What Are EDI Standards?
Think of EDI (Electronic Data Interchange) standards like a special language that helps businesses talk to each other through computers. Just like we need rules for speaking and writing, businesses need rules for sharing information electronically. These rules have been helping companies work together since the 1960s. It’s important to note, EDI is the only standard that is not a standard. Meaning that while standards are set and regulated, each trading partner sets their own rules.
As someone who has helped hundreds of companies set up their EDI systems, I can tell you that good standards make everything work, but each additional EDI trading partner adds complexity beyond the standards alone, since it’s simply a translation of a business process, and every business has a slightly different process. Let me show you how it all works.
The Basic Rules of EDI
Let me explain EDI (Electronic Data Interchange) identification values.
In EDI, identification values (also called identifiers or IDs) are unique codes used to identify different parties, documents, and transactions in electronic business communications. These are crucial for ensuring messages are routed correctly and can be properly processed.
Some common types of EDI identification values include:
- Trading Partner IDs: Unique codes that identify specific businesses or organizations. For example, a retailer might have ID “WLMRT12345” while their supplier has “SUPP98765”.
- Interchange Control Numbers: Unique numbers assigned to each EDI transmission to track individual messages between partners. These are typically sequential numbers that help prevent duplicate processing.
- Transaction Set IDs: Numbers that identify the type of business document being transmitted. For example, the most common for North American retail supply chain are:
- 850: Purchase Order
- 855: Purchase Order Acknowledgment
- 810: Invoice
- 856: Advanced Shipping Notice
- Qualifier Codes: Two or three-character codes that provide context for the identification values that follow them. For instance, “ZZ” might indicate that what follows is a trading partner ID.
These identification values are essential because they help:- Route messages to correct recipients
- Prevent duplicate processing
- Track message status
- Match related documents (like purchase orders to invoices)
- Ensure data security by verifying sender/receiver identities
Popular Types of EDI Standards
ANSI X-12 for North American Business
The most common standard in North America helps over 300,000 companies share information. It’s like a business language that most American and Canadian companies understand. The American National Standards Institute oversees the development of voluntary standards for various industries.
UN/EDIFACT for International Trade
There’s a special standard that helps companies and governments around the world talk to each other. It’s especially popular in Europe and is growing in Asia. They use six-letter codes to identify different types of documents.
RosettaNet for Tech Companies
Companies that make electronics and computer parts use their own special standard. It helps them keep track of complicated parts and make sure everything works together.
TRADACOMS for UK Retail
TRADACOMS, originally managed by the UK Article Numbering Association, is now under GS1’s oversight. It was a common EDI standard for retail businesses across the British Isles.
Verband der Automobilindustrie (VDA) for Automotive manufacturing in Europe
VDA was created for German automakers like Daimler, VW, and Audi to share EDI documents with suppliers.
Universal Business Language (UBL) for B2G and some B2B in Europe
UBL is an XML-based business document library created by OASIS. Its readable format simplifies business communication, and since it’s free to use, it’s a cost-effective EDI solution.
EANCOM certain industries in the UK and Europe
EANCOM combines elements from EDIFACT and TRADACOMS for versatility. While it started in retail, GS1 has expanded its use across multiple sectors including publishing, construction, and healthcare.
SWIFT for Banks
SWIFT is a financial EDI standard that banks and financial institutions use to exchange messages and documents with each other.
Why EDI Standards Matter
From my experience working with growing companies, here’s why EDI standards are so important:
Faster Work
No more typing information by hand
Computers can share information instantly
Fewer mistakes in orders and shipping
Better Tracking
Know where your products are at all times
See when payments are made
Track inventory automatically
Save Money
Less paper waste
Fewer people needed to handle paperwork
Fewer mistakes to fix
Tips for Choosing EDI Standards
As an EDI expert, here’s what I tell companies who are just starting with EDI:
- Start with the standards your biggest trading partners use
- Make sure your computer systems can handle the standards you choose
- Think about which countries you do business with
- Consider your industry’s special needs
- Plan for future growth
Common Questions About EDI Standards
“Which standard should my company use?”
The answer depends on:
- Your industry
- Where you do business
- Who your trading partners are
- What kind of information you need to share
“Are EDI standards hard to use?”
Several factors contribute to making EDI standards difficult for suppliers
- While some EDI standards use XML, most use positional flat files that can be difficult to work with, as something as simple as a carriage return or an extra space will invalidate it.
- Even transactions that are technically the same (e.g. 850 order) can be vastly different from retailer to retailer. That means each trading partner requires its own mapping. Troubleshooting transactions requires knowledge of each trading partner’s specification, and the underlying business process.
- Trading partner specifications change from time to time, sending shockwaves through the supply chain of EDI professionals having to adjust their mappings to adhere to the new specifications
- Communication methods vary from sFTP, AS2, AS4, REST APIs and even VANs where businesses pay per kilo character of usage (which hints at how old EDI really is)
- Versioning complicates matters further, as with X12 alone, retailers can support multiple versions and require suppliers to migrate to new versions. Some of the versions used in X12 are 4010. 5010, 6020, 6040 & 7030
“Do I need different standards for different partners?”
Depending on your growth, yes, because you are surely going to add more trading partners that will have their own way of doing things. Modern EDI systems can translate between different standards, but will require an EDI professional to map to different trading partner specifications. Web EDI platforms versioning and standards a non-issue, but often require manual entry of at least some of the transactions.
Managing the Shifting Sands of Retail EDI Compliance
Remember, good EDI standards are like a strong foundation for a building – they make everything else work better. With the right standards in place, your business can grow faster and work more efficiently. However, EDI is the only standard that’s not a standard. Tribal knowledge, software, communication methods and trading partner nonconformity put much of the burden back on the supplier. While EDI is a small part of a large corporation’s IT infrastructure, most medium-sized CPG, food & beverage and apparel & accessory businesses are often better off outsourcing EDI to a managed EDI provider like Surpass. Contact us today to speak with an EDI expert, and receive a free written assessment of your operation and 3-5 year projection of expenses, ROI and TCO of your EDI infrastructure.
