Electronic Data Interchange, or EDI, is classified as an electronic communication method that provides standards for exchanging data via any electronic means. Data is transferred from one computer system to another by using a standardized format, without any human intervention involved. There are various standards of EDI (X12, EDIFACT, ODETTE, etc.) and companies utilizing the same standard are able to electronically exchange documents (i.e. purchase orders, invoices, shipping notices, etc.) through serial links and peer-to-peer networks. When sending an EDI document, both companies must adhere to the same standards, or set of rules set forth, which define where and how the information from the specific document will be found. Translation software owned by the companies is able to process the information sent and received, to determine the buyer’s/seller’s company name, order numbers, purchase items and prices, etc. This information can be sent to an order entry system without ever necessitating manual order entry.

So what exactly does an EDI message contain? 

An EDI message contains a string of data elements, each representing a singular fact (price, product model number, etc.) and is separated by a character that identifies the beginning and end of a character string, known as a delimiter. Each string in its entirety is called a data string.  One or more data segments framed by a header, an information structure which identifies the information that follows in the data segment, and a trailer, the information which occupies several bytes at the end of the data segment being transmitted, form a transaction set, which most likely will consists of what would usually be contained in a typical business document or form. Common EDI documents include Product Inventory (846), Product Catalog Price File (832), Warehouse Shipping (945), and more, each of which will be described more in depth in following posts.

What are the benefits of utilizing EDI?

Although many Fortune 500 and other large companies use EDI in order to achieve a uniform processing system, many small businesses are beginning to utilize EDI as well. Cost, speed, accuracy, and efficiency are all major benefits of EDI found in the field today. EDI eliminates both the need and cost associated with paper documents, and allows information to be processed quickly and read easily. EDI improves data quality and transactions can be exchanged in real-time within minutes rather than days. EDI can allow a business to grow tenfold without increasing workforces and creates more time for team members to work on more important tasks.

The 810 Invoice* is used by the supplier to indicate to the buyer the details of the purchase (items, price and quantities delivered). The 810 Invoice will also contain payment details and terms as indicated by the buyer.

What makes up the 810 Invoice document?

Elements could include vendor number, item, quantity, price per item; address information (street, city, state, etc.) identical to a paper invoice. 

How is the 810 Invoice used?

The 810 Invoice is typically sent in response to an 850 Purchase Order as a request for payment once the goods have shipped or services are provided.

*After the EDI document has been received, a 997 Functional Acknowledgement is sent back from the buyer indicating the EDI document was successfully received.

The 820 Payment Order/Remittance Advice** is most often used to indicate one of three things:

1) That payment for an open item is required and settle the account

2) To advise the payee of the details of the payment

3) to advise the payee of any adjustments in the payment

This document is sent by either the supplier or the buyer.

What makes up the 820 Payment Order/Remittance Advice document?

Elements could include Transaction Set Header, Beginning Segment for Payment Order/Remittance Advice, Trace, Currency, Reference Identification, Date/Time Reference, etc.

How is the 820 Payment Order/Remittance Advice used?

The 820 Payment Order/Remittance Advice is used when an open account needs to be settled, or to advise the payee of details or adjustments in payment.

**After the EDI document has been received, a 997 Functional Acknowledgement is sent back from the transportation provider indicating the EDI document was successfully received.

The 832 Price/Sales Catalog* is used to provide a trading partner with a report of vendor product data for ordering purposes and maintain an established practice in furnishing trading partners with prices of goods or services in a catalog.

What makes up the 832 Price/Sales Catalog document?

Elements could include vendor number, product or service, and cost of product or service, identical to a paper price catalog.

How is the 832 Price/Sales Catalog used?

The 832 Price/Sales Catalog has four major functions:

1) UPC catalog operation

2) a traditional vendor catalog

3) item setup and maintenance

4) sales price communication.

*After the EDI document has been received, a 997 Functional Acknowledgement is sent back from the buyer indicating the EDI document was successfully received.

The 846 Inventory Inquiry/Advice** is used by a manufacturer or supplier to notify a trading partner of on-hand inventory that maybe purchased such that a trading partner can take advantage of an opportunity for special buys on overstocked inventories.

What makes up the 846 Inventory Inquiry/Advice document?

Elements could include vendor number, products, and number in stock, identical to a paper inventory inventory/advice document. 

How is the 846 Inventory Inquiry/Advice used?

The 846 Inventory Inquiry/Advice is transmitted to the trading partner by the supplier to notify the trading partner of the inventory levels and whether there is overstock or if the supplier is understocked.

**After the EDI document has been received, a 997 Functional Acknowledgement is sent back from the transportation provider indicating the EDI document was successfully received.