VL OMNI Resources EDI Ebook for SMBs(clone) | Page 5

Chapter 1
EDI: What You Should Know
When computers started to be used by major organizations back in the 1960’s, there was a immediate need
for systems that could communicate and exchange business information between applications in a consist-
ent manner.
While the data exchange processes were proprietary at first, ANSI (American National Standards Institute)
and UN/EDIFACT (United Nations Directories for Electronic Data Interchange for Administration, Com-
merce, and Transport) developed Electronic Data Exchange (EDI) standards. These standards to set interna-
tional guidelines for data communication and movement, and provided a consistent method for how differ-
ent computer systems were to move data from one to another. Each type of EDI document was assigned a
number. For example, X12 documents have these numbers referenced against the EDI standards by comput-
ers in order to decode what type of document was being sent. EDI, put simply, standardized the electronic
sending and receiving of documents, no matter the industry.
And EDI has been a central method for moving business documents electronically ever since -- although
developments in automation and technology have allowed for imprevements in sophistication. For example
integrated EDI is of utmost importance today if a business has a certain level high of volume with customers
or vendors; without integrated EDI, fulfilling these t ansactions is near impossible.
Over time, EDI has evolved from its original format and use, and is still highly used today. EDI is crucial to the
functionality of many businesses, and will likely continue to be for the foreseeable future as EDI remains a
core communication method for many retailers and supply chain partners.
Some Common EDI Transactions
EDI and the transactions it handles can be complex, but management should be aware of some basic fuc-
tions. Purchase Orders (POs) (EDI document number 850 or 875) for goods or services are built using
EDI standards. This includes the format and size of the purchase order number, the date, the billing infor-
mation, and the shipping information. Purchase Order EDI documents also include information regarding,
and the line item information including quantity, product number, product description, and price. Basically
Everything that was on a paper PO is included in an EDI PO.
Invoices (EDI document number 810 or 880) follow purchase orders. The EDI 810 document replaced the
paper invoice. Many businesses created agreements surrounding these EDI standards and pay according to
the results of the electronic transactions.
Shipping Notices (EDI document number 856) are sent in response to an EDI purchase order after it’s re-
ceived. The shipping notice or ASN (Advance Ship Notice) is sent before a shipment arrives at the customer,
and in some cases it becomes the physical invoice.
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