What is EDI, and Why is It Used by fcB2B

TAKING THE LEAD

Lewis Davis Senior Director of Technology and Research

What is EDI, and Why is it Used by fcB2B?

What is EDI or Electronic Data Interchange? Let us start with a bit of history; in the early 1970s, companies looked at ways to communicate business documents in an automated fashion. Back then, communication was done using modems (precursor to today’s routers). Companies like Montgomery Ward and Kmart defined their format to send purchase orders to their suppliers. This was great if you were the sender, but each supplier had to support multiple formats to process PO’s. This was very inefficient and costly for the suppliers. The industry came together and requested help from the American National Standards Institute (ANSI), and after a period, EDI was born. When the fcB2B standards were created, EDI was well established and heavily used within the supply chain. This made the decision on the format very easy.

The EDI documents are somewhat cryptic if you are not familiar with the format. Each document has a number that identifies what information is contained within. For example, the 810 is an electronic invoice, whereas the 832 is a product catalog. Each document is broken down into segments and elements. The elements define what data is stored, and qualifiers are used to identify the data further. For example, X12 EDI is used throughout the United States, whereas EDIFACT is the standard used everywhere in the world. Although they differ in context and document name, a Purchase Order is an 850 in X12 and ORDERS in EDIFACT; both still use segments, elements, and qualifiers to identify the sent data.

I know this is techno-speak, but it helps to explain why EDI was used to create the fcB2B standard. Things move much faster in today’s IT and life, and we have gotten accustomed to instant access and instant delivery. One question I get is why are we still using EDI to send these critical documents; why not a newer technology or web services to request a catalog and receive the data? One reason is the volume of data in a complete catalog from some suppliers, although small compared to some

The EDI documents are somewhat cryptic if you are not familiar with the format. Each document has a number that identifies what information is contained within.

files on the internet. Another reason is the investment suppliers have made in EDI, which large retailers still require to conduct business. The big online retailers (Amazon, Wayfair, etc.) look to EDI to provide stock levels to keep products on a website and supplier analytics. There are other options for sending this information, but they require additional effort to define and get an industry agreement. EDI may be getting some gray hairs, but it’s still useful and has a role in automating business-critical documents.

Visit our website at www.fcb2b.info and click on the Resources tab to learn more about fcB2B. In addition, the Organization tab has a listing of the members that support fcB2B.

Do you B2B? If not, Why? Contact me to find out how to be more efficient in your business. ■

One question I get is why are we still using EDI to send these critical documents; why not a newer technology or web services to request a catalog and receive the data? One reason is the volume of data in a complete catalog from some suppliers, although small compared to some files on the internet.

Lewis Davis can be contacted at 706-217-1183 ext. 132 or via email at ldavis@wfca.org.