EDI Insights & Facts: August 2025

Monday, 18 August 2025

Top FAQs About EDI for Beginners - Part 2

Q11. What are the different types of EDI standards?

A. The most common EDI standards are:

ANSI X12 (used in North America)
EDIFACT (global standard by UN/CEFACT)
TRADACOMS (mainly UK retail, now largely replaced by EDIFACT)
HL7 (for healthcare data)
ODETTE (for European automotive industry)

Q12. What is the difference between EDI 850 and EDI 810?

EDI 850 = Purchase Order (buyer → supplier).
EDI 810 = Invoice (supplier → buyer).
👉 850 starts the order cycle, while 810 is for payment settlement.

Q13. What is the role of an EDI Translator?

A. An EDI translator converts raw EDI messages into human-readable or application-readable format (XML, CSV, JSON, flat files) and vice versa, ensuring systems can understand and process transactions.

Q14. What is an EDI Acknowledgment (997/CONTRL)?

A. An EDI 997 (X12) or CONTRL (EDIFACT) is a functional acknowledgment message confirming that the EDI file was received and syntactically correct (but not guaranteeing business acceptance).

Q15. How is EDI integrated with ERP systems?

A. EDI middleware maps incoming messages (e.g., 850 → sales order) and sends them into ERP systems like SAP, Oracle, NetSuite, Microsoft Dynamics, while outbound ERP data (e.g., invoice) is converted into EDI format before sending to trading partners.

Q16. What is the difference between Direct EDI and VAN-based EDI?

Direct EDI (point-to-point): Connects two partners directly over AS2, SFTP, API, etc.
VAN (Value Added Network): Acts as an intermediary that routes, secures, and stores EDI messages between partners.

Q17. What is EDI Mapping?

A. EDI Mapping is the process of converting EDI segments and elements into a format that ERP or internal systems can understand (e.g., mapping N1+ST to "Ship To Address" in ERP).

Q18. What are some common challenges in EDI implementation?

Complex mapping requirements
Different standards used by partners
Security and compliance (HIPAA, GDPR)
High setup and maintenance costs
Onboarding new trading partners quickly

Q19. What is the difference between EDI 940 and 945?

EDI 940 = Warehouse Shipping Order (sent from seller → 3PL warehouse, telling them what to ship).
EDI 945 = Warehouse Shipping Advice (sent from warehouse → seller, confirming shipment details).

Q20. What is the future of EDI?

A. The future of EDI includes:

Cloud-based EDI solutions
Integration with APIs for real-time data exchange
AI/ML for exception handling and error detection
Blockchain for secure supply chain visibility
Greater automation in order-to-cash and procure-to-pay cycles

Sunday, 3 August 2025

Top FAQs About EDI for Beginners - Part 1

1. What is EDI?

Answer:
EDI (Electronic Data Interchange) is the digital exchange of business documents (like purchase orders, invoices, and shipping notices) between companies in a standard format — without human intervention.

2. Why is EDI important?

Answer:
EDI automates the exchange of critical business information, reduces manual errors, speeds up processes, cuts costs, and strengthens relationships with trading partners.

3. What types of documents are exchanged through EDI?

Answer:
Common EDI documents include:

850 – Purchase Order
810 – Invoice
856 – Advance Ship Notice
997 – Functional Acknowledgment
940/945 – Warehouse Orders
867 – Product Transfer and Resale Report

4. What are the most common EDI standards?

Answer:
The most widely used EDI standards are:

ANSI X12 – Mostly used in North America
EDIFACT – Common in Europe and globally
VDA – Used in the automotive industry (Germany)
TRADACOMS – Formerly used in the UK retail sector

5. What is a VAN (Value Added Network)?

Answer:
A VAN is a third-party network service that helps companies exchange EDI documents securely. It acts like an EDI “post office” between trading partners.

6. Do I need special software for EDI?

Answer:
Yes, you’ll need an EDI translator, integration tool, or middleware to convert standard EDI formats into your internal system format (ERP or accounting software).

7. What is an EDI 997 or Functional Acknowledgment?

Answer:
An EDI 997 is a response sent to confirm that an EDI document (like an 850 order) was received and processed correctly — not to be confused with business acceptance.

8. What is EDI mapping?

Answer:
EDI mapping is the process of translating EDI data into the internal format of your business system — and vice versa. It's how your systems understand incoming or outgoing EDI messages.

9. What are EDI communication protocols?

Answer:
These are the ways EDI files are securely transmitted:

AS2 – Internet-based, secure, real-time
SFTP/FTPS – Secure file transfer
HTTPS – Secure web-based transfer
OFTP2, PEPPOL – Industry-specific secure protocols

10. Is EDI still relevant in the age of APIs?

Answer:
Yes. While APIs are gaining traction, EDI remains a key standard in supply chain, logistics, retail, healthcare, and automotive industries due to its stability, wide adoption, and compliance features.