What Does EDI Stand For - A Beginner’s Guide to B2B Data Exchange

Thomas Smith

Director Supply Chain Consulting, PartnerLinQ Inc.

Jun 03

Every now and again, one department or another will ask for a ‘Beginner’s Guide ‘to one or more of the technologies involved in the exchange of data between our clients and their partners and today was no exception. Today, however; I decided to publish, along with a beginner’s guide, an outline that could serve as guidance for the beginners while at the same time guide appeal to a broader audience. What started as a ‘Beginner’s Guide to the everyday exchange of B2B data between and their customers, vendors, and partners of all sorts quickly evolved into a digital resource that would provide information for beginners and assist newer resources with navigating the complexities of B2B Data Exchange. A trail guide so to speak, with the priority of such a guide to assist wayfarers at any level with navigation and techniques for success and safety during their journey.

What does EDI Stand for?

Everything is a process, and this entry is one of the many pages of your journey. You have gotten this far without much help. What we are going to do from here is help you refine, adjust, and configure your approach to the journey that lies ahead in your EDI career. That is sort of what the PartnerLinQ platform does. PartnerLinQ helps you refine, adjust, and configure your approach to your journey as a party to multiple B2B Data Exchange. Having gotten this far without much help, you already understand that EDI simply stands for Electronic Data Interchange. Let’s break it down, Electronic Data Interchange, and refine the way we look at it.

Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) is an internationally recognized standard for formatting and exchanging information. EDI allows document information to be communicated between businesses and other entities, e.g., exchanged. EDI is a combination of global standards used to create specifically formatted documents, the action of sending those formatted documents electronically within a cohesive system from which all parties (Trading partners) are able to electronically retrieve and exchange (Send/Receive) data (information) with a defined set of protocols (which by the way, we agree with our partner to use). Perhaps we should break that down further.

Electronic

‘Electronic’ sent via ‘electrons,’ in other words the way electronic signals are transmitted across ‘the wire’ using the movement of electrons as the carrier. In simpler terms, it is how electrical devices like cell phones, computers, and televisions work, it is how they send and receive information. Fax Machines make excellent examples of this and while ‘the wire’ is perhaps a bit dated give the propensity of wireless devices today, they work in the same manner and add a bit of trivia.

Which technology is older? A) The telephone (B) The telegraph, (C) the ‘FAX’ machine?

Answer:
While the idea for a machine to machine transmissions of text dates back to the 1700’s, a working model was not available until the 19th century. The fax machine came first. Known at the time as the “electric printing telegraph” it was invented in 1843 (Alexander Bain), which makes it older than the telephone (1876 Alexander Graham Bell) and older than the telegraph (1844 Samuel Morse)

While machine to machine technologies began evolving in the 1830’s and 1840’s, the success of the telegraph, widely regarded as being the first such successful machine to machine technology was accredited to Samuel Morse on May 24, 1844, after a structured message travelled by wire between Washington, D.C. and Baltimore, Maryland. Interestingly 62 people had claimed to invent the first electrical telegraph by 1838 only the success of the Morse system of message encoding and the backing of the US Government led to widespread adoption of the telegraph after 1844. The telegraph becoming a primary means of long-distance communication decades before the telephone…The first commercially viable fax service was established in a similar manner between Paris and Lyon in 1865 . Fax services finally went mainstream in the 1980’s and with companies like FedEx offering fax services to customers and we all know what happened to their fax services, FedEx Office.

Moving back to our purpose here, Electronic Data Interchange (EDI). Telephone, Telegraph, and FAX technologies for the lineage of EDI machine to machine technologies. They all send information across wires using electrons, the “E” in EDI and while there’s a bit more to it, the short story is electrons are employed to move data across the wire, the manipulation of the data creates a signal, more specifically an electric field The electric field pushes the free electrons within the wire, causing them to move thus propagating the electric field along the length wire, much like a chain reaction. The electric field travels in this way along the wire at nearly the speed of light in what I like to refer to as ‘near real time’ thus making EDI ‘Electronic’ sent via ‘electrons.’

Data

‘Data’ when used in Electronic Data Interchange (EDI) is a term that describes ‘information,’ and in the case for EDI, information being transmitted. The difference between data and information is that while data may be raw and unprocessed, information is data that has been organized, processed, and interpreted in order to give meaning and context to the data, making them useful for decision-making and yes, ‘data’ are plural.

During the American Civil War (1861-1865) President Lincoln and General Ulysses S. Grant leveraged the telegraph against the Confederacy for strategic advantage, Lincoln to obtain ‘real time’ information from the field of battle and Grant to communicate with requests to (place orders) and receive instruction from (receive orders) his superiors. Their communication was a precursor to today’s Electronic Data Interchange (EDI).

Communication is critical in times of war; the timing of information and communication may very well be everything as is often said. The ability for Lincoln and Grant to communicate electronically and do so in ‘near real time’ contributed greatly to their success and ultimately to their victory. A historical example of technological success does not go without notice. In 1865, France was undergoing similar and significant modernization prior to what became known as the Industrial Revolution.

Led by Napoleon III the nephew of Napoleon Bonaparte (aka Napoleon I) and the Emperor of France from 1852 to 1870 a fax service was established in France. The first commercially viable fax service of its kind was placed into service between Paris and Lyon in 1865 and half a world away from the Washington/Baltimore corridor.

Lyon was a bustling city in 1865, a city with a long history of trade in textiles and silk. It was particularly well known for its silk workshops, with an estimated 60,000 mills in operation by the mid-19th century. Paris long considered the fashion capital of the world for more than centuries, fashion and Paris share a history dating back to the 1670s. Now imagine its 1865 and the emperor has ensured Paris’s continued success by giving the fashion industry the ability to send instructions from the epicenter of fashion and design (Paris) to the garment manufacturing mills (Lyon) in near real time.

By the way, much like his famous uncle, Napoleon III also seized power. He did so when he could not be constitutionally re-elected. Napoleon III to his credit however commissioned a grand reconstruction of Paris, expanded and consolidated the railway system, modernized the banking system, and as an enthusiastic admirer of Giovanni Caselli actively supported the development and deployment an early form of the fax machine in France.

These and other modernization efforts by Napoleon III undoubtedly led to the 1889 Exposition Universelle (World’s Fair) which not only commemorated the 100th anniversary of the start of the French Revolution, which Napoleon I ended, it featured the Eiffel Tower as a centerpiece, a structure later saved by the advent of wireless communication.

Interchange

‘Interchange' while notably another word for exchange, interchange lies at the heart of Electronic Data Interchange and EDI communications. ‘Interchange' denotes the two-way ‘conversation’ between trading partners that takes place. Two way communication between buyers and sellers. Two way communication are essential in an operational environment where responses are (1) expected, (2) customary, and (3)necessary throughout the business process all the way to its logical conclusion. Let us now take a look at the idea of ‘interchange' beginning with simplest form, the Functional Acknowledgement (997).

The Functional Acknowledgment (997) are an example of an ‘industry best practice’ and as such are typically and automatically generated by the Electronic Data Interchange solution for transmission back to the sending party. I use the work typically here because even today, more than 190 years since the beginning of the machine to machine technology revolution, solutions come into the market without a thought given to confirmation of essential communication. The Functional Acknowledgment (997) delivers confirmation of these essential communications. It is used to indicate the results of the syntactical analysis, a complicated way of saying that the grammatical structure of the message was understood, and the recipient can confirm the delivery of the business message. Generally speaking, business messages with errors may be accepted with errors or rejected entirely Rejected messages must be corrected and re-transmitted by the sending party.

Another example of interchangeability can be observed with the Message Delivery Notification (MDN), one of the benefits for using AS2 over FTP, SFTP or MFTP is the message delivery notification (MDN). The Message Delivery Notification (MDN) provides data integrity in EDI transactions sent by way of AS2, in other words, the Message Delivery Notification (MDN) provides ‘proof of receipt’, an electronic signature for an electronic package delivery.

Though some may argue the MDN replaces the Functional Acknowledgement (997), the message delivery notification (MDN) used in AS2 only indicates the message has been received whereas the Functional Acknowledgement (997) confirms the delivery, that the document can be interpreted, and can be used to document formatting errors or loss of data that might have occurred along the way.

While the MDN and the 997 when used in combination do provides the ‘proof of receipt’ and viability of the message, they do not provide assure to the sender that their needs will be fulfilled, though they do go a long way in ensuring timely delivery and viability of the message by ensuring that it has been organized properly such that it can be processed and interpreted accordingly. Details such as hash totals are included in the MDN, the MDN document itself cannot be altered without the recipient detecting a change.

MDN and the 997 notwithstanding, a Purchase Orders quite commonly require a response. How else would a buyer rest assured that the order they placed moments ago was accepted, processed, and interpreted? Was it priced correctly and was going to be delivered on time? if not for the ‘interchange,’ the two way communication between buyers and sellers.

Procurement activities do not end with the Purchase Order, they also include the Purchase Order Acknowledgment (855 or POA), a transaction that delivers the ‘interchange’ response offering the benefit of efficiency with an integrated means of confirming the buyer purchase order by providing information regarding the Purchase Order plus any change to buyer purchase order. The POA simplifies the business relationship between buyers and sellers. That being said, the Purchase Order Acknowledgment (855) can contain a large amount of information. Information concerning the receiving location, shipping date, products, and quantities not to mention pertinent details that typically accompany an order.

Straight forward and timely by necessity, a response to a Load Tender closes the ‘interchange’ loop in transportation by indicating to a shipper that a carrier will accept, conditionally accept, or decline a load tender. Interchange responses are a timed event in transportation in fact. Response must be received by the "Must Respond Date" and "Must Respond Time" information is indicated within the Motor Carrier Load Tender. If a response to a Load Tender is not received by the "Must Respond Date" and "Must Respond Time" it is typically reassigned by the shipper and tendered to another carrier. The short story on not responding in a timely manner to an interchange message, "You snooze, you lose" is a popular idiom that seems to say if you are not attentive to your customer’s needs and take action quickly, someone else will and you will miss the opportunity.

Conclusion

What started as a ‘Beginner’s Guide’ to assist newer resources with navigating the concepts of a B2B Data Exchange has evolved, we have covered a lot of ground. Some background, some history and some evolution, this effort continues to develop from a remarkably simple asset to a more complex form.

The team thinks the value lies in the contribution to a digital resource. I believe that digital resource with little luck and some advances in AI technologies we allow us to provide this and other content to the next generation of business users, technologists and engineers involved in Electronic Data Interchange (EDI) whether they find the process interesting as I do or they work with RESTful APIs, X12, EDIFACT, ODETTE, VDA, directs or anything else that might come along for that matter. If you like this material, by all means, share it with your team.

Update

What started as baseline has indeed grown into a trail guide for EDI wayfarers and so far is making good on a promise to deliver advanced techniques and navigational aids for the journey. Please enjoy this material for safety and success in your journey and with our compliments, share it with your team and by all means, enjoy your journey.