FAQ
Your EDI Questions Answered Print E-mail

EDI BASICS

Some of my customers and suppliers are requesting that we "do EDI."

What does this mean?

First know that EDI (Electronic Data Interchange) is not new. For thirty years

companies have increasingly found that exchanging business documents

electronically improves business. EDI is the preferred method of doing

business for all the Fortune 500 companies. Basically EDI replaces mailed,

faxed, emailed or phone orders and paper invoices. The computer-to-computer

exchange of documents in a standardized format increases efficient order

handling by eliminating manual data entry, thus eliminating most human error.

It also improves payment cycles with increased accuracy and faster turn-

around thus improving cash flow management. Other EDI documents can be

utilized to send information about shipping schedules, current inventory status,

sales activity, forecasts, electronic payments, and many other types of data to

improve communications between business partners. More and more

customers want their suppliers to have the ability to reliably exchange EDI

documents. If you can't comply, you often are not able to accept orders in any

format from those customers.

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What are the real benefits of EDI? Why do I need it?

Besides the improved speed, economy and accuracy in handling business

documents, there are many other advantages to trading electronically.

EDI strengthens business relationships, reduces operating costs by

automating routine tasks, contributes to better in-stock positions, provides

quick-response capability, and helps you to create a competitive advantage.

Allowing technology to handle business transactions through EDI allows

people to use their time to develop and enhance business relationships.

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Will I need special software or hardware to trade via EDI?

A wide range of mainframe, mid-range and PCs can be used for your EDI

system. Most companies find that they already have the hardware they need.

You will need special software to "translate" EDI documents into usable formats

for integration into, and out of, your ERP system. You may need an electronic

"mailbox" (called a VAN - Value-Added Network). You may need other com-

munications software. Every set-up is different depending on your trading

partners' demands and capabilities.

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Is EDI more expensive than traditional document exchange?

Actually the computer-to-computer exchange of documents is much less

expensive than the manual handling of paper documents. Studies have

shown that processing a paper-based order can cost $70 or more while

processing an EDI order can cost less than $1. The reason is because of

reduced labor, fewer errors, better-managed inventory levels, better use of

warehouse space, fewer out-of-stock occurrences, and lower freight costs.

Paper purchase orders can take up to 10 days from when the buyer prepares

the order until when the supplier ships it. EDI orders can take as little as one

day. Time saved + labor costs saved = money saved.

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My customer sent me an email saying that they want to send us orders

via EDI. They asked us to send them our EDI Profile.

What is an EDI Profile?

An EDI Profile is a document exchanged by trading partners with pertinent

information about the company and its EDI capabilities. A profile typically

contains the following: company name; address; phone; fax; EDI technical

contact person's information with email; business contact person's information

with email; EDI qualifiers/IDs; types of available communication methods

(VAN, AS2, ftp, etc.); type and version of EDI documents to be exchanged;

etc. A GraceBlood professional can easily assist you with developing an EDI

Profile to share with your trading partners.


ABOUT EDI WITH WALMART

Our company has an opportunity to sell to Walmart but I don't know what to

do to move it forward. Please help - this is a fabulous opportunity for us.

Congratulations on this opportunity to sell to the world's largest retailer. You

will proceed one step at a time: first say "YES" and fill out and return the

vendor form. Then Walmart will set up and send you a testing schedule with

specific instructions about what you need to do to be a Walmart EDI Vendor.

There are many steps and decisions to make but basically you will need

communications software (called AS2) and EDI Translation software that will

read the inbound POs so that you can use the data; then create an outbound

invoice in EDI to send back to Walmart.

GraceBlood professionals can make it all come together for you. Remember:

we speak EDI so you don't have to.

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I'm implementing EDI with Walmart and wondering about the recent news

I've heard about their mandate for something called RFID. What is this?

Walmart announced in 2003 that they will be requiring all suppliers to tag

pallets and cases with RFID (radio frequency identification device) chips.

RFID technology replaces bar codes on pallets, cartons and even items with

electronic devices that make shipment management more efficient. This

initiative in supply chain technology puts Walmart once again ahead of the curve.

However the demanded implementation has been slow to really evolve. So far

their focus has been less on the 15,000 Walmart suppliers but rather on the

suppliers to the 700 Sam's Clubs.

But you can be sure that RFID is the next big thing in EDI.

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EVERY DAY EDI OPERATIONS

My company already does EDI with several customers. We receive dozens

of POs each day, print them out, then enter them into our back-office soft-

ware. Sometimes (to be expected) we have manual keying errors which

cause us delays in shipment or worse. When our two customer service

people are absent the same day, we sometimes fall behind in getting the

orders into our system. It doesn't seem like EDI is helping us very much.

What can we do to increase our accuracy, our shipment turnaround time,

and better utilize our EDI system?

When EDI is not integrated into your back office system, EDI can feel like a very

expensive fax machine. The return-on-investment for EDI is realized when

orders come into your office electronically and are exported directly to your

back-office system, accurately and efficiently without any manual intervention.

Then shipments can be filled expeditiously and invoiced immediately - again

coming out of your back-office system automatically and transmitted

electronically without your staff even being involved. Integrated EDI saves time

and saves money, increases efficiency and timely shipment fulfillment, and

makes your customers happy. Additionally, you get paid sooner and with fewer

hassles. What's not to like?

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My company has several EDI trading partners. They send us many docu-

ment that we print out; various people in our company need to see these

documents but sometimes the printers are down, sometimes paper gets

lost. This doesn't seem like a very good way to process information. Is

there another way?

It sounds like what you need is an email notification system whereby EDI

documents are automatically processed and emailed to the people who

need to see them: electronic funds transfer documents go to the people

in AR; sales activity reports go to sales managers; etc. This system can be

easily implemented at your company.

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Is it possible to get sales activity data that I receive via EDI into a spreadsheet

so I can actually analyze and use the information?

Absolutely - that makes perfect sense - perfectly do-able too.


EDI COMMUNICATIONS

My company uses a VAN for EDI communications. Recently our monthly

charges have gotten exorbitant. Is there anything I can do to reduce or get

rid of these monthly charges?

There is a great deal of variability in what VANs charge for monthly transmission

so you are right to question high bills. With the Internet there are also many

options for EDI communications that do not require VANs. Contact GraceBlood

directly to see what more affordable EDI communications options might be right

for you.

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My trading partner doesn't send documents via VAN. They want to ex-

change documents via AS2. What are they talking about? How do I do

that?

AS2 (Applicability Standard 2) is an EDI specification intended to ensure the

proper level of security for data transmitted over the Internet. Although it was

developed specifically for EDI, it can be applied to virtually any type of file,

including XML.


AS2 addresses challenges about security for files sent over the Internet by

providing a common set of conventions for security, verification, Message

integrity and privacy.AS2 utilizes a very common method called public-key

cryptography for securing AS2 messages. Certificates are created that contain

keys for encrypting and decrypting your data.

AS2 also allows for immediate transmission of files, directly between trading

partners.That is, it eliminates the need for a VAN (Value Added Network) to

handle the exchange of data. Any organization with constant access to the

Internet is capable of handling AS2 communications.

AS2 is typically handled automatically by AS2 software installed on your system.

GraceBlood can advise you about what you need and how to be able to say

"Yes"to your trading partner's requirement.


EDI FOR THE FUTURE

I keep hearing that EDI is going away. Is that true?

Is XML going to replace EDI?

For thirty years EDI has successfully allowed companies to exchange

business data to help reduce inventories, get products faster to market,

create closer coordination between manufacturing and distribution, and

provide more choices for consumers. XML stands for eXtensible Markup

Lanuage, a Syntax for use in a Web environment. The XML syntax has

rapidlyimposed itself as a popular format for exchange of information

on the web.

There is a present attempt to combine the best features of traditional

EDI (which has had broad industry support) with the improvements

in technologyoffered by XML. The general consensus is that XML

has the promise to move EDI technologies to the Internet but the

integration of the two technologies is not fully developed at this time.

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