Introduction To EDI And EDI Standards

Introduction to EDI and EDI StandardsMike KatonaOctober 2010

Objectives The objective of this session is to introduce you toElectronic Data Interchange (or EDI) and EDIstandards You will learn the basics of ASC X12 and EDIFACT,the two most common EDI standards in use today You will understand the basic structure of an EDIenvelope and how it differs among the mostcommonly used standardsOctober 13, 2010 Slide 2 2010 GXS, Inc.

Who Should Attend? Are you brand new to EDI? Have you been asked by a TradingPartner to exchange documents withthem via EDI? Are you aware of EDI, but are still a bitconfused by some of the processes andterminology? If you answered ‘yes’ to any of thesequestions, then this session is for you!October 13, 2010 Slide 3 2010 GXS, Inc.

What is EDI?

1960s–1970s Automationwithin the ngShippingOctober 13, 2010 Slide 5 2010 GXS, Inc.

1980s–1990s ExtendedEnterprise CommunicationCustomersEmployees and Other DivisionsThe EnterpriseVendorsTrading PartnersOctober 13, 2010 Slide 6 2010 GXS, Inc.

1990s–2000s Electronic CommerceTraditional EDIFAXWeb-Based EDIINTRANETSEFTImagesVANSTHEINTERNETThe EnterpriseVoiceEXTRANETSOther CommerceTechnologiesE-MailVideoOctober 13, 2010 Slide 7 2010 GXS, Inc.

What Is EDI?Electronic Data InterchangeThe process of electronically exchanging business documentsin a standard format. EDI formally started in the 1960s, but istraceable back as far as the 1948 Berlin Airlift.Before the advent of the Internet and other technologies,traditional EDI was "the application-to-application electronicexchange of business documents in a standard format."October 13, 2010 Slide 8 2010 GXS, Inc.

BusinessBeforeEDIOUTININMailINMailPost OfficeOUT

Business before EDI Paper purchase order business example:– Purchase order data manually keyed into a computer– Purchase order printed– Internal mail sent purchase order to various departments for processing– Copies of purchase order filed in various departments– Purchase order approved and mailed– Purchase order delivered by post office– Data entry personnel for the company receiving the purchase orderre-keyed the data Answer these questions:– How long did it take?– How many hands touched the documents?– How many times was the data keyed?– How likely is it that errors occurred?October 13, 2010 Slide 10 2010 GXS, Inc.

Business With EDIElectronic Data InterchangeThe electronic exchange of businessdocuments in a standard formatOctober 13, 2010 Slide 11 2010 GXS, Inc.

Business with EDI EDI automates the exchange of standard business data,regardless of the type of computer, location of the company, or theoriginal application format of the data EDI changes the way you do business EDI streamlines cumbersome proprietary files and/or manualpaper documents EDI accommodates rapid response to customer demands EDI can be implemented numerous ways The 1960s offered one standard and one method of doing EDI This millennium offers multiple standards and methods of doing EDIOctober 13, 2010 Slide 12 2010 GXS, Inc.

EDI Today Virtually all industries have adopted someform of EDI 300 documents/transactions exist today– Generic: purchase orders, invoices, power ofattorney, project cost reporting, priceinformation, contract abstract– Industry-specific: motor carrier rates, studentrecords, tax returns, rail waybill, vehicleshipping order, vessel content details EDI standards and the methods ofimplementing EDI are rapidly changing tomake corrections to the 80/20 rule Companies want to achieve 100%electronic transaction volumesOctober 13, 2010 Slide 13 2010 GXS, Inc.

What Does EDI Involve? ApplicationCommunicationTranslation– "Business documents" Translator– "Standard format" Communications VehicleApplication– "Electronic Exchange”October 13, 2010 Slide 14 2010 GXS, Inc.

Application Document FormatsCommunicationTranslationApplication In the traditional businessenvironment, there are no agreedupon standards for paperdocuments or file formats Applications produce differentdocument formats and requiredifferent information Locating and interpretinginformation on different documentformats reduces productivityOctober 13, 2010 Slide 15 2010 GXS, Inc.

Multiple Application File FormatsFormat APartner AFormat BFormat AFormat BPartner BFormat CFormat CFormat DPartner CYourCompany When computer applications create business documents, the filesthat generate the documents are in different formats Different file formats require the receivers to reformat or translatethe file before it can be used in their own systems Dealing electronically with many trading partners can be complexOctober 13, 2010 Slide 16 2010 GXS, Inc.

TranslationCommunication Most companies purchase or leasetranslation software Translation software translates businessdocuments into a common EDI standardfor transmission to a trading partner Translation software also translates EDIstandard data into a format suitable forapplication processing EDI outsourcing services are also availableand are beginning to come into wide use;they could become the dominant methodof translation for companiesTranslationApplicationOctober 13, 2010 Slide 17 2010 GXS, Inc.

Translation SoftwareInboundApplication DataEDI DataTranslatorOutboundApplication DataEDI Data Bi-directional software which converts data to and from the EDIstandard formats Some translators provide any-to-any translation capabilities Translators exist for all platforms (mainframe, mid-range, micro, PC)October 13, 2010 Slide 18 2010 GXS, Inc.

Communications Transmission method notaddressed by the EDIstandardsCommunication Alternatives– Value Added NetworkTranslation– Point-to-Point (Direct)– Proprietary Network– Internet Service Provider– Combinations of aboveApplication Some communicationproducts can be tightlycoupled with translationOctober 13, 2010 Slide 19 2010 GXS, Inc.

Traditional EDI tionNetworkApplicationApplicationOctober 13, 2010 Slide 20 2010 GXS, Inc.

So, What is EDI? EDI is the electronic exchange of business documents in astandard format EDI is one of many electronic commerce technologies The overall goal of EDI is to improve business performance EDI may be implemented using many different methods The three primary components involved in EDI are:– Application– Translator– Communication productOctober 13, 2010 Slide 21 2010 GXS, Inc.

EDI Data Standards and Structure

EDI Standards DefinitionA usable, well-defined,generic language format thatenables organizations tocommunicate documentswithout human interpretationor interventionOctober 13, 2010 Slide 23 2010 GXS, Inc.

Standards Categories Proprietary– Definitions, rules and syntax defined by one organization orindustry– Difficult to manage when multiple trading partners are involved– More complex setup required in translation software or programsmust be written to accommodate Generic– Definitions, rules and syntax defined by consensus of manyorganizations within and across industry groups– More manageable when multiple trading partners are involved– Well suited for commercial translation softwareOctober 13, 2010 Slide 24 2010 GXS, Inc.

EDI Data DiagramTransaction/MessageSegmentsElementsOctober 13, 2010 Slide 25 2010 GXS, Inc.

Transaction/Message One businessdocument representedelectronically Begins with a HEADERand ends with aTRAILER Made up of segmentsin sequence asspecified by thestandards Identified by:– Meaningful name –EDIFACT– 3 digit numeric value –ASC X12October 13, 2010 Slide 26 2010 GXS, Inc.

Document Naming ConventionsEDIFACTASC X12810 - InvoiceINVOIC820 - Payment Order/RemittanceAdviceREMADV - Remittance Advice832 - Price/Sales CatalogPRICAT - Price Catalog840 - Request for QuotationREQOTE - Request for Quote850 - Purchase OrderORDER - Purchase Order- InvoiceOctober 13, 2010 Slide 27 2010 GXS, Inc.

EDI Data DiagramTransaction/MessageSegmentsOctober 13, 2010 Slide 28 2010 GXS, Inc.

Segments Variable length recordsin a specific sequenceas specified by thestandards Made up of elements insequence as specifiedby the standards Begins with:– Tag – EDIFACT– Segment Identifier – ASC X12 Ends with:– Segment Terminator– ASC X12 recommends usingthe tilde “ ”October 13, 2010 Slide 29 2010 GXS, Inc.

Segment Types Segments containing actualdata from an application orprovided by a user Segments containinginformation required forstructuring the transmission– Data segments– Service Segments – EDIFACT– Contain data from theapplication– Control Segments – ASC X12– Examples: name, line item,school enrollment information,etc.– Examples: addresses,standard in use, test orproduction data– Generated by translationsoftwareOctober 13, 2010 Slide 30 2010 GXS, Inc.

EDI Data DiagramTransaction/MessageSegmentsElementsOctober 13, 2010 Slide 31 2010 GXS, Inc.

Data Elements Variable length fieldsin a specific sequenceas specified by thestandard– Simple data elements– Composite dataelements Identified by:– Tag and Name –EDIFACT– Element ReferenceNumber and name –ASC X12 May contain a qualifieror data– Maximum number ofelements in a segmentshould not exceed 24October 13, 2010 Slide 32 2010 GXS, Inc.

Qualified & ID Type ElementsSEGMENT for Accounts Payable Adjustment.*25.00 *AdjustmentV2 *Reference01 * 000415613 mber Qualifiers further define and specify how the next element is to be interpreted Qualifiers are "ID" data types and come from a list of codes Codes are typically provided by standard but may come from other sources All "ID" type elements are not qualifiers as in "V2" example above–VA qualifier indicates the reference number is a Vessel Agent number–01 qualifier indicates the reference number is an ABA Routing number–1A qualifier indicates the reference number is a Blue Cross Provider numberOctober 13, 2010 Slide 33 2010 GXS, Inc.

Record/Field vs.Segment/Element AnalogyRecord for Mortgage Closing Data135000.002001123127000.00Ed D. ieldFieldOctober 13, 2010 Slide 34 2010 GXS, Inc.

Record/Field Translated toSegment/ElementSEGMENT for Mortgage Closing DataMCD*135000.00*20011231*27000.00*Ed D. Aye ElementElementElementElementMCD Segment Identifier* Element Separator Segment TerminatorOctober 13, 2010 Slide 35 2010 GXS, Inc.

Envelopes Transaction/Message envelopes– Contain individual transactions ormessages Group envelopes– Contain groups of like transactions ormessages– (FUNCTIONAL GROUPS) Interchange Envelopes– Contain group(s) oftransactions/messages destined for asingle receiverOctober 13, 2010 Slide 36 2010 GXS, Inc.

Typical EDI Envelope EDI data isstructured inmultiple layers of“envelopes” withone envelopelevel containingone or moreadditional levels The envelopestructure varieswith the type ofEDI dataInterchangeGroupTransactionCommission Sales ReportTransactionCommission Sales ReportOctober 13, 2010 Slide 37 2010 GXS, Inc.

ASC X12 Envelope ExampleISA INTERCHANGE This is an ASC X12envelope structure, theGS FUNCTIONAL GROUPmost commonly usedST TRANSACTIONEDI data type in the US.SE When you see EDI datathat starts with thecharacters “ISA” youknow you’re looking atX12 dataST TRANSACTIONSEGEIEAOctober 13, 2010 Slide 38 2010 GXS, Inc.

EDIFACT Envelope ExampleUNB INTERCHANGE This is an EDIFACTenvelope structure, theUNG FUNCTIONAL GROUPmost commonly usedUNH MESSAGEEDI data type outside ofthe US. When you see EDI datathat starts with thecharacters “UNB” youknow you’re looking atEDIFACT dataUNTUNHMESSAGEUNTUNEUNZOctober 13, 2010 Slide 39 2010 GXS, Inc.

TRADACOMS Envelope Example This is aTRADACOMSenvelope structure,used primarily in theUK.STXINTERCHANGEMHD TRANSACTIONMTR When you see EDIdata that starts withthe characters “STX”you know you’relooking atTRADACOMS dataMHD TRANSACTIONMTRENDOctober 13, 2010 Slide 40 2010 GXS, Inc.