The Inovis Blog

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Today’s post is a guest post from one of our favorite readers, Craig Dunham. Craig is currently an employee of Big 5 Sporting Goods and is also a regular contributor to the blog EDI Talk. Without further ado, here’s Craig:

It was recently suggested that maybe - just maybe - we need to cover what EDI really is; kind of an EDI primer, if you will. Something that gives a reader the basics of what EDI is and what EDI is not and what it’s all about. For those of us that are EDI proficient and know what it’s about - it will be a step back in time to when we weren’t quite as experienced.

First off, if we break it down, EDI stands for ELECTRONIC DATA INTERCHANGE. If you go to Wikipedia.org and search for EDI, you’ll basically find this:

An inter-company, application-to-application communication of data in standard format for business transactions, Electronic Data Interchange (EDI) is a set of standards for structuring information that is to be electronically exchanged between and within businesses, organizations, government entities and other groups.

Well, that’s not difficult to understand, now is it…?

Basically, at the core, EDI is a way of sending data back and forth between two entities. It can be two companies, two universities, or two hospitals; even two divisions of the same big company or corporation. EDI is used in a large number of industries - from retail sales and automotive manufacturing, to banks, hospitals, insurance and so many other industries and uses.

EDI is, quite simply, a way to send data between systems. That’s it. Not much else is involved. It’s a way of taking data from one system - at one company or a division - and then transmitting that data to another system, at that other company or division. This other entity is called a TRADING PARTNER. Depending upon your preferred method of communications, be it AS2 or BiSync or good old fashioned FTP; you send the information - those bits and bytes of data - from here to there. Now, just to be clear, however, EDI is generally a way for the two systems to communicate - to talk to one another. EDI is not really considered “human eye readable” - in that the information is provided in a way that may not make sense to the common user.

Now, before you think that you can just send raw data from one system to another, there are SOME other basics that need to be known.

Depending upon where you live and work, there are some standards - or guidelines - that you need to follow. In North America - the USA and Canada - the common standard being used is called “X12″ and it’s created and administered by the American National Standards Institute, which coordinates standards used primarily by “trade, technical, professional, consumer and labor organizations.” From there, there is another group - the Accredited Standards Committee - that is used to create those standards.

In other parts of the world, and in other industries, the ANSI really isn’t used. The United Nations created UN/EDIFACT (United Nations/Electronic Data Interchange For Administration, Commerce and Transport), which is used outside of North America. In the United Kingdom, they use a system called TRADACOMS, which was created in 1982, and is used for their retail industry. There’s not a whole lot of online information about TRADACOMS.

These different standards tell you what documents you can format your data into and what syntax - the layout - that document needs to follow. Pretty much any document you need to send via EDI can be found in the X12 standards guide. The ASC X12 has a number of subcommittees and groups that maintain the standards as they pertain to a specific industry.

OK… So how far was that over everybody’s head? Still a little stumped? Well, how about this for a concept? I think even a beginner can understand this one!

When was the last time that you sent or read an e-mail? Or even just a regular letter? But, since we’re on the World-Wide-Web and on the Inovis website, we’ll assume you have at least a bit of technical and computer knowledge and understanding, so we’ll go the e-mail route.

OK, so you’re sitting at your desk and you need to send a message to Meg Suggs at Inovis. So you open up your trusty e-mail client (like Outlook) and you create a new e-mail:

To - Meg Suggs

From - Me

Subject - How Does EDI Work?

Dear Meg,

I was just wondering if you could explain to me just how EDI works and what it all means?

Thank you,

Me.

So, that’s a basic e-mail document, right? We have a “TO” and a “FROM” and we have a “SUBJECT” and we have a “MESSAGE” and then we have the “CLOSE.” Pretty simple and straightforward, right?

Well, EDI truly isn’t that much different from that e-mail. Honestly!

We have a TO - it’s usually called a QUALIFIER and an ID. There are a number of IDs out there - from a company’s DUNS number to a Phone Number or even just a Name! Each ID is like saying “MEG SUGGS.” Then there is the qualifier. If you’re using a phone number, the qualifier is a 12. If you’re using your DUNS, it’s a 01. If it’s something else, there probably is a qualifier for that, too; even if it’s just “ZZ” for “mutually defined.” In the case of sending Meg an e-mail, the qualifier would be the “domain” that you send the e-mail to - the @Inovis.com. That’s the qualifier.

Make sense?

OK, next up we have the FROM - again, it’s just like the TO - made up of a QUALIFIER and an ID. This is the address that the message is coming from. Simple enough.

Now we’re up to the SUBJECT line. The subject gives the reader an idea of what the message is going to be about. Above, we say “how does EDI work?” - but in the EDI world, depending upon what kind of message you’re sending, this SUBJECT would be more like the type of document you’re sending. Let’s say you’re sending a PURCHASE ORDER. In the X12 world, it’s known as an 850. TRADACOMS calls it an ORDER. And UN/EDIFACT does the same - ORDERS.

Are you still with Me?

Good! Moving on, we come to the MESSAGE. This is simply the data we’re sending across! In our e-mail, it’s the body of the e-mail with our question for Meg to please define EDI for us. In EDI, it’s the data we want to send to the other system - to our Trading Partner. If we’re sending the 850 or the Order, we’re putting in quantities and costs and terms and product descriptions and more, to alert our trading partner that this is what we’re buying and how much it costs and when we want it and how soon we’ll pay for it.

Now this is where it gets a little tricky. The body - the message - of the order is set up in a certain way, based upon the standards we’re using. For X12, the body is broken up into SEGMENTS and each SEGMENT will be broken up into ELEMENTS. The SEGMENTS will tell the other system what information is to follow in the ELEMENTS. The ELEMENTS actually tell the system what we’re doing - i.e. we’re ordering 100 widgets in size small and color blue to be shipped to ABC Company.

It’s not all that difficult, once you grasp the basic concepts.

Finally, we’ll have the CLOSE of the message. This is the THANK YOU above, and the signature. In EDI, it’s basically going to be a bit of a summary of the document - a count of the segments, for example - and then an “END” of the document.

So, that’s about all there is to EDI. The easiest way to think about it is to liken it to an e-mail message that you’re sending. That’s the basic premise and idea - sending information - data - from one place to another, electronically.

Any questions?