Learning EDI - Day 2 : Difference Between EDI, XML, JSON, and Flat Files

1. EDI (Electronic Data Interchange)

EDI follows industry standards.

Example (X12 850 Purchase Order)

ISA*00*          *00*          *ZZ*BUYER*
GS*PO*BUYER*SUPPLIER*
ST*850*0001
BEG*00*NE*PO12345
SE*4*0001
GE*1*1
IEA*1*000000001

Characteristics

• Highly standardized
• Used between trading partners
• Requires EDI translator/mapping
• Common in retail, healthcare, logistics, manufacturing

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2. XML (Extensible Markup Language)

XML uses opening and closing tags.

Example

<PurchaseOrder>
    <OrderNumber>PO12345</OrderNumber>
    <Customer>ABC Hospital</Customer>
</PurchaseOrder>

Characteristics

• Self-describing
• Easy to validate using XSD
• Widely used in SAP, Oracle, enterprise applications

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3. JSON (JavaScript Object Notation)

JSON uses key-value pairs.

Example

{
  "OrderNumber": "PO12345",
  "Customer": "ABC Hospital"
}

Characteristics

• Lightweight
• Easy to read
• Popular for REST APIs
• Common in cloud integrations

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4. Flat Files

Plain text files with delimiters or fixed positions.

CSV Example

PO12345,ABC Hospital,100

Pipe Delimited Example

PO12345|ABC Hospital|100

Fixed Length Example

PO12345   ABC Hospital       100

Characteristics

• Very simple
• Easy to create
• Common in legacy systems
• Often used in SAP PI/PO and batch integrations

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Example

Imagine a customer sends a Purchase Order.

EDI Version

BEG*00*NE*PO12345

XML Version

<OrderNumber>PO12345</OrderNumber>

JSON Version

{
  "OrderNumber":"PO12345"
}

Flat File Version

PO12345

Same business information, different formats.

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When to Use What?

Use EDI when:

• Working with retailers, distributors, hospitals, logistics providers.
• Exchanging official business documents.
• Trading partners require standards like X12 or EDIFACT.

Use XML when:

• Integrating enterprise systems.
• Need strong validation and hierarchical data.

Use JSON when:

• Building APIs.
• Cloud integrations.
• Modern web applications.

Use Flat Files when:

• Legacy systems are involved.
• Batch processing is sufficient.
• Simplicity is preferred.

 

Learning EDI - Day 1: What is EDI?

EDI (Electronic Data Interchange) is the computer-to-computer exchange of business documents in a standard electronic format without manual intervention.

Instead of:

• Printing a Purchase Order
• Sending it by email
• Re-entering it into another system

EDI allows systems to exchange data automatically.

Simple Example

Without EDI

Buyer → Email PDF PO → Supplier → Manual Entry → ERP

With EDI

Buyer ERP → EDI → Supplier ERP

No printing, no email, no manual typing.

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Common EDI Documents

EDI Document	Purpose
850	Purchase Order
855	PO Acknowledgment
856	Advance Ship Notice (ASN)
810	Invoice
997	Functional Acknowledgment
ORDERS (EDIFACT)	Purchase Order
DESADV (EDIFACT)	ASN
INVOIC (EDIFACT)	Invoice

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Real-Life Example

Imagine a hospital orders ventilator consumables from a medical manufacturer.

Step 1

Hospital sends:
EDI 850 Purchase Order

Step 2

Manufacturer sends:
EDI 855 Acknowledgment

Step 3

Manufacturer ships goods and sends:
EDI 856 ASN

Step 4

Manufacturer sends:
EDI 810 Invoice

Everything happens electronically between systems.

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Benefits of EDI

1. Faster Processing

Orders reach trading partners within seconds.

Manual Process: Hours or days

EDI Process: Seconds or minutes

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2. Reduced Errors

Manual typing causes mistakes.

Example:

• Customer orders 100 units
• Employee enters 1000 units

EDI eliminates re-keying of data.

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3. Cost Savings

Reduces:

• Paper
• Printing
• Postage
• Manual labor

Organizations often save significant operational costs after EDI implementation.

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4. Better Accuracy

Data is transferred exactly as generated by the source system.

This improves:

• Inventory management
• Shipping accuracy
• Billing accuracy

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5. Faster Cash Flow

Invoices reach customers immediately.

Result:

• Faster payment cycles
• Improved cash flow

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6. Improved Supply Chain Visibility

Documents move electronically and can be tracked.

Businesses can quickly know:

• Orders received
• Orders shipped
• Invoices sent

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7. Scalability

A company can process thousands of orders without hiring additional staff.

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Typical EDI Flow

Customer ERP
     |
EDI Translator
     |
AS2 / SFTP / VAN
     |
EDI Translator
     |
Supplier ERP

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EDIFACT Messages Every EDI Professional Should Know

Here are some of the most important EDIFACT messages

ORDERS – Purchase Order

Purpose:

Used by buyer to place an order with supplier.

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ORDRSP – Purchase Order Response

Purpose:

Supplier responds to purchase order.

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DESADV – Despatch Advice / ASN

Purpose:

Advance shipment notification with package details

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INVOIC – Invoice

Purpose:

Electronic invoice transmission for payment

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RECADV – Receiving Advice

Purpose:

Buyer confirms receipt of goods.

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CONTRL – Syntax Acknowledgement

Purpose:

Confirms whether EDI syntax is valid.

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APERAK – Application Error and Acknowledgement

Purpose:

Business-level acknowledgement/error.

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PRICAT – Price/Sales Catalog

Purpose:

Share product catalog and pricing.

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DELFOR – Delivery Forecast

Purpose:

Forecast future demand.

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DELJIT – Just-In-Time Delivery

Purpose:

Precise delivery scheduling.

Understanding about PEPPOL (Pan-European Public Procurement On-Line)

Peppol (Pan-European Public Procurement On-Line) is an international network that standardizes how businesses exchange electronic documents—especially e-invoices—with each other and with governments.

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Peppol Capabilities

• E-invoicing: Send and receive invoices in a structured, machine-readable format
• E-procurement: Exchange documents like purchase orders, catalogs, and shipping notices

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How it works

1. A company connects to Peppol through a certified provider (called an Access Point).
2. The sender creates an electronic document in a Peppol standard format.
3. The document is sent through the Peppol network.
4. The recipient’s system automatically receives and processes it.

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Key features

• Standardized formats → fewer errors and no manual retyping
• Interoperability → works between different software systems
• Security & reliability → trusted network with certified participants
• Government compliance → required or encouraged in many countries

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Where it’s used

Originally developed in Europe, Peppol is now used globally, including:

• EU countries (widely adopted for public sector invoicing)
• UK, Norway, Sweden, Netherlands
• Australia & New Zealand
• Singapore and other parts of Asia

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Why businesses use it

• Faster payments (less processing delay)
• Lower administrative costs
• Reduced errors and fraud risk
• Easier compliance with e-invoicing laws

Understanding about Warehouse Management System (WMS)

 

A Warehouse Management System (WMS) is software that helps companies manage, track, and control warehouse operations — from receiving goods to shipping them out.

WMS ensures the right product is in the right place at the right time.

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Importance of WMS

Without a WMS:

• Inventory errors are common
• Orders get delayed
• Wrong items are shipped

With a WMS:

• Real-time inventory tracking
• Faster order fulfillment
• Accurate picking and packing
• Reduced operational costs

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Key Functions of a WMS

1) Receiving: Goods arrive from suppliers and Items are scanned & recorded

2) Put-away: System decides where to store items

3) Inventory Management: Tracks stock levels in real time

4) Picking: Identifies items for customer orders and guides workers for faster picking

5) Packing: Packs items into cartons or pallets and prepares shipment details

6) Shipping: Dispatches goods and generates shipping & tracking information

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How WMS Works with EDI

WMS plays a critical role in EDI workflows, especially for retail and 3PL operations. WMS provides the actual shipment data used in EDI.

Typical Flow:

1-Retailer sends Purchase Order (EDI 850)
2-ERP processes the order
3-WMS receives fulfillment request (EDI 940)
4-WMS performs picking & packing
5-WMS generates data for ASN (EDI 856)
6-Goods are shipped

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Common Challenges Without WMS

• Wrong inventory levels
• Manual errors in picking
• Delayed shipments
• High EDI chargebacks (especially ASN errors)

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Real-World Example

A retailer orders 1,00 Medical devices,

Without WMS:

• Items picked manually
• Quantity mismatch
• Wrong shipment

With WMS:

• System guides picking
• Tracks cartons accurately
• Sends correct ASN

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Key Benefits of WMS

• Real-time inventory visibility
• Faster order processing
• Improved accuracy
• Reduced costs and penalties

RosettaNet - Standard business process exchange

RosettaNet is a global standard for electronic business communication used mainly in high-tech and electronics industries.

It allows companies to automatically exchange supply chain information such as orders, inventory, shipping, and forecasts.

RosettaNet is a structured way for technology companies to communicate business transactions automatically.

3PL (Third-Party Logistics) in EDI

3PL (Third-Party Logistics) in EDI: 

3PL stands for Third-Party Logistics.

In EDI, a 3PL company manages logistics operations (warehouse, shipping, delivery) on behalf of another company and exchanges EDI documents with suppliers, retailers, and carriers.

A 3PL handles storage and shipping, while EDI allows them to exchange logistics data electronically.

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A 3PL typically manages:

• Warehousing

• Inventory management

• Order fulfillment

• Shipping & transportation

• Returns processing

Many large companies outsource logistics to providers such as DHL Supply Chain, FedEx Supply Chain, or UPS Supply Chain Solutions.

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Common EDI Documents Used with 3PL:

EDI Document and Purpose

• 940: Warehouse Shipping Order
• 945: Warehouse Shipping Advice
• 943: Warehouse Stock Transfer
• 944: Warehouse Stock Transfer Receipt
• 856: Advance Ship Notice
• 846: Inventory Inquiry / Advice

These documents help track inventory, shipments, and warehouse activities.

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Example Scenario:

Imagine a company selling medical devices:

1- Customer orders from retailer
2- Retailer sends order to supplier
3- Supplier sends EDI 940 to 3PL warehouse
4- 3PL picks and packs items
5- 3PL sends EDI 945 / 856 confirming shipment
6- Goods shipped to customer

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Benefits of using 3PL with EDI:

Benefits include:

• Faster order fulfillment

• Real-time inventory visibility

• Reduced manual work

• Better supply chain tracking