What is EDI ?

08 febbraio 2022

Electronic Data Interchange (EDI) is a technology used for the electronic exchange of documents between companies. Instead of exchanging paper documents (purchase orders, invoices, etc.), EDI allows the transfer of information in a digital, standardized way, from software to software.

Communication is therefore done quickly, in a few hours rather than in a few days. This method is used in the automotive sector for the supply of raw materials or in finance to accelerate bank transfers. In the pharmaceutical sector, too, communication between laboratories must be fast and efficient.

 

The main documents exchanged using EDI are purchase orders, invoices and Advanced Shipping Notices (ASN). An EDI transaction is defined by EDI standards. In order for the EDI document to be processed correctly, the information must be complete and in the right place.

 

The EDIFACT/UN standard is the international EDI standard. Here are examples of EDI messages exchanged in the transport and logistics sector, according to this standard :

  • IFTSTA: informs about the change of status of the transport,
  • INVOIC : the transport invoice,
  • RETANN: informs about the return of goods,
  • Etc

What you need to set up EDI

 

An EDI system can be difficult to set up. It is necessary to constantly follow the standards and the evolution of the EDI messages which can be exchanged since it is of the good performance of the information exchanges that to respect the codes of writing.

 

The implementation of EDI must take into account certain elements. A Transformation software must be able to transform documents, i.e. take addresses, amounts, references or quantities and then translate them into EDI language. It must also be able to group or separate batches of EDI messages according to the sectors and commercial agents with which the company will interact. Likewise, it is necessary to be able to sort them in order to send them directly to the targeted people.  

 

These are the many requirements to take into account that sometimes lead companies to outsource their EDI systems.

 

The advantages of EDI

 

  • Speed and reliability: the exchange of information is secure between each person who needs to have access to the information at a given time. The company saves time in repairing errors made with manual information management,
  • Effective communication and system agility: because all information is standardized. Information is understood upon receipt and there is no confusion,
  • Real-time information between customers, companies, warehouse managers and all actors involved in the supply chain,
  • Easier administrative procedures: to save time and money while remaining organized,
  • Dematerialization of exchanges: a paperless initiative to meet environmental challenges,

 Smoother information flow: it allows companies to make decisions quickly and to accelerate processes and operations in the warehouse. The experience is then positively impacted.

Monstock is the inventory and flow management solution that provides end-to-end traceability on your tracking documents and products. Intelligent and agile, Monstock allows you to gain productivity by exchanging information in near real time.

 Learn more about automation and information transfer by reading our article on Advanced Shipping Notice. Click here for more information.

 To learn more, contact the Monstock team.

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