EDI – Electronic Data Interchange Introduction

Posted on by By admin, in Business Intelligence, Open Source Business Intelligence | 0

Standardisation is needed in every field to create uniformity. Same is the case with data exchange,
Without a standard format, each company would send documents using its company-specific format and, much as an English-speaking person probably doesn’t understand Japanese, the receiver’s computer system doesn’t understand the company-specific format of the sender’s format .
A standard format decides in which format, with what indentation and language the data should be written and represented for universal understanding of the information as data. For data to interchange electronically it should be in format which is undstandable by the electronic devices.The electronic exchange of data adds speed, clarity and reduced errors in the data. These advantages of electronic data exhange has popularised the use of EDI in the buisness field to exchange data between buisness partners. EDI process had no paper no people iinvolved in its transmission and reception.

What is there in EDI document ?
An EDI document is comprised of data elements, segments and envelopes that are formatted according to the rules of a particular EDI standard.
Only thing to be kept in mind while creating EDI is “Adhere to strict formatting as instructed”
and please do not add you own formattings.These rules define exactly where and how each piece of information in the document will be found. That way, when the EDI translator on the receiving computer reads an incoming EDI purchase order, it will immediately understand where to find the buyer’s company name, the purchase order number, the items being ordered, the price for each item, etc. Then, that data will be fed into the receiver’s order entry system in the proper internal format without requiring any manual order entry.

Data elements:The piece of information in your EDI document is nothing but data elements.
Elements may differ from one another in their data types, as it can be numeric, text data or dates. Next after defining the data type there comes its size, ‘the data length’ . Next the code values must be considered if required, e.g if the currency is in your dollar you need to use the related function.

Segment: Elements together make segment.
For each type of business document, the EDI standard documentation defines:
1] The segments that may be included and which ones are mandatory, optional and/or conditional
(i.e. must be included only if another segment or element is included)
2] For each segment, the elements that may be included – for every piece of information in a paper
document there is a corresponding EDI element. These elements are defined in the standards
dictionary and each standard has its own dictionary
3] The required sequence of the segments and elements
4] How many times a segment may be repeated

After collecting all data in prescribed format , they form a complete electronic document. Next for transmission these segments should be put in envelopes.

Envelopes:There are three envelopes message envelope, group envelope and interchange envelope. EDI documents are exchanged using several envelopes. All transaction data are put in group envelope and exchanged via interchange envelope.


EDI is the most efficient way of data transmisssion with almost zero errors. There are ways to create EDI through data extraction and modification and putting it in the prescribed format for the transmission between several buisness parties and between machines as well. EDI is having lots of scope in the present as well as coming days. In next examples I’ll come up with EDI creating instructions and guides.



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