Tuesday, 23 December 2025

How EDI Works: From ERP to Trading Partner (Step-by-Step)

Electronic Data Interchange (EDI) connects two businesses by allowing their systems to exchange documents automatically—without emails, PDFs, or manual data entry. Let’s walk through the complete journey of an EDI document, from ERP to trading partner, in simple steps.

Step 1: Business Transaction Created in ERP

A business event occurs in the ERP system (SAP, Oracle, NetSuite, etc.)
Example: A buyer creates a Purchase Order
The ERP stores data like item, quantity, price, ship-to address

Note: This is raw business data, not yet EDI

Step 2: Data Extracted from ERP

Relevant data is picked from ERP tables or flat files
Extraction happens via IDoc, XML, CSV, or database query
Only required fields are selected based on trading partner rules

Note: ERP data is prepared for EDI translation

Step 3: Data Translated into EDI Format

EDI translator converts ERP data into standard EDI format
Common formats: X12 (850, 856, 810) or EDIFACT (ORDERS, DESADV)
Partner-specific mapping rules are applied

Note: Business data becomes an EDI document

Step 4: Validation & Compliance Check

EDI file is validated against standards and partner rules
Checks include:
- Mandatory segments
- Correct codes and qualifiers
- Control numbers

Note: Invalid files are rejected before transmission

Step 5: Secure Transmission to Trading Partner

The validated EDI file is sent using an agreed method:
- AS2
- SFTP
- VAN
- API
- FTP
- OFTP2
Security features include encryption and authentication

Note: File is securely delivered

Step 6: Functional Acknowledgment (997/CONTRL)

Trading partner sends acknowledgment confirming receipt
Confirms file structure, not business acceptance
Helps ensure no data is lost

Note: Sender knows the file arrived successfully

Step 7: Trading Partner Receives & Translates

Partner’s EDI system receives the file
EDI is translated back into their internal format
Data is mapped into their ERP system

Note: EDI becomes usable business data again

Step 8: Business Processing in Partner ERP

Partner’s ERP processes the transaction automatically
Example actions:
- PO creation
- Shipment planning
- Invoice matching

Note: No human intervention required

Step 9: Response EDI Document Sent Back

Partner sends a response document:
- 855 (PO Acknowledgment)
- 856 (ASN)
- 810 (Invoice)
Same EDI flow repeats in reverse direction

Note: Two-way automated communication

Simple Real-World Flow Example

Buyer sends EDI 850 → Purchase Order
Supplier sends EDI 855 → Order confirmation
Supplier sends EDI 856 → Shipment details
Supplier sends EDI 810 → Invoice
Buyer sends EDI 820 → Payment

Why This Flow Matters

Eliminates manual data entry
Reduces errors and delays
Enables real-time supply chain visibility
Scales easily for high transaction volumes

Summary

EDI works like a digital conveyor belt—moving business data smoothly from one ERP system to another. Once set up, it runs silently in the background, powering global trade every second.

Understanding this flow is the foundation for learning EDI mapping, testing, troubleshooting, and integration projects.

Monday, 15 December 2025

1. EDI 850 – Purchase Order

Sent by the buyer to place an order for goods or services
Contains item details, quantities, prices, and delivery dates
Example: A retailer orders 500 medical gloves from a supplier

2. EDI 855 – Purchase Order Acknowledgment

Sent by the supplier to confirm receipt of the PO
Indicates accepted, rejected, or changed order details
Example: Supplier confirms 500 gloves will be shipped by Friday

3. EDI 856 – Advance Ship Notice (ASN)

Sent before the shipment leaves the warehouse
Includes carton, pallet, and tracking details
Example: Supplier informs retailer that the order is shipped via FedEx

4. EDI 810 – Invoice

Sent by the supplier to request payment
Contains invoice number, amounts, taxes, and terms
Example: Supplier sends invoice after shipping the gloves

5. EDI 997 – Functional Acknowledgment

Confirms receipt of an EDI document
Validates structure, not business content
Example: Buyer confirms receiving the supplier’s invoice file

6. EDI 820 – Payment Order / Remittance Advice

Used to send payment details electronically
Includes payment amount and invoice references
Example: Retailer sends payment confirmation for the invoice

7. EDI 846 – Inventory Inquiry / Advice

Shares current inventory availability
Helps buyers plan orders
Example: Supplier sends stock levels for medical devices

8. EDI 940 – Warehouse Shipping Order

Instructs a warehouse to ship goods
Common in third-party logistics (3PL)
Example: Retailer requests warehouse to ship customer orders

9. EDI 945 – Warehouse Shipping Advice

Confirms shipment from the warehouse
Includes shipped quantities and tracking info
Example: Warehouse confirms items are shipped

10. EDI 204 – Motor Carrier Load Tender

Used to request transportation services
Includes pickup, delivery, and freight details
Example: Shipper assigns a truck to move goods to a distribution center

Summary:

These EDI documents form the core business flow—from ordering to shipping to payment. Mastering them gives you a strong foundation in EDI integration, supply chain, and automation.

Monday, 8 December 2025

What is EDI? A Beginner’s Guide to Electronic Data Interchange

What is EDI?

Electronic Data Interchange (EDI) is the automated exchange of business documents between two companies in a standardized electronic format.

Instead of sending Purchase Orders, Invoices, or Shipping Notices through email or paper, EDI allows businesses to send them system-to-system, saving time, reducing errors, and speeding up operations.

Why Do Companies Use EDI?

1. Faster Communication

A Purchase Order that might take hours or days via email or post can be transmitted in seconds using EDI.

2. Fewer Errors

Since the data flows directly between systems, there is no manual typing, reducing mistakes like wrong quantities or incorrect addresses.

3. Cost Savings

EDI eliminates paper, printing, postage, and manual labor. Companies save 30–70% in transaction processing costs.

4. Stronger Business Relationships

Retailers, distributors, manufacturers, and logistics companies prefer suppliers who support EDI.
Many big companies—like Amazon, Walmart, Costco—require EDI for doing business.

How EDI Works (Simple Explanation)

EDI follows three main steps:

Step 1 — Data Extraction

Your system generates business data.
Example: A Purchase Order created in your ERP.

Step 2 — Data Transformation

The data is converted into a standard EDI format (such as X12 or EDIFACT).

Step 3 — Data Transmission

The EDI file is securely sent to your trading partner using communication methods like:

AS2
SFTP
FTP
OFTP2
API
VAN (Value Added Network)

The receiving system automatically reads and processes the document.

Common EDI Documents

EDI 850 - Purchase Order
EDI 855 - PO Acknowledgment
EDI 856 - Advance Ship Notice (ASN)
EDI 810 - Invoice
EDI 820 - Payment Order
EDI 846 - Inventory Inquiry

EDI Standards You Should Know

1. ANSI X12 (North America)

Used by U.S. retailers, logistics companies, and healthcare (HIPAA).

2. EDIFACT (Global)

Used in Europe, Asia, and international logistics.

3. TRADACOMS (UK Retail)

Older standard, still used by some UK supermarkets.

EDI Communication Methods

AS2 - Secure, real-time communication. Very common for retail.

SFTP - Simple, secure file transfer.

FTP/FTPS - Older methods, still used by some partners.

VAN - A private network that routes EDI messages.

API - Modern alternative to EDI; sending JSON/XML instead of flat files.

Who Uses EDI?

EDI is widely used in:

Retail (Amazon, Walmart, Target)
Healthcare (Hospitals, insurance companies)
Logistics & Transportation
Manufacturing
Automotive (Honda, Ford)
Food & Beverage
Pharmaceuticals
Government agencies

Benefits of Learning EDI (For Professionals)

High demand skill
Great career opportunities (EDI Analyst, EDI Consultant, Integration Specialist)
Used in SAP, Oracle, Cleo, OpenText, MuleSoft, Boomi
Growing with API + EDI hybrid solutions

Summary

EDI is the digital backbone of global trade, connecting businesses and making transactions faster, cheaper, and error-free. Even with modern APIs, EDI continues to be essential in supply chain, retail, logistics, and healthcare.

If you are a beginner, understanding the basics of EDI is the first step toward exploring integration, automation, and digital transformation in businesses.

Monday, 1 December 2025

The Hidden Costs of EDI: What Most Companies Don’t Talk About

When companies think of EDI, they imagine automation, faster transactions, fewer errors, and strong B2B relationships.

But behind the benefits, there are hidden costs that organizations rarely anticipate—and these can impact budgets, timelines, and operational efficiency if not planned properly.

Here are the real, often-overlooked costs that companies face in an EDI implementation.

VAN (Value-Added Network) Charges

Many large retailers and healthcare organizations still require communication through a VAN.

Hidden cost:

Monthly fees based on kilo-characters
Additional mailbox charges
“Pass-through” or interconnect fees when messages route across networks
Charges for test mailboxes

The cost depends on traffic volume, so invoices fluctuate and are often higher during seasonal surges.

Trading Partner Setup & Certification

Every trading partner has unique rules, including:

Mapping guidelines
Acknowledgement requirements
Connectivity protocols (AS2, SFTP, VAN)
Compliance testing

Hidden cost:

Paying for partner-specific testing
Re-certification when standards change
Additional cost for each new partner

Mapping & Maintenance Costs

Each EDI document needs mapping—850, 810, 856, 940, 945, 997, etc.

Hidden cost:

Time spent updating maps when a partner change guideline
Fees charged by EDI vendors for each mapping update
Re-mapping when migrating to new ERP or middleware
Cost of maintaining custom logic, scripts, and validations

Most companies underestimate how frequently mapping changes.

EDI Errors & Chargebacks

This is the most painful cost, especially in retail.

Chargebacks occur because of:

Missing ASN
Late ASN
Incorrect barcode
Quantity mismatches
Pricing errors
Duplicate invoices
Incorrect pack hierarchy (856 HL structure issues)

Hidden cost:
Retailer's fine suppliers anywhere from so and so per violation.

Infrastructure & Licensing Fees

If the EDI is on-premises or hybrid, the costs include:

Hardware servers
Database licenses
OS upgrades
Disaster recovery
Backup solutions
Middleware licensing (Cleo, Seeburger, Axway, SAP PI/PO, BizTalk)

Cloud EDI also has hidden charges like per-document or per-partner cost.

Support & Monitoring Costs

EDI isn’t “setup and forget.” It needs daily monitoring.

Hidden cost:

24x7 support team
Error handling and reprocessing
Message tracking and reconciliation
Holiday/weekend support during peak business cycles
SLA commitments

Many companies hire specialized EDI resources—adding to recurring operational cost.

Upgrades & Standards Changes

EDI standards evolve:

X12 version upgrades (4010 → 5010 → 6010)
EDIFACT directory changes
Retailer-specific guideline updates
Security upgrades (AS2 certificates, encryption algorithms)

Hidden cost:
Updating systems and performing regression testing.

API + EDI Hybrid Integration Costs

Modern retailers require API calls along with EDI (inventory APIs, shipment status APIs, label APIs).

Hidden cost:

Additional API licenses
Developing API connectors
Monitoring real-time traffic
New security procedures (OAuth2, JWT, certificates)

Migration Costs

Moving from:

One EDI provider to another
VAN to AS2
On-premises to Cloud
SAP ECC to S/4HANA
OpenText → Cleo (like your project)

Hidden cost:

Re-mapping all transactions
Re-certifying partners
Dual run during migration
Project management overhead

Summary

EDI delivers massive value—automation, accuracy, and speed.
But companies should be aware of the hidden costs that impact long-term operations.

When planned properly, these costs can be optimized and controlled using:

Cloud platforms
Automated monitoring
Unified integration tools
Strong governance processes
Modern API–EDI hybrid architecture

Monday, 24 November 2025

Industries That Rely on EDI

Electronic Data Interchange (EDI) is the backbone of global supply chains.

From retail giants to healthcare companies, industries across the world depend on EDI to exchange essential business documents quickly, securely, and accurately.

The major industries where EDI is used, the key transactions, and why EDI continues to be essential in 2025.

1. Retail & eCommerce

EDI is used for Automating high-volume purchase orders, inventory updates, shipment notifications, and invoicing.

Common EDI transactions:

850 – Purchase Order
855 – PO Acknowledgment
856 – Advance Ship Notice (ASN)
810 – Invoice
846 – Inventory Updates

Retailers deal with thousands to millions of orders daily. EDI reduces manual errors, ensures real-time visibility, and speeds up fulfillment.

2. Logistics, Freight & Transportation

EDI is used for Shipment bookings, dispatch management, tracking updates, and freight billing.

Key transactions:

204 – Load Tender
214 – Shipment Status
210 – Freight Invoice
315 – Rail Status
322 – Intermodal Ramp Activity

The logistics industry needs instant visibility. EDI keeps carriers, shippers, and consignees aligned across every movement.

3. Manufacturing

EDI is used for Demand planning, supplier coordination, JIT production, order tracking.

Key transactions:

830 – Forecast
862 – Shipping Schedule
856 – ASN
824 – Application Advice

A single delay or manual error can stop a production line. EDI ensures timing, accuracy, and efficient supplier collaboration.

4. Healthcare (HIPAA EDI)

EDI is used for Insurance claims, eligibility checks, patient status, payment remittances.

HIPAA X12 transactions:

270/271 – Eligibility Request/Response
837 – Claims
835 – Payment/Remittance
277 – Claim Status

Healthcare EDI reduces paperwork, speeds up claim processing, and ensures compliance with regulations.

5. Pharmaceuticals & Life Sciences

EDI is used for Track-and-trace, regulated movement of products, temperature-controlled chain visibility.

Common transactions:

850, 855, 810, 856
DSCSA (Drug Supply Chain Security Act) compliance messages

Strict regulations require complete traceability; EDI ensures documentation accuracy.

6. Food & Beverage

EDI is used for Grocery orders, perishable inventory tracking, food safety, recalls.

Transactions:

875 – Grocery Purchase Order
880 – Grocery Invoice
881 – Product Recall

7. Banking & Financial Services

EDI is used for Secure, structured electronic payments.

Transactions:

820 – Payment Order
821 – Account Summary

EDI here acts as financial messaging for corporate clients and banks.

8. Energy & Utilities

EDI is used for Meter data exchange, billing, service enrollment, demand forecasting.

Common transactions:

867 – Utility Usage Report
810 – Utility Invoice
814 – Enrollment/Change

9. Automotive

EDI is used for Just-in-time manufacturing, high-precision supply chain operations.

Key transactions:

830 – Forecast
856 – ASN
997 – Functional Acknowledgment

10. Government & Defense

EDI is used for Procurement, logistics, compliance-based shipments.

Transactions:

850, 856, 810, 860
Military-specific 856S

Governments use EDI to reduce corruption, automate submissions, and enforce traceability.

Summary

EDI is still the foundation of global B2B communication. Even as APIs and cloud integrations grow, industries rely on EDI because it is:

Proven
Standardized
Secure
Scalable
Accepted worldwide

From retail to healthcare, EDI remains essential for keeping supply chains running smoothly.

Monday, 17 November 2025

How APIs Are used Instead of EDI Nowadays

Today, many businesses — especially e-commerce, logistics, retail, and fintech — use APIs to support or replace EDI where speed and flexibility are needed.

Below is a detailed overview of how APIs are transforming B2B integration.

1. Real-Time Data Exchange (vs. EDI Batch Processing)

Traditional EDI sends files in batches:

Orders every 15 mins or every hour
Ship notices once the warehouse completes picking
Inventory updates daily or hourly

APIs allow real-time data exchange:

Inventory can be updated instantly
Order confirmation is instant
Tracking updates are immediate
Payment confirmations happen instantly

Example:
Amazon, Shopify, eBay APIs instantly send order details to sellers (no EDI 850 needed).

2. APIs Are Used for Modern Platforms (EDI Can’t Integrate Easily)

Platforms like:

Shopify
WooCommerce
Amazon Seller Central
BigCommerce
Stripe
Razorpay
UPS/FedEx
Google Cloud / AWS

These platforms do not support EDI directly.

They use REST APIs or Webhooks, not EDI.

Example
A seller receives an order from Shopify via API, not via EDI 850.

3. APIs Enable Event-Based Systems (Webhooks)

APIs support events, something EDI cannot do.

Example events:

Order created
Item shipped
Label generated
Payment completed

Webhook → API Callback
The system instantly notifies another system when something happens.

EDI has no capability for event-driven communication.

4. APIs Reduce Transaction Cost & Complexity

EDI requires:

Standard mapping
Middleware
AS2/SFTP connections
Message translators
EDI analysts

APIs only need:

URL + Token
JSON/XML data
Simple authentication (OAuth2/Bearer Token)

Example
Instead of sending an EDI 856 ASN via AS2, the warehouse updates the retailer via a POST /shipments API with JSON.

5. APIs Use Modern Security (OAuth2, JWT, TLS 1.3)

EDI uses older security protocols:

AS2 certificates
SFTP keys
MDN acknowledgments

APIs use:

OAuth2
JWT tokens
API gateways
Rate-limiting
Zero-trust policies

Modern and faster.

6. APIs Integrate Better With Mobile, Cloud & SaaS

EDI translator cannot easily run inside:

Mobile apps
Serverless platforms
Microservices
Cloud-native systems

APIs are built for:

AWS Lambda
Azure Logic Apps
Google Firebase
Mobile apps (Android/iOS)
Cloud-based ERPs

7. APIs Are Used for Shipment Tracking Instead of EDI 214

Earlier:
EDI 214 Shipment Status was used by trucking carriers.

Now:
Logistics companies like UPS, DHL, FedEx, Delhivery, BlueDart provide tracking APIs.

Warehouse / ERP systems call:


GET /tracking/{tracking_number}

Instead of waiting for EDI 214.

8. APIs Are Used for Invoicing Instead of EDI 810

Fintech platforms use API-based invoicing:

Zoho
QuickBooks
Stripe
Razorpay
SAP Cloud
Tally API

EDI 810 becomes optional.

9. E-Commerce Uses APIs Instead of EDI

For marketplaces:

Amazon
Flipkart
Etsy
Myntra
Ajio
Meesho

APIs drive the entire order flow, not EDI.

EDI is used mostly in:

Retail (Walmart, Target, Kroger)
Manufacturing (Automotive, Aerospace)
Healthcare (Hospitals, Pharma)
Logistics (Carriers)

10. Hybrid Model: API + EDI Together

Most companies use a hybrid model:

Scenario	Technology
Large retailers (Walmart, Costco):	EDI
E-commerce platforms:	APIs
Logistics status updates:	APIs
Invoices / ASN for enterprise customers:	EDI
Small suppliers:	Web-EDI / REST API
Internal system sync:	APIs

Many EDI tools now support API + EDI together:

Cleo Integration Cloud
MuleSoft
Boomi
SAP CPI
OpenText

Wednesday, 29 October 2025

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.

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.

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).