Understanding how EDI technology works

By improving accuracy and eliminating paper documents with EDI technology, businesses see significant time and cost savings. EDI technologies automate the processing of transaction data between trading partners. So, instead of raising, sending and rekeying documents manually (e.g. POs and invoices), organisations can automatically and digitally communicate data within their supply chain.

EDI tech has evolved in line with changing market needs and the heavier reliance on digitised communications. Businesses have a much wider scope on what they can do with their data. This can involve more message types, business applications and systems integrations, as well as reporting.

In this blog you will learn; the basics of how EDI works, how EDI technologies have changed over time, and what the key components of a robust EDI solution is today.

EDI technology (Electronic Data Interchange) works by converting information into standardised digital formats, which can then be automatically distributed between trading partners. This is achieved through the translation, mapping, and integration of data into business systems. Essentially, EDI enables efficient and accurate digital business communications.

An EDI solution can cover a wide range of different message types depending on the particular requirements. However, the most common include:

• POs
• Invoices
• ASNs

These messages are then converted into the correct standard file format, according to the specific EDI protocol being adhered to. There are a number of standards/protocols of EDI message format. The standard being used will depend on the trading partner being connected to, as they vary between business industry and geographical location.

Unlike the traditional approach, the frictionless EDI process can be measured in minutes rather than days.

EDI technology has improved business data processing for decades. But it has also transformed and become far more sophisticated over the years.

Initially, businesses would need to implement an on-premise EDI solution. This typically would require internal overheads to manage the solution and keep it up to date. On-premise solutions made EDI unobtainable for most SME businesses. This is because they were less likely to have the resources to allocate to this technology.

However, there are more accessible and affordable EDI technologies available today. Harnessing the cloud, means that businesses no longer need to host the solution themselves. Instead, they onboard the services of an SaaS provider to do all the legwork.

Most on-premise solutions are now considered legacy systems that are nearing end-of-life. Organisations with this outdated EDI technology in place need to consider switching to a cloud-based EDI service that offers all the mod-cons, such as Transalis eDI™ solutions.

These modern EDI technologies include additional features, such as; advanced sales reporting, business system integrations, and agile supply chain management.

EDI technology works by exchanging and translating data into standard file formats that can be validated by your internal systems and those of your trading partners. The main EDI file format for Europe is called EDIFACT.

Data elements include items such as sender and receiver IDs. There are also hundreds of internationally recognised ‘message types’ reflecting the types of data to be transferred.

Your EDI software should also be based on a recognised protocol for secure, online data transfer such as AS2 or AS4.

Transalis is one of just a handful of certified UK EDI providers following AS4 standards of PEPPOL. PEPPOL stands for: Pan European Public Procurement Online. This is a multi-national framework designed to create interoperability between disparate tech systems.

AS4 supports all aspects of electronic procurement and supply chain management. This includes the exchange of POs, dispatch advice and invoices. AS4 goes further than its predecessors by providing more support for metadata.

A mapping exercise is required to integrate different sources of data into your EDI technology and support it in file formats that your internal systems can validate.
Mapping involves locating documents in your ERP, connecting relationships between data and choosing the destination.

It can be a time-consuming challenge to configure how each file is to be translated and sent out, ensuring the system will know how to perform the process in future.

Your EDI provider should be able to remove this burden from you by automatically mapping the data output from the source file into the relevant EDI format and making the process ‘future-proofed’. Transalis cloud-based eDI™ does exactly that.

Achieving digital transformation through EDI technology is a pragmatic choice that controls costs and supports competitive advantage.

The Transalis eDI™ team will ensure all your business documents, including structured and unstructured data, can be exchanged without having to learn the technical ins-and-outs.

Our range of bundled EDI solutions have been developed to support supply chains of all complexities. We provide our clients with robust, agile, and scalable EDI technologies suited to their needs. For example, a business with just one trading connection can be EDI live in as little as 24 hours with eDI Instant.