Among many services available for data exchange, EDI stands on top when it comes to efficient and secure transferring of business files for companies today. EDI services are working as an innovative and convenient option for modern day businesses to exchange critical business files in a specific format with business partners across the globe. 

What is EDI and How Does it Work?

In simplest terms, Electronic Data Exchange (EDI) refers to the electronic exchange of business documents (e.g. purchase orders, invoices, acknowledgements, bill of lading, etc. ) in a standardized format within an organisation or between computer systems of trading company partners.

Historically, EDI technology is very mature. A variety of EDI standards (e.g. ANSI ASC X12, TRADACOMS, UN/EDIFACT, ODETTE, HL7, etc.) and document formats are used by companies across different industries for electronic data exchange for decades. The result is that the EDI is a highly efficient process that saves time, money and human resource needed for companies engaged in business information exchange in diverse sectors , including retail & ecommerce, banking, shipping & logistics, etc.

Read Also: What To Look For In The New EDI Service Provider

Why are EDI Services Important for Your Business? 

As a native or first time user of EDI service, you must know that EDI simply replaces the need to use postal mail, fax and email for your company to exchange vital business documents with external business partners. 

EDI services enable the business systems of trading company partners to exchange vital documents in a standardized format without any human intervention. 

You can also say that without EDI, efficient communication between organizations would not be possible. Think of any major commercial business -healthcare providers, retailers, manufacturers or even country governments, everybody trusts EDI for secure, error-free, fast and efficient exchange of important business information.

When your organisation relies on paper-based commercial transactions or uses some form of outdated procedures or system to conduct business-to-business (B2B) communication, you simply get jumbled up. Using manual methods for data exchange increases labour cost, possibility of human errors, and reduces productivity for companies. 

Simply put, any exchange of business information between companies without EDI capabilities is less efficient today. The use of standardized communication format in EDI makes it an international language for business data exchange across every industry in the world. It is also the most popular global business communication standard that enables companies to conduct business electronically and exchange information securely with partners across the globe. 

Major industrial giants like Walmart have made it mandatory for its partners to use some form of EDI standards or communication protocol for information exchange. Popular EDI services providers offer different types of EDI services, which companies can avail for seamless information exchange with external partners. Learn about different types of EDI Services below: 

Different Types of EDI Services 

The types of EDI services are mainly dependent upon how EDI communication and conversions are organized between trading partners.

Broadly, there are two main types of EDI Services - proprietary or in-house EDI solution and third-party EDI solution. In the former case, all the tools required for EDI communication and conversion are built inhouse by an EDI user. In another category, all EDI services are delivered by an external EDI services provider to the companies. Businesses do not have to worry about any communication protocol and EDI standards when availing services from an EDI services provider. 

Based on the EDI communication methods, proprietary and provider EDI solutions can be further categorized, which are given below: 

Direct/Point to Point EDI

Brought to life by Walmart, this popular form of EDI service, sometimes known as point-to-point EDI creates a direct connection between two business partners for exchange of information. In this approach, your organization is required to establish a separate connection with each business partner for electronic data interchange.

Direct EDI approach is not suitable for large organizations If their partner businesses use different communication protocols. They need to maintain a separate EDI connection with each partner as well as an EDI software solution that supports multiple protocols like AS2, FTPS, etc.

Hence, only prefer this type of EDI service when your firm performs a lot of daily EDI transactions with a particular client. 

EDI via VAN 

Majority of EDI transactions between firms today incur via VAN/EDI network. EDI networks are preferred by many companies due to the value-added services they receive from service providers. 

To be specific, an EDI network is simply a secure internet channel over which EDI documents are exchanged by related parties. Generally, an EDI network provides multiple facilities to organizations like full mailbox service, full audit trail, message alerts, ancillary services, and so on. 

EDI through AS2 

AS is an internet communication protocol that ensures secure data transmission over the internet. In case of EDI via AS2, the EDI data is sent securely and reliably in a point to point manner. AS2 created EDI data “envelops”: enabling it to be sent securely using digital certificates. 

EDI through FTP/VPN, SFTP, FTPS 

All the above acronyms are popular internet communication protocols that are used for the exchange of EDI information. Business partners can leverage any of these protocols for the exchange of EDI documents in a point to point fashion or via an EDI Network over the web. 

Web EDI 

Unlike AS2 EDI transfer, information exchange in case of mobile EDI is done via a standard internet browser. Different kinds of forms are used by organizations for information exchange over the internet. Such type of EDI services is immensely popular among small and medium scale organizations as they occasionally need such a service. 

Mobile EDI 

Traditionally, private networks like VAN or the internet are used by organizations for exchange of EDI documents. Mobile EDI service is at a very early stage due to security issues and a limited number of supporting mobile devices. The screen size and quality of mobile devices are mostly unsuitable to support EDI transactions. But, the mobile EDI service industry is growing slowly and we are a few days away from seeing people downloading EDI apps from corporate app stores. 

EDI Outsourcing 

EDI outsourcing (B2B managed services or B2B outsourcing) is rapidly gaining popularity among organizations as it enables them to hire external specialist resources to manage their EDI tasks on a day to day basis. The other reason is that companies want to integrate their back-office systems like ERP with EDI systems for seamless data transfer. 

If your company doesn't have enough time and dedicated resources for EDI integration, you can consult an expert EDI service provider to ease out the task for you. 

Which Type of EDI Services Suits your Business Better?  

A variety of EDI services are available in today’s market, many companies don’t know which type of EDI services are best for their business and how to choose a perfect EDI services provider. 

No matter whether you’re going to use EDI services for the first time or expanding your existing EDI infrastructure to support global business partners for data exchange, choose an EDI service that not only meets your current business needs but is also in line with your company budget, size and technical capabilities. 

In case of large organizations, it is highly recommended to adopt a “hybrid approach” while opting for EDI services. Why?  

Having multiple external business patterns is a common case with large firms. However, the frequency of data exchange done with each partner is not always the same - it depends upon their size, importance and technical capabilities. So, for large firms, it is better to go for a hybrid solution when opting for EDI services.

Adopting a hybrid approach means having a separate EDI solution for each business partner for information exchange. For example, when dealing with a small-size vendor, it is better to perform EDI via Web as it would be more affordable and convenient for both whereas in case of a large company partner, performing EDI via VAN is more appropriate. 

On the other hand, as a startup or emerging businesses working on cutting-edge tech like Artificial Intelligence, Blockchain, etc. - it is generally advised to partner with a third-party EDI service provider or choose a provider EDI solution, considering limited budget, manpower or technical capabilities. 

Outsourced EDI consultants are highly experienced to track down the EDI transaction volume, integration requirements and business resources, you have, as a startup and accordingly integrate a custom EDI solution in your business hierarchy, meeting your budget constraints. 

Partner a Reliable EDI Services Provider to Run Your Business Better  

As you know, when you hire an EDI consultant, you simply save yourself from the cumbersome task of paper-based document exchange within your firm and with your business partners.

EDI consultants at A3logics are innovative architects who understand your business needs and revolutionize your company operations by integrating EDI into your systems. We are also recognised as a leading IT consulting and Salesforce development company with operations in more than 69+ countries. Contact us directly to explore our widest range of EDI mapping & integration services.