EDI Using APIs — The Modern Approach

Traditional EDI uses file-based communication (via VANs, AS2, SFTP, etc.), while API-based EDI uses web services to send/receive data instantly between systems like SAP, Oracle, or Amazon Vendor Central.

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1. REST API in EDI

REST APIs are the modern choice for cloud-based EDI platforms (like Cleo, SPS Commerce, or TrueCommerce).

Example: Sending an EDI 856 (ASN) through REST API

Scenario:
Supplier ships goods to Amazon and sends the ASN using an EDI REST API.

Request:

POST https://api.edi-platform.com/asn
Content-Type: application/json
Authorization: Bearer <AccessToken>

Payload (JSON):

{
  "transactionSet": "856",
  "senderId": "SUPPLIER123",
  "receiverId": "AMAZON",
  "shipment": {
    "shipmentId": "SHIP12345",
    "orderNumber": "PO56789",
    "shipDate": "2025-10-20",
    "items": [
      { "sku": "B0C2ZNX6T8", "quantity": 10 },
      { "sku": "B0C3LMK5P9", "quantity": 5 }
    ]
  }
}

Response:

{
  "status": "SUCCESS",
  "asnId": "ASN78910",
  "message": "ASN received successfully by Amazon."
}

Advantages of REST EDI:

• Real-time integration (no waiting for batch jobs).

• JSON format — easy for modern applications.

• Better visibility and faster error handling.

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2. SOAP API in EDI

SOAP APIs are often used in large enterprise systems (like SAP, Oracle EBS, or healthcare systems) where reliability, security, and transaction validation are critical.

Example: Sending an EDI 850 (Purchase Order) through SOAP API

Request (XML):

<soapenv:Envelope xmlns:soapenv="http://schemas.xmlsoap.org/soap/envelope/"
                  xmlns:edi="http://edi.company.com/">
   <soapenv:Header/>
   <soapenv:Body>
      <edi:SendEDIMessage>
         <edi:TransactionSet>850</edi:TransactionSet>
         <edi:SenderID>BUYER001</edi:SenderID>
         <edi:ReceiverID>SUPPLIER001</edi:ReceiverID>
         <edi:Data>
            <edi:PO>
               <edi:OrderNumber>PO12345</edi:OrderNumber>
               <edi:OrderDate>2025-10-20</edi:OrderDate>
               <edi:Item>
                  <edi:SKU>B0C2ZNX6T8</edi:SKU>
                  <edi:Qty>20</edi:Qty>
               </edi:Item>
            </edi:PO>
         </edi:Data>
      </edi:SendEDIMessage>
   </soapenv:Body>
</soapenv:Envelope>

Response (XML):

<soap:Envelope xmlns:soap="http://schemas.xmlsoap.org/soap/envelope/">
   <soap:Body>
      <SendEDIMessageResponse>
         <Status>Accepted</Status>
         <ControlNumber>000123456</ControlNumber>
      </SendEDIMessageResponse>
   </soap:Body>
</soap:Envelope>

Advantages of SOAP EDI:

• Strong error handling (ACK/NACK within the response).

• Secure (WS-Security, encryption, and digital signatures).

• Reliable delivery (guaranteed message acknowledgment).

EDI 850 (Purchase Order)

What is EDI 850?

The EDI 850 Purchase Order is a transaction set used by a buyer to place an order with a supplier.
It replaces the traditional paper or email-based purchase order and automates the ordering process electronically.

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Purpose of EDI 850

• Communicate purchase information between trading partners.

• Specify items, quantities, prices, shipping instructions, and payment terms.

• Initiate the Order-to-Cash (O2C) cycle.

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Who Uses It

• Retailers send 850s to suppliers.

• Manufacturers send them to vendors for raw materials.

• Distributors send them to manufacturers for replenishment.

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Typical EDI 850 Business Flow

1. Buyer creates a purchase order in their ERP.

2. The system converts it into an EDI 850 format via middleware or VAN.

3. The supplier receives the 850 through their EDI system.

4. The supplier sends back:

   • EDI 855 (Purchase Order Acknowledgment)

   • EDI 856 (Advance Ship Notice)

   • EDI 810 (Invoice)

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EDI 850 in the Order-to-Cash Cycle

Step	Transaction	Purpose
1	850	Buyer sends Purchase Order
2	855	Seller acknowledges the order
3	856	Seller sends shipment notice
4	810	Seller sends invoice
5	997	Functional acknowledgment for each transaction

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Benefits of Using EDI 850

• Eliminates manual order entry.

• Reduces errors and processing time.

• Speeds up order confirmation and fulfillment.

• Improves buyer-supplier collaboration.

• Enables real-time order visibility.

EDI Implementation Challenges Every Business Faces

Electronic Data Interchange (EDI) has become the backbone of modern B2B transactions. It automates the exchange of purchase orders, invoices, shipment notices, and more, ensuring faster and error-free business processes. 

However, implementing EDI isn’t always straightforward. Many companies face roadblocks during setup, integration, and partner onboarding. 

Here are the some of the challenges in EDI implementations and practical ways to overcome them.

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1. Partner Onboarding Complexity

The Challenge:
Every trading partner may have different EDI requirements (formats, versions, and compliance rules). Managing these variations often slows down onboarding.

The Solution:

• Use a standardized onboarding checklist for each partner.

• Invest in middleware or cloud-based EDI platforms that can handle multiple formats (X12, EDIFACT, VDA, etc.).

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2. Integration with ERP and Legacy Systems

The Challenge:
Mapping EDI data into ERP systems like SAP, Oracle, or Microsoft Dynamics can be complex, especially with older or custom-built systems.

The Solution:

• Use prebuilt ERP connectors provided by middleware tools (Cleo, Seeburger, SAP CPI).

• Automate mapping through drag-and-drop EDI mappers instead of manual coding.

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3. Compliance and Standards Management

The Challenge:
Different industries (retail, healthcare, logistics) enforce specific EDI standards and regulatory compliance (HIPAA, GS1, ANSI X12, EDIFACT). Staying updated is critical.

The Solution:

• Subscribe to standards update notifications from organizations like ANSI or UN/CEFACT.

• Partner with an EDI service provider that ensures continuous compliance updates.

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4. Error Handling and Visibility

The Challenge:
When an EDI transaction fails (e.g., missing invoice, incorrect SKU code), it can lead to shipment delays, chargebacks, or lost revenue. Many companies struggle with real-time visibility.

The Solution:

• Implement dashboards with real-time alerts for failed transactions.

• Set up automated acknowledgment messages (997/CONTRL) to confirm receipt.

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5. High Implementation and Maintenance Costs

The Challenge:
Traditional on-premises EDI systems require significant upfront investment and ongoing maintenance, making them expensive for small and mid-sized businesses.

The Solution:

• Consider cloud-based EDI solutions with subscription models to reduce costs.

• Outsource EDI management to a managed services provider (MSP) if in-house expertise is limited.

Different EDI formats (standards) for exchanging data

EDI (Electronic Data Interchange) has evolved over decades, and different industries, regions, and trading partners use different EDI formats (standards) for structuring and exchanging data. Some of the formats are 

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1. ANSI ASC X12 (North America)

• Developed by the Accredited Standards Committee (ASC) X12.

• Widely used in the United States and North America.

• Covers multiple industries: retail, healthcare, logistics, government, finance.

• Example: 850 (Purchase Order), 810 (Invoice), 856 (Advance Ship Notice).

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2. UN/EDIFACT (International)

• Stands for United Nations/Electronic Data Interchange for Administration, Commerce, and Transport.

• Widely used in Europe and globally.

• More internationally accepted than X12.

• Example: ORDERS (Purchase Order), INVOIC (Invoice), DESADV (Advance Shipping Notice).

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3. TRADACOMS (UK Retail Industry)

• Predecessor to EDIFACT, mainly used in the UK retail sector.

• Developed by the GS1 UK standards body.

• Now mostly replaced by EDIFACT.

• Example: ORDHDR (Order Header), INVOIC (Invoice).

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4. ODETTE (European Automotive)

• Organization for Data Exchange by Tele-Transmission in Europe.

• Mainly used in the European automotive industry.

• Helps standardize supply chain transactions between OEMs and suppliers.

• Example: Delivery Schedules, Shipping Instructions.

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5. VDA (German Automotive Industry)

• Verband der Automobilindustrie (German Association of the Automotive Industry).

• Specific to German automotive manufacturers like VW, BMW, Daimler.

• Still widely used in Germany, but transitioning to EDIFACT/ODETTE.

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6. HL7 (Healthcare)

• Health Level Seven standard for healthcare data exchange.

• Used to transmit clinical and administrative data between healthcare providers.

• Example: Patient admission, lab results, claims processing.

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7. HIPAA EDI (US Healthcare – subset of X12)

• HIPAA mandates specific EDI transactions for healthcare providers, insurers, and payers in the US.

• Example:

  • 837 (Healthcare Claim)

  • 835 (Payment/Remittance Advice)

  • 270/271 (Eligibility Inquiry/Response)

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8. RosettaNet

• XML-based EDI standard for high-tech and electronics industries.

• Used for supply chain automation in semiconductors, IT, and telecommunications.

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9. XML / JSON-based EDI (Modern formats)

• Newer companies are adopting API-driven data exchange with XML or JSON payloads.

• Example: Amazon Vendor Central uses XML EDI over AS2/AS4.

• JSON is often used in API-EDI hybrid integrations.

EDI vs. API: Key Differences in B2B Integration

Both EDI (Electronic Data Interchange) and API (Application Programming Interface) enable data exchange between business partners — but they do it in different ways.

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What is EDI?

• A standardized format for exchanging business documents (PO, Invoice, ASN, etc.).

• Batch-based: documents are sent in structured files (X12, EDIFACT, VDA).

• Works well for large-scale, regulated industries (retail, healthcare, automotive).

Example: A retailer sends an EDI 850 Purchase Order to a supplier.

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What is API?

• A real-time communication method between applications.

• Data is exchanged instantly using web technologies (REST, JSON, XML).

• Works best for instant updates (inventory checks, shipment tracking).

Example: An eCommerce site calls a supplier’s API to get livestock availability.

Cloud-Based EDI Integration: The Future of B2B Data Exchange

For decades, companies relied on on-premises EDI systems—servers and translators installed inside their IT landscape. While reliable, they were costly to maintain, slow to scale, and hard to upgrade.

Now, businesses are shifting toward Cloud-Based EDI Integration platforms, which deliver EDI as a service.

Cloud-Based EDI simplifies integration, speeds up partner onboarding, and reduces costs—making it the go-to choice for modern supply chains.

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What is Cloud-Based EDI?

It’s an EDI solution hosted on the cloud, managed by a vendor, and accessible via the internet. Companies don’t need to install heavy software or manage servers; instead, they subscribe to an EDI service provider who handles connectivity, standards, and compliance.

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Key Benefits

1. Lower Costs – No upfront investment in servers or complex software.

2. Scalability – Easily add new trading partners, formats, or volumes.

3. Faster Onboarding – Pre-built connectors for retailers, healthcare payers, logistics, etc.

4. Global Compliance – Support for PEPPOL, e-Invoicing, HIPAA, GS1 standards.

5. Real-Time Visibility – Dashboards for monitoring transactions (e.g., 850 POs, 856 ASNs, 810 Invoices).

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When to Choose Cloud EDI?

• If your company is growing and adding multiple trading partners quickly.

• If you want to replace legacy EDI translators and reduce IT overhead.

• If your industry requires regulatory compliance (e.g., healthcare, retail, government).

Top FAQs About EDI for Beginners - Part 4

Q31. How is EDI integrated with ERP systems?

Answer:
EDI middleware maps EDI messages into ERP-readable formats. For example, an 850 Purchase Order can be translated into an SAP Sales Order or Oracle Purchase Entry, enabling seamless automation.

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Q32. What is the difference between Direct EDI and VAN-based EDI?

Answer:

• Direct EDI (Point-to-Point): Companies connect directly via secure protocols like AS2.

• VAN-based EDI (Value-Added Network): A third-party network routes, stores, and forwards EDI messages. VAN adds tracking, auditing, and mailbox features.

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Q33. What is EDI Compliance Testing?

Answer:
EDI compliance testing ensures that a company’s EDI messages meet trading partner’s format, standards, and rules before going live. Retailers like Walmart, Amazon, and Target require suppliers to pass compliance certification.

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Q34. What is an EDI test file, and why is testing important before go-live?

Answer: 

An EDI test file is a sample transaction (e.g., PO, invoice) exchanged between partners to validate formatting, data accuracy, and system integration. Testing prevents costly errors during live operations.

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Q35. What is the difference between real-time and batch EDI processing?
Answer:

• Real-time: Transactions are sent and received instantly (e.g., AS2 or API-based EDI).

• Batch: Multiple transactions are grouped and transmitted at scheduled intervals.