EDI's Role and Evolution through Technological Advances
Published on 10 November 2021
Designed to automate the processing of information in a "zero paper" perspective, electronic data interchange (EDI) has not stopped moving forward since its inception. Thanks to the numerous advantages it offers in terms of business collaboration, it has become a seemingly indispensable tool within companies. But on a concrete level, what is EDI? How has the technology evolved over the years? Let's look together at the uses of EDI over time.
How EDI works: definition and regulatory context
What is EDI?
In principle, electronic data interchange (EDI) can be likened to a dialogue between two computers and pursues a very simple goal: to exchange electronic documents between trading partners. By replacing paper document exchanges, electronic transactions have made it possible to significantly reduce human intervention. From this point of view, EDI therefore offers companies numerous advantages:
- Greater speed and reliability in processing information
- Reduction of operational costs
- Reduced errors and improved relationships between trading partners
For the exchange of data to be structured, it is essential to adopt a common standard recognized by the parties.
The format matters
Inevitably, along with electronic data processing comes the need to use a standard format that enables the system to read and understand the documents received. This format defines the type and form of the expected information, for example: integer, decimal, dd/mm/yy, etc. In this way, it is possible to share a common language used by the sender's computer system and that of its recipient.
There are numerous EDI standards, including ANSI X12, UN-EDIFACT (and its many variants EANCOM, GALIA...), VDA, TRADACOM, etc., and each of them has defined its own syntax and data dictionary. New standards based on the XML metalanguage have since been added to these historically popular standards, just as has been the case with HL7 industry standards used in healthcare or generic frameworks such as UBL, eb-XML, and UN-CEFACT. In addition, each standard includes numerous variants such as ODETTE or EANCOM for EDIFACT, resulting in ANSI version 5010 or EDIFACT version D12, Release A.
Before companies can exchange their electronic documents, they must therefore choose a common standard and version. Most of the time, they then use an EDI translator to automatically convert data from internal software or an application service provider.
Internet and XML metalanguage put EDI to the test
In the last decade, the overwhelming spread of the Internet and XML metalanguage have had a considerable impact on EDI. EDI/B2B software houses have taken advantage of these technological advances by aiming to facilitate the use of this tool within companies. In addition, all recent developments in EDI interoperability standards are based on XML syntax and use API-type exchange protocols.
EDI emerges as an online service
The first commercial offerings of outsourced EDI type became popular in the early 2000s. These platforms had the advantage of outsourcing all EDI exchanges to external companies, regardless of the partners, systems and file formats involved. SaaS (Software as a Service) therefore made it possible to eliminate the many obstacles that held back EDI implementation.
EDI in Saas greatly simplifies the uses of this new technology. It can be used without major investment, to the great benefit of cost optimization. You can send or receive messages directly in the format of your ERP without the need for resources or an in-house EDI expert.
B2B integration: what’s the future for EDI?
By automating the inter-company core business, B2B integration allows different stakeholders (customers, suppliers, business partners) to work more streamlined and efficiently.
Also known as B2B gateways, these integration solutions differ from the first generations of EDI platforms in that they bring a general, rather than a technical, view of the core business. By ensuring that different formats are taken care of, and multi-protocol transmission is possible, these B2B gateways allow you to model your core business processes and provide tailored monitoring. All of a company's complex processes are thus integrated into a single platform. In addition, these B2B integration solutions can be offered on premise for on-premises use, or in the cloud and thus be accessible from anywhere, such as Generix EDI Services.
Although process management or data processing engines are generally open to all use cases and formats, some EDI service providers have chosen to verticalize their solution for certain core businesses - this is what is happening in banking, healthcare, and supply chain. This allows them to speak the same language as the users and focus on each industry's practices regarding data format, process type or security challenges.
Undeniably, the uses of EDI have evolved greatly since its inception, particularly due to the technological advances made since 2000. Thanks to APIs and blockchain, there is no shortage of prospects for further evolution, making EDI more than ever a solution of the future that can improve the efficiency of multi-company collaboration.
Generix Group North America provides a series of solutions within our Supply Chain Hub product suite to create efficiencies across an entire supply chain. From Warehouse Management Systems (WMS) and Transportation Management Systems (TMS) to Manufacturing Execution Systems (MES) and more, software platforms can deliver a wide range of benefits that ultimately flow to the warehouse operator’s bottom line. Our solutions are in use around the world and our experience is second-to-none. We invite you to contact us to learn more.