Electronic Data

Interchange

EDI
Electronic

Data

Interchange (EDI)

is

the electronic

interchange of business information using a standardized

format.
A process which allows one company to send information to
another company electronically rather than with paper.
EDI operates under two principles, firstly electronic documents
replace paper ones and secondly the exchange of documents
takes place in a standardised format

History of EDI
Early 1960s
Ed Guilbert develops an electronic message
format for sending information about cargo
between Du Pont and Chemical Leahman Tank
Lines. Guilbert expanded on the standardized
shipping manifests he developed with other U.S.
Army officers during the Berlin airlift of 1948.

 1965

The Holland- America steamship line begins sending

trans-Atlantic

shipping

manifests

using

telex

messages and converting the messages into tape that

could be loaded into their computers. Previously,
sending shipping manifests had been accomplished
with paper. This helped begin the foundation of the
EDI format. Telex is capable of sending a full page of
information in about 2 minutes

 1968
Many oceanic shipping companies, airlines,
railroads,

trucking

companies

are

using

electronic messages for manifests but the many

disparate formats are creating problems. The
Transportation Data Coordinating Committee is
created

and

standards.

begins

work

on

developing

 1973
The FTP protocol is published. FTP stands for
File Transfer Protocol and is a way to transfer
files between computers. The transmission can
be between any two computers that support the
FTP protocol. File Transfer Protocol would
emerge as one method for sending electronic
messages between companies.

 1975
The first Electronic Data Interchange standards are
published by the Transportation Data Coordinating
Committee that was created in 1968. Edward
Guilbert is a major contributor to the standards
and becomes known as the father of EDI. In the
same year Telenet, the first VAN (Value Added
Network) is established. Telenet provides a
commercial data network and associated services.

 1977
Several grocery companies begin an EDI pilot project
with their business partners.
1978
The Transportation Data Coordinating Committee is
renamed the Electronic Data Interchange Association.
In the same year the association is chartered by the
American National Standards Institute. The association
will become known as the ANSI X12 committee and
will evolve the publication of EDI standards

 1981
ANSI X12 standards are published for the first time and
encompass the transportation, food, drug, warehouse
and banking industries
1982
Companies such as General Motors and Ford in the
automotive industry begin to mandate EDI for their
suppliers. Several large retailers, including Sears and
Kmart, begin to demand EDI capability from their
suppliers.

 1985
The EDIFACT EDI standard is created by the United
Nations to assist with the global use of the
technology. EDIFACT will be adopted by the
automotive industry, but other industries in the
United States continue to use the ANSI X12 standard.
1991
About 12,000 businesses in the United States are
using EDI.

 1996

EDI is transmitted over the internet between

companies who have the capability to manage the
point-to-point communication requirements of
each of their partners.
2001

The AS/2 communications standard is published

by the Uniform Code Council. AS/2 provides
encrypted transmissions of data over the internet.

 2004
Wal-Mart begins using AS/2 communication
with their suppliers. Some other major retailers
will follow suit, but many retailers continue to
use VAN communication to this day to outsource
the management of their EDI connections.

 Today
Well over 90% of the Fortune 500 use ANSI X12
or EDIFACT. Large companies in Europe have
similar adoption levels. Over one hundred
thousand companies in the United States use
an EDI solution to communicate with their
business partners.

EDI Replaces Paper-Based

Business Documents

Working of EDI
1. Exchange

of

data

with

several

trading

partners directly in a standard format.

2. Interaction with multiple companies through a
central information clearing house. Here each
companies add EDI program to its computer to
translate the company data into standard
formats for transmission,
translation in the data

and for reverse

EDI Components
EDI Standards format
American National Standards Institute (ANSI)
founded in 1918
Accredited Standards Committee (ASC) X12 chartered
in 1979 by ANSI
Transportation Data Coordinating Committee (TDCC)
X12
EDI for Administration, Commerce and Transport
(EDIFACT) - Europe

Software
Application Software
Interface Software
Communication Software
Translation Software

Hardware
Communications and Value Added Networks
VANs - Network

EDI Standards
A set of rules, agreed upon, accepted, and adhered
to by two entities, through which data is structured
into electronic formats for exchange of information
EDI standards help to ensure that electronic
business documents can be exchanged between
companies with ease
There are many different EDI standards in use
locally and around the world

EDI Industry Standards

Different industry sectors have
their own set of standards for
processing electronic documents
Industry

groups

such

as

EDIFICE (high-tech) and Odette

(automotive)

represent

their

industry groups but also work

together

to

share

standards

across the automotive and hightech sectors

EDI Document Standards

Companies need to be able to

exchange documents of any type

with customers and suppliers
Mapping is the process used to

convert business documents to

the required EDI format
Document mapping

requires

skilled staff to generate the maps

EDI Communication Standards

Companies can use a variety of communication

protocols to connect with each other

Some major sets of EDI standards:

The UN-recommended UN/EDIFACT is the only international standard
and is predominant outside of North America.
The US standard ANSI ASC X12 (X12) is predominant in North America.
The TRADACOMS standard developed by the ANA (Article Number
Association now known as GS1 UK) is predominant in the UK retail
industry.
The ODETTE standard used within the European automotive industry
The VDA standard used within the European automotive industry mainly
in Germany
The HL7 a semantic interoperability standard used for healthcare
administrative data.

ANSI X12

Chartered by the American National Standards

Institute (ANSI) in 1979, it develops and
maintains the X12 Electronic data interchange
(EDI)

and

Context

Inspired

Component

Architecture (CICA) standards along with XML

schemas which drive business processes globally.

EDIFACT
It is the international EDI standard developed under
the United Nations.

The EDIFACT standard provides:

a set of syntax rules to structure data
an interactive exchange protocol (I-EDI)
standard messages which allow multi-country and
multi-industry exchange

EDI Services
Application Services :It provides the link between application and
EDI. It allows you to send documents from an
EDI system. The set of callable routine is used to
transfer

document

from

the

business

application into EDI document destination can

be either intra-company or to the external
companies .

Translation service:Converts the out going documents from an

internal format file to an agreed external
format.
Translates internal document from external
format to EDI internal format file.

Communication service:The communication service sends and receives

transmission files to and from the trading
partners either directly or by using party
service called a valued added network(VAN).

Benefits of EDI

Need for Speed

Sending

an

electronic

message locally or globally

takes seconds
Information sent by EDI is
available immediately for use
within internal applications
Faster receipt of documents
can provide a competitive
edge in any business

Need for Accuracy

Electronic transfer of business
documents
eliminates the need for copying
data between paper-based
documents
eliminates errors caused by
manual updates or intervention
helps to reduce re-work

Competitive Advantages of EDI

Reduces

inventory

costs

through the shortening of order

processing and delivery cycles
Reduces

overhead

costs

through elimination of manual

handling in areas such as
mailroom,
circulation,

sorting

and
clerical

documentation and data entry

EDI in India
The government of India has established an EDI council under
the Ministry of Commerce as the nodal agency for
implementation of EDI in India.
It is the apex body with representation from several key
government departments and representatives from trade and
industry.
The chairman of EC/EDI council is Secretary, Department of
Commerce.
The council is responsible for laying down policy framework and
directions.

Organisations like All India Management Association

(AIMA), Federation of Indian Export Organisation (FIEO),
Indian Institute of Foreign Trade (IIFT) and National
Informatics Centre (NIC) conduct training programs for
bringing out awareness about EDI.

Besides two government networks i.e. VSNL of DoT and

NICENET of NIC, there are also a number of private sector
EDI service provider in the country such as Mahindra
Network Services, Global Telecom Services Ltd., Satyam
Infoway Network, Manipal Control Data , IBM Global
Network Services, GE Information Services.