EDI is a computer to computer exchange of business transaction documents.
EDI initially began with simple Invoices and Purchase Orders and has evolved into inventory management and product distribution.
EDI reduces handling costs and increases processing speed.
EDI requires all transactions be submitted in a standard data format.

The first step is mapping. Mapping is the process of establishing the communication between the data inputs of an organizations terminology and the data inputs in standard EDI terminology.
Standards Used:

  • ANSI X.12 in the US
  • EDIFACT in Europe
  • IPPAA in Healthcare

XML is very flexible and is sometimes used instead of the standard formats. XML is tagged based, much like HTML if you are familiar. Tags are both standard and user defined. XML communicates to the systems the format of the data and the type of information the data is. XML is emerging due to its flexibility and possible uses and may be in line to phase out existing EDI standards.

What are the Costs of EDI?

Legal and 3rd Party Costs

  • How much are you going to spend in re-negotiating contracts with your trading partners?
  • How much do you have to pay to start up a 3rd party communication intermediary?

Hardware Costs

  • Do your systems, networks and physical infrastructure need to be upgraded to support EDI?

Software Costs

  • Is new software needed to translate this data?

Transmission Costs

  • Know what it is going to cost you per order transmission. See if you can get volume discounts.
  • Trends in technology have been driving the cost down.

Reengineering Costs

  • Will EDI integrate with Inventory, Warehouse, Shipping and will your systems need to be reengineered to accommodate?

Training Costs

  • This is new information and skill sets for your employees and yourself to learn.
  • What is this training going to cost you. Both to get started and on going?

Security & Control Costs

  • Is your system secure now you have opened up access to an outside source?
  • Are you in a position to monitor and control this?

EDI Controls

  • Make sure you have the ability to check successful transmission and are notified with detailed reports of errors and failed transactions.


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