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.