EDI Overview-Introduction..

What is EDI?

EDI which stands for Electronic Data Interchange is the computer-to-computer communication of business documents between companies in a standard format.  It is a paperless way to send and receive Purchase Orders, Invoices, etc.  EDI replaces human-readable documents with electronically coded documents. The sending computer creates the document and the receiving computer interprets the document.  Implementation of EDI streamlines the process of exchanging standard business transactions.   Companies save by eliminating people cost as well as the cost due to errors and double entry of data.   The transmissions are accomplished by connecting to a mailbox via a modem or the internet.   The most common mailbox is a Value Added Network's (VAN) electronic mailbox.  Each user, identified by a unique EDI ID, accesses his mailbox to send and receive all EDI transactions. EDI standards are formats and protocols that trading partners agree to use when sending and receiving business documents.

Electronic       è Media (Internet)

Data                è Business Information

Interchange    è Sending and Receiving of Data

How EDI Works

Typically, an EDI document begins in a trading partner's business application computer system.  A document is produced and sent to a specialized computer program that translates the document into a standard EDI format.   The EDI file is then transmitted, usually via the trading partner's VAN.   When the VAN receives the transmission, it is sent to the intended recipient's mailbox, identified by its EDI ID.  The trading partner receives the document from its VAN when it connects and empties its mailbox.  Through the use of an EDI translation program, the document is translated into a file that will be processed by the trading partner's business application system.  During the inbound translation process, a new EDI document is transmitted back to the sender to acknowledge receipt of the document.   This new document, the functional acknowledgment (FA), assures the sender that its transmission has been received.