standard data into a format suitable for application
processing
EDI outsourcing services are also available
Translation Software
Bi-directional software which converts data to and from the EDI standard formats
Some translators provide any-to-any translation capabilities
Translators exist for all platforms (mainframe, mid-range, micro, PC)
Communications
Transmission method is not addressed by the EDI standards
Alternatives
Value Added Network
Point-to-Point (Direct)
Proprietary Network
Internet Service Provider
Combinations of above
Some communication products can be tightly coupled with translation
EDI System Components
Although the translator is the heart of any EDI system, the nature of EDI requires that the transactions be communicated with a
trading partner. And as the source or target of data processed by the translator, the application also plays a key role. These
components may be uncoupled from the translator, loosely coupled, or tightly coupled.
When the application and communication components are uncoupled from the translator the data may be physically moved from
one step in the process to another and the processing by the components is not synchronized or coordinated with no
communication between the components other than the passing of data files.
A loosely coupled system may involve one component launching or causing the execution of another component. The
communication program may pass status of communications back to the translator to allow administration at the translator with
information regarding the status of translation, enveloping, and communication.
A tightly coupled EDI system will often involve an Application Programming Interface (API) that is responsible for the execution
and status of all components of translation. The API may then provide the central point of control and administration of the EDI
process.
Traditional EDI System
The "traditional" EDI system uses Value Added Networks (VANS) for communcation between trading partners. VANS often
specialize in EDI data, using Interchange Control Header information to identify senders and receivers. They may also
interconnect with other VANS, allowing companies on different VANS to communicate without establishing connectivity to the
VANS of all their trading partners. VANS provide a high degree of security, reliability, and accountability for network
transmissions.
Other Forms of EDI
Paper Oriented
EDI to Fax - An EDI system may produce FAX output to be sent to a trading
partner.
EDI to Print - Inbound or outbound EDI data may be printed for local processing
or for a trading partner.
People Oriented
Forms-based documents are available on the Internet allowing entry and
transmission of EDI data.
VAN or Extranet access to EDI applications is also an option.
New Methods for EDI:
Allow more trading partners access to EDI function and thereby assist large
enterprises in achieving 100% EDI.
Assist small and medium business (SMBs) with implementing EDI without the
complexity and cost involved with complex EDI systems and VAN requirements.
EDI Benefits:
There is no doubt that EDI can bring significant benefits to organizations. These can generally be classified into:
Strategic, operational, opportunity
Strategic benefits include:
Ø Faster trading cycle.
Ø Ability to adopt new business processes such as Just-in-Time manufacturing techniques.
Ø Ability to win new business or retain existing customers leading to improvements in business efficiency. Ability to respond too highly competitive new market entrants.
Operational benefits include:
Ø Reduced costs - paper and postage bills cut - reduction in money tied up in stock - manual processing costs (e.g. associated with verification, keying and re-keying of documents and the cost of manual filing systems).
Ø Improved cash flow.
Ø Security and error reduction.
Ø Acknowledged receipt.
Opportunity benefits include:
Ø Enhanced image
Ø Competitive edge
Ø Improved corporate trading relationships
