General EDI Information - 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. To standardize the documents communicated between many companies, the Transportation Data Coordinating Committee, in 1975, published its first set of standards. EDI standards are formats and protocols that trading partners agree to use when sending and receiving business documents. Around 1979, The American National Standards Institute (ANSI) designated an accredited standards committee for EDI. More information can be found by visiting the ASCX12-Website. The standards continue to evolve to address the needs of the member companies. The Uniform Communication Standard (UCS) is used by the grocery industry and other retail-oriented industry sectors. The UCS standards are a subset of the ANSI ASC X12 standards. For more information, visit the UCSWebsite. In the 1980's, the UN/EDIFACT standards were announced for international trade. The ANSI standards, however, are still the most commonly used standards in North America. The VICS (Voluntary Interindustry Commerce Standards Association) standards are used by some retailers and are a subset of the ANSI standards. The VICS standards are maintained by the VICS-Association.
How EDI Works
Typical EDI Documents
Invoices (ANSI- EDI 810, UCS- EDI 880) are issued by the trading partner who has provided products and/or services as a request for payment. These EDI invoices include most of the purchase order information as well as Invoice Number, Invoice Date and Total Amount Due.
Functional Acknowledgments (EDI 997) are short documents returned to the sender of an EDI transmission. They indicate that the transmission was received, but do not indicate agreement with the document.
Purchase Order Acknowledgements (EDI 855) are used to provide seller's acknowledgment and acceptance or rejection of a buyer's purchase order. This can be an acknowledgement that the entire ordered quantity will be shipped and the date when it will be shipped. It can also be a line by line acknowledgment of partial or complete quantities and single or multiple shipping dates. The 855 Document can also be used as notification of a vendor-generated order or Reverse Purchase Order. The 855 Reverse PO is used in support of Vendor Managed Inventory (VMI). The vendor creates this Reverse PO to indicate to the buyer that the supplier has created a purchase order to maintain inventory levels as agreed to in the VMI agreement between the two parties. There is usually a minimum time period for the 855 to be sent prior to the sending of the 856 - Advance Ship Notice, which is sent when the goods are shipped.
Advance Shipping Notices (EDI 856) tell the customer all the details about the shipment: what items were sent, how many, when they were sent, etc. The ASN document has information about each carton and its contents including the carton number, weight, cube, etc. There is almost always a UCC128 label on each carton, which has information about the contents of the carton and its destination and shipping method. There are several barcodes so that important data items can be scanned. One of the most important codes on the UCC128 label is the carton number (128 code), which is how this carton information is referenced back to the ASN document.
The Purchase Order Change Request (EDI 860) document is sent by a customer to communicate changes to a previous Purchase Order. The 860 can be used to cancel the entire order, add and delete items, alter item quantities and prices, and change dates specifying order shipment, delivery, etc.
The Text Message (EDI 864) document is used to communicate plain free-form text messages. The 864 is often used to communicate information regarding problems with a received document. It is also used to communicate general business information about the trading relationship that is not document specific.
The Credit/Debit Adjustment (EDI 812) document is used to communicate details of credits and debits for products. It may reference a specific Purchase Order and Invoice and include detailed information such as item identification and quantity. Standard codes are used to indicate the reason for the credit or debit request. Some common reasons are defective product, non-receipt of goods, return of goods, order quantity shortage or overage, and pricing error.
The Organizational Relationships (EDI 816) document is used to communicate location address and relationship information. On the most frequently exchanged EDI documents (the PO, ASN, and invoice) locations are most often identified only by codes in order to avoid the cost of transmitting full addresses. Location codes are unique to a specific trading partner. The 816 document tells trading partners the address to associate with a particular location code. The trading partner receiving the 816 can use it to maintain a list of the sender's location codes and associated addresses. An alternate format of the 816 is used to show organizational relationships, such as stores serviced by a specific Distribution Center or warehouse. Trading of 816's begins with a full set of the trading partner's addresses, after which changes may be sent on a weekly or monthly basis, or as needed.
The Payment Order/Remittance Advice (EDI 820) document is used in connection with Electronic Funds Transfer (EFT) in one of two ways. In the first, a Remittance Advice is sent to the trading partner and a Payment Order is sent to the sender's bank to initiate transmission of the payment to the trading partner's bank. The second option sees a combined Payment Order/Remittance Advice transmitted to the sender's bank, which in turn sends the payment and remittance data to the trading partner's bank, which then informs the trading partner that the payment has been received. The 820 includes such data as payer and payee identification, including bank and account IDs, seller's invoice ID, adjustment amounts, reason codes, and billed and paid amounts.
The Application Advice (EDI 824) document is used to inform trading partners of errors in EDI documents they have sent, most often invoices. The 824 differs from the 997 Functional Acknowledgement in that it is created as the result of error checking by the trading partner's business application program, whereas the 997 generally indicates EDI standard problems rather than business rule errors. In contrast to the 864 Message Text document, the 824 provides a fixed format for the identification of specific data items in error and for their suggested correction, in addition to free-form text message.
The Product Activity Data (EDI 852) document is used to report sales, inventory, and ordering information. Data is reported by item and may be broken out by store location. The 852 is usually sent on a weekly basis. The data is useful to the selling trading partner for product planning purposes. Normally the purchaser's buyer must approve the sending of 852 data to the seller.
EDI Document Structure
The Interchange Header (ISA), commonly known as the Communications envelope, starts an interchange of one or more functional groups. It contains: the syntax identifier, Sender and Receiver EDI ID's, unique control number, acknowledgment requested, test indicator, date and time sent, recipient reference or password, and version of Standard being used. The Functional Group Header (GS) indicates the beginning of a group of transaction sets and provides a second level of Sender and Receiver IDs. It usually includes an identifier for the type of transaction set, application sender identifier, application recipient identifier, date and time sent, unique functional group reference, agency responsible for specification of structure (i.e. X12, VICS), message type version, and password.
The Detail area contains the details of the business transaction. In a PO document, the ST includes elements such as: Purchase Order Number, Date and PO Type, Item Numbers for Products Ordered and Product Descriptions, Prices, Method of Shipment and Delivery Dates, Terms of the Order, and, for some orders, a Distribution List by Item by Location.
The Trailer Envelope Segments contain control information such as total ST Segments and total GS Segments and unique control numbers that must be identical to the values in the ISA and the GS.