EDI has been an indispensable business tool now for years and is a “must” for lasting business relations in most industries. EDI enables companies to optimise both their own internal business processes and those processes that apply throughout the entire organisation. Data and documents can undergo automatic further processing in the in-house ER system without any media disruptions, thereby keeping manual data entry and associated error sources to a minimum. Ultimately, EDI helps save time and money.
The electronic interchange of business messages is conducted via remote data transmission regardless of the hardware and software used by the sender and recipient. Depending on the particular industry, partners use coordinated:
EDI procedures (classic EDI, WebEDI, Mobile EDI, etc.)
EDI messaging formats (EDIFACT, VDA, ANSI X.12, ODETTE, etc.)
EDI message protocols (AS2, HTTP(S), OFTP, OFTP2, FTP, SMTP, etc.)
EDI transmission channels (VANs, X.400, internet, e-mail, etc.)
Creating EDI compatibility
Companies can either implement EDI capability themselves in-house, or they can use EDI services from external EDI services providers, also known as EDI providers or EDI clearing centres. EDI requires the following:
- Hardware (or as needed, a back-up system)
- Software for converting and communicating (EDI converter)
- Interfaces to the ERP system
- Personnel and know-how for administration, operation and monitoring
EDI software consists of connectors and a converter, with the converter representing the heart of the EDI software. The converter translates data supplied by the ERP system pending transmission into the respective standard message format, for example EDIFACT in the trade sector. The required qualifiers and the service segments needed to ensure smooth exchange of the data are added. For incoming data, the converter inspects the syntax and translates the message back into a company’s preferred format.
EDI service provider
Compared to an in-house EDI solution, using an external EDI service provider such as Mercoline costs nothing in terms of implementation and investment costs for hardware and software components. Smaller and mid-sized companies in particular profit from the lower costs and quicker implementation of EDI requirements. However, even companies operating their own EDI converters still profit from EDI outsourcing, thanks to the specialisation of the EDI service provider and associated lower costs. This is primarily because the EDI service provider implements the EDI services for hundreds of customers, subsequently spreading the costs for hardware and software, maintenance and servicing among all partners.