Evolution of EDI
EDI has been established within various industries as a reliable and efficient form of data transmission. It is a technical representation of a business conversation between two entities, either external or internal. From its inception, EDI was applied differently within these industries, and therefore different standards were set up.
In the late 1960s, EDI was established within the transport industry, and they created their own standards. Soon other industries followed suit and various standards were created. Thus each of these standards is not necessarily compatible, which causes confusion and an inability to communicate. EDI was designed to function outside of communication and software technologies, and can be transmitted between sender and receiver via any means the two share. These may include modem, FT, AS1, AS2, Email or HTTP.
Although the methods of EDI transmission are changing – as with the increased use of Internet options – the actual EDI documents have remained the same. And this is due to the use of standards within the field of electronic data interchange, which have established and maintain the continuity of data information transmission.
The History of EDI Standards
During the 1960’s processing of business orders and shipping data was transmitted using networks. This was referred to Electronic Data Interchange or EDI. This occurred within the transport industry, where it was found to be more time efficient to transfer data between trade partners on the same network. As such, the networks required to be talking about the same information in the same language.
A set of documentation was created for this purpose. The Transportation Data Coordinating Committee was formed to coordinate the development of translation rules among four existing sets of industry-specific standards. Standardization was more in range when the X12 standards of the American National Standards Institute (ANSI) were issued. These were an expansion on the TDCC standards, and eventually replaced them.
At the same time, the UK Department of Customs and Excise in collaboration with the British Simplification of Trade Procedures Board (SITPRO) was also making moves to create standards for its documentation in international trade called Tradacoms.
These were eventually extended by the United Nations Economic Commission for Europe (UNECE) into the General purpose Trade Data Interchange standards (GTDI), and were gradually taken on by about 2000 British exporter organizations. As two of the major traders of the world had created different and somewhat incompatible systems of standardization, problems arose. These have been addressed by the formation of a United Nations Joint European and North American working party (UN-JEDI). Hence began the development the Electronic Data Interchange for Administration, Commerce and Transport (EDIFACT) document translation standards.
The automotive industry went through a similar confusion when GM attempted to reduce costs by holding an inventory which would be only a day’s worth of supply. In this way, their inventory costs were reduced considerably. They did this through EDI and thus set up their own mode of communication with suppliers. This style was soon adopted by other automotive entities in order to similarly reduce their costs. This led to a need for standardized documentation across the industry. These were made clear through the Automotive Industry Action Group which worked with automakers and suppliers to develop an EDI standard for the entire industry. As such, the industry was able to create a standard which was related just to the automotive industry.
Currently there is a large list of business documents which the standard covers, from shipping to trucking, to re-ordering. This list has developed over the last ten years, and includes the finance, health, trucking, shipping, automotive and various other sectors of industry. It has widened the scope of efficiency, decreased human related errors and reduced delays. EDI is used worldwide from Australia to Alaska.
Improvements can be seen in areas such as inventory management, transport and distribution, administration and cash management. Currently EDI is in a great phase of expansions, where it is being used in collaboration with other data tools such as XML, and the Internet. These allow for the potential of EDI to come through as a tool not simply for data transmission, but as a means to create closer ties and networks for businesses and corporations.
New EDI Standards
Since EDI was established, and despite new technologies emerging, there are still an increasing number of businesses and corporations taking on EDI as a method of data transmission. The four major sets of standards are:
• UN/EDIFACT: the only international standard, which is mainly used outside of North America
• ANSI ASC X12 (X12), which is mainly in North America
• TRADACOMS standard used mainly in UK retail industry
• ODETTE standard used within the European automotive industry
These standards dictate the formats, data elements and character set which are required for the use of EDI. The codes are a string of letters, numbers and characters which provide information to the receiver regarding what the document concerns. Some information is mandatory, while other information is optional. Two documents can follow the same code, but appear completely different, depending on what industry they are associated with. For example, a dog food company may send information regarding expiry date, while an automotive company sends information regarding size of tire.
Since 2002 new standards have emerged, as more trading partners are using EDI through the Internet. These standards enable EDI to be securely transferred through e-mail, HTTP and FTP. While the use of the Internet as a protocol for EDI transmission has increased, VANs remain a valuable part of the EDI process for many users.
Electronic Data Interchange requires standards of data formatting to function. These standards include EDIFACT, HL7, which are used world wide and various others which are used within certain regions. These standards are data formats, and each one has characters and symbols that identify what each row is recording. The data items are separated by special characters.
EDIFACT or UN/CEFACT
EDIFACT arose from the issues of using EDI not just across nations but across the globe. As there were different standards between Europe and the U.S., a single format was created that was sanctioned by the United Nations. This allows international communications to also enjoy the benefits of the fast and efficient communications which EDI provides.
EDIFACT was born of the fact that there were differing standards across Europe and indeed the world. For this purpose, EDIFACT allows documents to be sent and received from Europe to American (and the reverse) easily. EDIFACT is highly used in the European markets, and was established early. Therefore current competing systems such as XML, while making inroads are not likely to have major impacts within these markets due to the existing hardware and software that many of these industries such as civil aviation, retail and tourism have implemented.
X12 is a standard which yet again regulates format type of and EDI document it was created by the Accredited Standards Committee.
This standard is health-related EDI which allows for exchange of health information electronically. It standards are used worldwide, and encourage the improvement of management, delivery and evaluation of health services within clinical practice.
This is the Internet Standard which allows for the secure and fast transmission of EDI documents via the Internet. It utilizes encryption and other authentication codes to ensure reliable and secure transmission.
Since EDI began many years ago, various codes have enabled trading partners to communicate with improved efficiency and accuracy. As the trading partners evolved to worldwide proportions, so did the standards. While various trading areas maintain their own standards, international standards allow for improved global communication.
Although trading use more open technology forms such as Internet, Email and HTTP, EDI through these means continues to provide secure and efficient transmission of data. As such, the standards will continue to evolve as do the industries and trading partners using the technology doing the same.