Lets talk about EDI

November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

What is EDI?
This is called as Electronic Data Interchange.

Its a standard way to transfer business data electronically

in predefined formats from one organization to another
organization.

Organization
November 25, 2014

Organization
2006 Sterling Commerce. Confidential and proprietary.

Why EDI?
Customer

Print and Paper Charges

Purchase
Order

Time Consuming and

Postal Charges

Postal
Service

Purchase Order sent through EDI directly

enters into Supplier's Order Processing
System from Customers Purchasing
system using EDI system.

Reentering of Purchase Order in

Local System.

Supplier
November 25, 2014

May cause errors.

Leads to rework
Cost incurred
Time Consuming

Supplier
2006 Sterling Commerce. Confidential and proprietary.

How many business domains are using EDI?

EDI is used now by almost all the business domains

Retail
Healthcare
Pharmaceuticals
Automobile Industries
Aviation

Manufacturing
Government
November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

Who uses EDI?

November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

What are the benefits of using EDI?

Speeds up the business process.
No paper work
Accuracy.

Reduces Cost & Increases Revenue

Flexible
Scalability

November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

What is History of EDI?

EDI has been under development in the U.S. in one form or another since the mid-1960s. In
1968, a group of railroad companies concerned with the quality of inter-company exchanges of
transportation data formed an organization to study the problem and to improve it. This
organization was known as the Transportation Data Coordinating Committee (TDDC).
At about the same time, individual companies such as General Motors, Sears and K-Mart were
also addressing the inefficiencies of inter-corporate document movement by using their own
electronic (but proprietary) systems with their major trading partners. By the mid 1980's, KMart's system- EPOS was being used by over 500 companies.
Where was the problem? The problem lay in the fact that each system was specific to the
company that in a proprietary sense had no standard except. A hypothetical company in the late
1960s doing business with GM, Sears and K-Mart therefore needed three different system
interfaces.
The story with the grocery industry was different. One EDI historical example is Super Valu, a
large American grocery chain. Because they had to first deal with larger "within-the-company"
EDI issues, they recognized early on the need for industry specific standards. They felt that a
universal standard was impractical and unnecessary for the technology levels that were
available and the extent of their needs.
November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

What is History of EDI? (continue)

In the 1970's, several industries sponsored a shared EDI system that they usually turned over
to a third party network. In some cases, the shared system was developed by the third party for
the group of common companies or industry trade group.
Examples of this early sharing include IBM IVANS, which the U.S. property and casualty
insurance industry sponsored. Another was ORDERNET, sponsored by the pharmaceutical
industry. These industry trade group systems had the same disadvantage as the company
proprietary EDI system: they were standard, but limited in scope, and unable to communicate
with other trade group EDI systems. (ORDERNET, for example, could not communicate with the
transportation carrier's EDI system.) In 1973, the TDCC decided to develop a set of standards
for EDI between companies and to invent a so-called "living standard"-ie: a standard that
included standards on how to change the standards! This resulted in the first inter-industry EDI
standard in 1975 covering air, motor, ocean, rail and some banking applications. What evolved
included generic formats for general business ANSI X12 , first published in 1981; a WINS format
for the warehouse industry; and a UCS format for the food and drug industry; and for TDCC.
European development of TRADACOMS, ODETTE and JEDI started around 1984. In 1985,
work started on EDIFACT (EDI for Administration, Commerce & Transport), an international
standard through the auspices of the United Nations.
November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

What do you mean by EDI Standards?

When we say standard, that means, something which
is common across the domain, country, organization,
group etc.
EDI standard are developed by many agencies for
Domain specific use as well as for common business
uses.

SPEC 2000 standards are

used by Aviation industry
defined by iATA
(International Airline
Transport Association).
November 25, 2014

X12 standard is defined

by ANSI (American
National Standard
Institution) for general
business uses.

2006 Sterling Commerce. Confidential and proprietary.

Who govern EDI standards?

In EDI standards are defined by many organization like:
Agency

Standard

ANSI

X12

United Nations

EDIFACT

SPEC 2000

iATA

Above are just few examples. These agencies releases versions time
to time according to the business requirements.
November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

10

Which EDI Standard is most commonly used?

ANSI - X12

November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

11

Show me one Communication scenario

VAN
Mail Box

VAN
Main Frame
System

Enterprise
Application
EDI Suite for
Translation

INTERNET

MQ Channel
November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

12

Show me one EDI use scenario

Customer

Supplier

Purchase Order
Purchasing
Department

Inventory
Department

A/C Payable
Department

November 25, 2014

Sales
Department
Order Ack.

Shipping
Department

Shipment Notice

Billing
Department

Invoice

2006 Sterling Commerce. Confidential and proprietary.

13

How EDI data gets into end application?

File System
INTERNET

Enterprise
Application

FIREWALL

EDI Translator

Server

End User
VAN

November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

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November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

15

Interchange

EDI Coded Data

ISA*00*
*00*
*ZZ*MAXXMART
*ZZ*PETBLING
*981018*1212*:*00404*000000001*0*P*>~
GS*PO*MAXXMART*PETBLING*19981018*1212*000000001*X*004040~
ST*850*00001~
BEG*00*NE*PO01000001**20021018*19~
REF*ST*STORE #826~
DTM*011*20050516~
N1*ST*MAXXMART~
N3*3000 MAXX DR~
N4*MAXXTOWN*NY*68463~
PER*OW*MAX OMILLIAN*TE*2145551212~
PO1*0001*10*DZ*60**BP*RAB00102*VN*RBC1234L~
PID*F****RED BASIC COLLAR LARGE~
REF*BC*7777777~
REF*PD*3333333~
SAC*C*D240***700*******06~
CTT*10*8050~
SE*79*00001~
GE*1*000000001~
IEA*1*000000001~

Transaction Set Envelope

Functional Group Envelope

Interchange Envelope

Show me one example

What are these lines, explain me one of them?

ISA*00*
*00*
*ZZ*MAXXMART
*981018*1212*:*00404*000000001*0*P*>~

*ZZ*PETBLING

Element

Segment
Element Separator

Tag / Segment Identifier

November 25, 2014

Segment Separator
Sub Element Separator

2006 Sterling Commerce. Confidential and proprietary.

16

How a X12 EDI document forms?

Element is the basic entity to build an EDI Document.

Each element is separated by Element Separator.

Composition of Elements called as Segment.

Series of Segments forms an EDI Document.

Each Segment is separated by Segment Separator.

Every EDI Document is called as a Interchange.

An EDI Interchange starts with line which has first word as ISA.

Every line is called as Segment.

ISA is the only fixed length segment in the entire interchange.

ISA segment length is 106 characters.

November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

17

What is a Interchange Envelope?

A X12 EDI Interchange consists 3 Envelopes.

Top level of Envelope is called as Interchange Envelope.

Interchange Envelope contains information related to the

Sender, Receiver, EDI standard, sequence number etc.

One can understand this like a postal envelope, as Postal

Envelope have sender address and receiver address, similarly in
Interchange Envelope has Sender ID and Receiver ID.

To route the document from source to destination address you

need Interchange Envelope.

November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

18

What is a Interchange Envelope?

ISA01

Authorization Information Qualifier

ISA02

Authorization Information

ISA03

Security Information Qualifier

ISA04

Security Information

ISA05

Interchange ID Qualifier

ISA06

Interchange Sender ID

ISA07

Interchange ID Qualifier

ISA08

Interchange Receiver ID

ISA09

Interchange Date

ISA10

Interchange Time

ISA11

Interchange Control Standards Identifier

ISA12

Interchange Control Version Number

ISA13

Interchange Control Number

ISA14

Acknowledgement Requested

ISA15

Usage Indicator

ISA16

Component Element Separator

November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

19

What is a Functional Group Envelope?

Second level of Envelope is called as Functional Group Envelope.

Functional Group Envelope

One can understand this like a postal envelope, as Postal

Envelope have sender address and receiver address, similarly in
Interchange Envelope has Sender ID and Receiver ID.

To route the document from source to destination address you

need Interchange Envelope.

November 25, 2014

2006 Sterling Commerce. Confidential and proprietary.

20