EDI Standard - EDIFACT

EDIFACT (Electronic Data Interchange for Administration, Commerce, and Transport) is an international standard for Electronic Data Interchange (EDI) developed by the United Nations. It provides a framework for structuring business documents and facilitates the exchange of data between organizations across different countries and industries.

Overview of EDIFACT

1. History and Development:

   • Established: EDIFACT was established in 1987 by the United Nations Economic Commission for Europe (UNECE) to create a globally accepted standard for EDI.
   • Scope: Aimed at facilitating international trade and communication, EDIFACT covers various industries including retail, transportation, finance, and manufacturing.

2. Structure and Format:

   • Message Types: EDIFACT messages are defined by a unique UN/EDIFACT message type code (e.g., INVOIC for Invoice, DESADV for Dispatch Advice).
   • Segments: Each message is composed of segments, which are groups of related data elements.
   • Data Elements: Individual pieces of information within segments.
   • Interchange Control Structure: Messages are enclosed in an interchange control structure, which includes an interchange header (UNB) and an interchange trailer (UNZ).

3. Commonly Used EDIFACT Messages:

   • INVOIC: Invoice
   • ORDERS: Purchase Order
   • DESADV: Dispatch Advice
   • RECADV: Receiving Advice
   • PRICAT: Price/Sales Catalog
   • DELJIT: Just-in-Time Delivery Schedule

4. Benefits of EDIFACT:

   • Global Standardization: Provides a universal standard that facilitates international trade and communication.
   • Efficiency: Streamlines business processes by automating document exchange, reducing manual entry, and accelerating transaction cycles.
   • Flexibility: Adaptable to various industries and business processes, with the ability to accommodate different business needs.

5. Implementation:

   • EDI Software: Organizations use EDI translation software to convert internal documents into EDIFACT format and vice versa.
   • Mapping: Defines how data fields from internal systems correspond to EDIFACT segments and data elements.
   • Transmission: EDIFACT messages can be transmitted via different methods, including Value-Added Networks (VANs), direct connections, and the Internet.
   • Acknowledgments: Receipt of messages can be confirmed through acknowledgment messages (e.g., CONTRL for Control Message).

EDI Standard - ANSI ASC X12

The ANSI ASC X12 standard is a widely used format for Electronic Data Interchange (EDI) in North America. Developed by the Accredited Standards Committee (ASC) X12, which is part of the American National Standards Institute (ANSI), this standard facilitates the electronic interchange of business documents.

Overview of ANSI ASC X12

1. History and Development:

   • Established: The committee was established in 1979 to develop uniform standards for inter-industry electronic exchange of business transactions.
   • Scope: Covers a wide range of industries including retail, finance, healthcare, supply chain, and transportation.

2. Structure and Format:

   • Interchange Control Structure: Each X12 transaction set is surrounded by a header (ISA) and a trailer (IEA) to manage and identify the start and end of an interchange.
   • Transaction Sets: Defined by three-digit codes, each transaction set corresponds to a specific business document (e.g., 850 for Purchase Order, 810 for Invoice).
   • Segments and Elements: Each transaction set is divided into segments (groups of logically related data elements), which are further divided into data elements (individual pieces of information).

3. Commonly Used Transaction Sets:

   • 810: Invoice
   • 850: Purchase Order
   • 856: Advance Ship Notice
   • 997: Functional Acknowledgement
   • 820: Payment Order/Remittance Advice
   • 837: Health Care Claim
   • 834: Benefit Enrollment and Maintenance

4. Benefits of ANSI ASC X12:

   • Standardization: Provides a uniform format for electronic documents, reducing the complexity of exchanging information between different systems.
   • Efficiency: Streamlines business processes and reduces manual data entry, leading to faster and more accurate transactions.
   • Interoperability: Facilitates communication between different industries and companies, even if they use different internal systems.

5. Implementation:

   • EDI Software: Organizations use EDI translation software to convert internal data into the X12 format and vice versa.
   • Mapping: Defines how data elements from internal business documents correspond to X12 data elements.
   • Transmission: Documents can be transmitted through various means, including direct connections, Value-Added Networks (VANs), and the Internet.
   • Acknowledgments: Receipt of documents is confirmed through acknowledgment transaction sets like the 997 Functional Acknowledgement.

Understanding about Dropshipping

Dropshipping is a retail fulfillment method in which a store doesn't keep the products it sells in stock. Instead, when a store sells a product using the dropshipping model, it purchases the item from a third party, usually a wholesaler or manufacturer, who then ships the product directly to the customer. This means that the retailer doesn't have to handle the product directly or maintain a physical inventory.

The dropshipping process typically involves these steps:

Setting Up an Online Store: The retailer creates an online store where they list products for sale. They often use platforms like Shopify, WooCommerce, or others to build their store.

Choosing Suppliers: The retailer identifies suppliers or wholesalers who offer dropshipping services for the products they want to sell. These suppliers provide product information, images, and sometimes even pricing to the retailer.

Listing Products: The retailer adds the supplier's products to their online store and sets the retail price, usually higher than the wholesale price to make a profit.

Customer Places an Order: When a customer places an order and pays the retail price on the retailer's online store, the retailer forwards the order and customer details to the supplier.

Supplier Ships the Product: The supplier then packages and ships the product directly to the customer, often under the retailer's branding or unbranded, depending on the arrangement.

Retailer's Role: The retailer's primary responsibility is managing the online store, marketing the products, handling customer service inquiries, and managing the overall customer experience.

Benefits of dropshipping include:

Low Startup Costs: Dropshipping doesn't require a large upfront investment in inventory, making it an attractive option for entrepreneurs with limited capital.

Low Risk: Since you don't buy inventory until you've made a sale, there's minimal risk of getting stuck with unsold products.

Location Independence: Dropshipping allows you to run your business from anywhere with an internet connection, as you don't need to manage physical inventory.

However, there are also challenges to consider:

Lower Profit Margins: Because you're not buying in bulk from a wholesaler, your profit margins might be lower compared to traditional retail.

Inventory and Quality Control: Since you don't handle the products, you're reliant on the supplier for quality control and accurate inventory counts.

Dependency on Suppliers: Your business's success depends on the reliability and efficiency of your chosen suppliers.

Competition: The ease of starting a dropshipping business has led to a competitive market, making it crucial to find a niche or unique selling proposition.

Dropshipping can be a viable business model for those who are willing to invest time in research, marketing, and customer service while understanding its advantages and limitations.

EDI Flow in Retail Industry

 

Retail is the process of selling consumer goods or services to customers through multiple channels of distribution to earn a profit.

Retailers satisfy demand identified through a supply chain.

The term ‘retailer’ is typically applied where a service provider fills the small orders of many individuals who are end users rather than a large orders of a small number of wholesales, corporate or government clientele.

EDI for retail industry can be viewed as a vital part of general company strategy regarding business development & delivering best services to customers.

Implementing EDI into company system gives a competitive advantage & raises efficiency. EDI Integrated into internal inventory gives possibility to take full control over goods supply & their delivery to clients.

The supply chain in retail is a system with a specific structure & tasks. The main task is to always provide customers with products available. 

Retail cannot stick to occasional orders or orders with delays. It must support efficient flow in order not to send clients to competition.

EDI helps to facilitate delivery process control over stock keeping units, to reduce check in times and human errors.