How does EDI work ?

Companies using EDI communicate with their trading partners in one of the two ways : I. II. Exchange of data with several trading partners directly. Interaction with multiple companies through a central information clearinghouse.

In the latter case, all transactions take place through a third partys computer system, which then sends them to the appropriate receivers computer. This enables the sender to communicate with an unlimited number of trading partners without worrying about proprietary system audit trails, variable transmission speeds and general computer compatibility. Sender and Receiver EDI is a batch process in which transactions are grouped together into one or more files and all transmitted at the same time. One trading partner is the sender (outbound) and one trading partner is the receiver (inbound). Both trading partners become senders and receivers throughout the relationship. In most situations one trading partner is the driver of the EC/EDI relationship and the other trading partner is the follower. The driver can be a customer, industry association or government department, while the follower is a supplier, member of an association, or an organization that deals with the government. The driver will publish an implementation guide, companion guide or web site portal that describes its EDI program, procedures and expectations. Someone who is a supplier or deals with the government must become compliant by following the instructions set out in the guide. Members of an industry association are not mandated to use EDI, but they must follow the guide if they a going to implement EDI. EDI works in the following manner: Prior to any computer work, representatives of two companies interested in exchanging data electronically meet to specify the application in the EDI standard which they will feel are important

 The two exchange date electronically in the standard formats Each company adds EDI programs to its computer to translate the company data into standard formats for transmission and for the reverse translation in the data it receives. The sender transmits the database formatted in EDI standards to the receiver who then translates the formatted message to a computer record to be processed and used internally. All transmissions are checked both electronically and functionally and the protocol includes procedures for error and correction. Once a company has established standardized communications with another company, it is now in a position to communicate with any other company that is also using the EDI standards. The flow of information in EDI is as follows: Collection of data for its own operational or statistical requirements which is edited and then added to its own database. Extraction of Pretinent information by the company from its database, summarized if necessary and constructed into EDI transaction sets, and finally it is transmitted to the company or organization requiring it for valid reasons. The frequency of preparing this information is determined by the operational requirements of each recipient. A communication link for transmission is established according to the standard communications protocol. The receiver transmission, checks for its physical characteristics, requests for transmission if an error is detected in the physical characteristics of the transmission. Checking the functional characteristics of the data receiver and an acknowledgment sent to the original sender for receiving the transmission and to identify any errors detected. To process the information by the receiver according to its own internal procedures and timing requirement.

SOURCEhttp://www.electronicdatainterchange.org/