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.

Top FAQs About EDI for Beginners - Part 3

Q21. What is the difference between EDI 810 and EDI 850?

Answer:
EDI 850 is a Purchase Order (buyer requests goods/services), while EDI 810 is an Invoice (seller requests payment for goods/services shipped).

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Q22. What is an EDI Trading Partner?

Answer:
A trading partner is any business entity that exchanges EDI documents with you, such as customers, suppliers, carriers, or 3PLs.

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Q23. What does "Mapping" mean in EDI?

Answer:
Mapping is the process of translating data from an EDI format (like X12 or EDIFACT) into your internal ERP/business system format, and vice versa.

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Q24. What is an EDI Acknowledgment (997/CONTRL)?

Answer:
An acknowledgment confirms receipt of an EDI document.

• 997 → Used in X12 standards.

• CONTRL → Used in EDIFACT standards.

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Q25. What is the role of a VAN in EDI?

Answer:
A Value-Added Network (VAN) acts like a mailbox service, routing EDI messages between trading partners securely without a direct point-to-point connection.

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Q26. What is the difference between EDI ANSI X12 and EDIFACT?

Answer:

• ANSI X12 → Widely used in North America.

• EDIFACT → International/European standard.
  Both serve the same purpose but differ in syntax and segment structures.

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Q27. What is the benefit of EDI over Email or PDF orders?

Answer:
EDI ensures automation, accuracy, and speed—no manual entry, fewer errors, real-time updates, and compliance with customer/supplier requirements.

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Q28. What is an EDI Envelope?

Answer:
An EDI envelope wraps transaction sets for transmission. Examples:

• ISA/IEA in X12

• UNB/UNZ in EDIFACT

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Q29. What is an EDI Translator?

Answer:
An EDI Translator is software that converts EDI data into a format readable by internal applications (ERP, WMS, TMS), and vice versa.

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Q30. What industries use EDI the most?

Answer:

• Retail (Walmart, Amazon)

• Healthcare (claims, insurance)

• Logistics & Transportation

• Automotive

• Manufacturing

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)

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

A.

• EDI 850 = Purchase Order (buyer → supplier).

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

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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.

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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).

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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.

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

A.

• 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.

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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).

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Q18. What are some common challenges in EDI implementation?

A.

• Complex mapping requirements

• Different standards used by partners

• Security and compliance (HIPAA, GDPR)

• High setup and maintenance costs

• Onboarding new trading partners quickly

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

A.

• 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).

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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

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.

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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.

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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

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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

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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.

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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).

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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.

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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.

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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

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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.