EDI (Electronic Data Interchange)

The acronym EDI stands for "Electronic Data Interchange". This refers to the standardized, digital exchange of business documents such as purchase orders, delivery bills or invoices between companies.
With EDI solutions, companies can automate business processes and transfer documents directly from system to system. Communication is based on internationally recognized standards, so-called EDI message formats. This speeds up processes, avoids errors and makes collaboration between business partners more efficient.

• Faster: Business documents are transmitted in real time - no waiting for post or e-mail.
• Fewer errors: Automatic electronic data exchange reduces manual input and transmission errors.
• Standardized: Uniform EDI message formats ensure smooth communication between all partners.
• Cost reduction: Eliminating paper, postage and rework makes processes more cost-effective.
• Transparency & compliance: Every step is digitally documented and can be traced at any time.
• Fewer media disruptions: Processes run completely digitally from sender to recipient.
• Future-proof: EDI is the basis for digital, end-to-end supply chains - even internationally.

The EDI process is based on the standardized, digital exchange of business documents between different IT systems. The aim is to avoid media disruptions and to automate processes throughout the company.
The following five process steps are involved:

1. Data source: the ERP, merchandise management or warehouse management system generates a business document, for example a purchase order or invoice. The data is initially available in the company-specific format.
2. Conversion: An EDI converter translates the internal format into a standardized EDI message standard (such as EDIFACT or XML). Modern solutions such as Yaveon EDI no longer require an external converter - the conversion takes place directly within the EDI software.
3. Communication: The standardized EDI message is sent to the business partner via an EDI interface with secure transmission protocols such as AS2, OFTP2 or X.400.
4. Receipt: The process is reversed at the recipient's end: The EDI solution receives the message, translates it into the appropriate target format and imports the data directly into the partner's ERP system.
5. Automated processing: The receiving system processes the data further - for example, to automatically post incoming goods, create invoices or update stock levels. Everything runs digitally throughout and without media disruptions.

Tip: With integrated cloud solutions such as Yaveon EDI, these process steps can be controlled and monitored directly from the ERP system - without additional software, interfaces or system disruptions.

ERP connector

The ERP connector connects the ERP or merchandise management system with the EDI solution. It ensures that data is transferred automatically and in the correct format. This eliminates the need to manually transfer documents or convert data from export files.

EDI converter

The EDI converter translates the company's internal data formats (e.g. CSV, XML or proprietary formats) into standardized EDI message formats such as EDIFACT or ANSI X12 - and back again. It acts as an "interpreter" between the systems.

EDI communication adapter

The communication adapter (also known as the EDI interface) is responsible for transmitting EDI messages to the business partner. It ensures that the data is sent and received in encrypted form via secure, internationally recognized protocols (e.g. AS2, OFTP2, X.400). This ensures data protection and confidentiality.

If companies or business partners want to exchange data, documents and information electronically, they need to agree on a "common language". EDI standards exist for this purpose: they define how information is structured and transmitted - regardless of the software used.

EDI standards work like interpreters: they ensure that everyone involved understands the data - regardless of which system or language they actually use. If there is a recognized, international standard for electronic data exchange, only one "interpreter" is needed - and not a separate one for each individual business partner. This makes collaboration easier, more efficient and cheaper.

EDIFACT:

The world's most widely used standard for the electronic exchange of business documents, especially in Europe. EDIFACT defines uniform formats for a large number of business processes - from purchase orders ("ORDERS") to delivery bills ("DESADV") and invoices ("INVOIC"). This makes EDIFACT ideal for companies with many partners who all use the same message format.

ANSI X12:

This standard is particularly widespread in North America and is regarded there as the industry standard in trade, industry and healthcare. Here too, there are clearly defined message types, such as 850 for purchase orders and 810 for invoices.

XML:

XML is a flexible, modern data format that is particularly suitable for integration with web services. XML is particularly relevant for electronic invoicing - such as XRechnungen, which is mandatory for public clients in Germany. XML is also becoming increasingly important due to the electronic invoicing obligation in the EU and is making companies fit for digital invoice exchange.

Tip: Professional EDI software supports various international standards and message types. In addition, new partners and systems can be easily connected via an EDI interface. This allows you to remain flexible when working with different business partners.

What is the difference between an EDI standard and an output type?

An EDI standard is the set of rules or the "language" according to which electronic business documents are exchanged. It determines how the data is structured and transmitted.
Within each standard there are different message types (also called "message types"). They define what type of business document it is - for example, a purchase order, an invoice or a delivery bill.

Examples:

• In the EDIFACT standard:
  • ORDERS is the message type for a purchase order
  • INVOIC is the message type for an invoice
  • DESADV is the message type for a shipping notification or a delivery note
• In the ANSI X12 standard:
  • 850 is the message type for a purchase order
  • 810 is the output type for an invoice
  • 856 is the message type for a shipping notification.

Simply put: The standard is the language, the message type is the subject of the document.

Electronic data exchange is used in almost all areas of a company: from purchasing and sales, logistics and warehousing to accounting and master data management. The benefits are particularly evident in industries with high requirements for speed, transparency and traceability - for example in the food industry.

Practical EDI example: Food company and the path to the shelf

A medium-sized food manufacturer wants to place its products with large retail partners such as EDEKA or REWE. The prerequisite: smooth digital processes and the exchange of all relevant business documents via EDI.

• Purchase orders and delivery call-offs arrive directly via EDI in the food company's ERP system without anyone having to enter data manually.
• Despatch advices (DESADV) are automatically transmitted to retail partners such as EDEKA or REWE - including batch, best before date and pallet information, which is essential for traceability in the retail sector.
• Warehouse receiving and quality checks are carried out digitally and automatically at the retailer: the data on shipments, batches and best-before dates provided via EDI is used directly by the retail partner to receive and check the goods.
• Invoicing is paperless: the invoice is sent electronically and processed digitally by the retail partner - this shortens payment terms and reduces sources of error.

The introduction of an EDI solution usually follows a structured roadmap. Whether you are using EDI for the first time in your company or migrating from existing EDI software to a more modern system: With good preparation, the changeover will go smoothly.

Typical steps in the introduction of EDI:

1. Needs analysis and target definition: The first question is: Which document types and business partners should be connected? Which processes should be digitized? It is particularly important to involve all relevant departments at an early stage so that the requirements are fully recorded.
2. Selecting the right EDI software: The decision for an on-premises or cloud solution depends on the IT resources and future requirements. It is important that the solution supports all required EDI standards and can be easily connected to the ERP. A solution that is too rigid or proprietary makes it difficult to make subsequent adjustments or connect new partners.
3. Partner connection and master data maintenance: The partner data and communication channels are defined. Incorrect or outdated master data is one of the most common causes of problems during go-live. Proper master data maintenance is therefore essential.
4. Mapping and configuration: The data fields from the ERP are assigned to the EDI message fields. Modern EDI solutions usually offer practical tools and templates to simplify configuration.
5. Test phase: Before going live, all processes are run through with the partners in order to identify errors in good time. Sufficient test runs with all business partners help to avoid subsequent disruptions in day-to-day business.
6. Go-live and ongoing operation: After a successful test run, productive operation begins. The EDI software takes over the monitoring of message flows and supports troubleshooting.

Tip: Rely on an EDI solution that grows flexibly with your processes, offers regular updates and supports you in connecting new partners. Modern EDI software not only saves time and effort during implementation, but also makes your company future-proof for further digitalization projects.

EDI migration: switching to a new EDI solution

Many companies switch to a modern EDI solution because their previous software is too rigid, does not support current standards such as XRechnung or is too complex to maintain and operate. The lack of cloud functions, high costs or an inflexible license model are also common reasons.

The migration process is basically similar to a new implementation, but also requires precise planning: existing partner connections, message mappings and master data must be backed up and transferred. Parallel operation of the old and new systems is often set up for a transitional period. Close coordination with business partners is particularly important to ensure that no data is lost. Many modern EDI solutions offer special migration tools and experienced advice for this process - so the changeover usually succeeds without downtime and with minimal risk.

Not every EDI landscape is fully integrated - but without clearly structured processes, up-to-date standards and central control, a lot of potential remains untapped. This self-check will show you how professional your electronic data interchange really is today.

Do the following statements apply to the EDI processes in your company?

• Business documents are already exchanged electronically with customers, suppliers or partners.
• An EDI solution is in use that automatically supports the exchange of purchase orders, invoices and delivery bills.
• New business partners are connected quickly, in a standardized way and without special developments.
• The EDI solution is integrated directly into the ERP system - there is no need for external stand-alone solutions or middleware.
• The EDI converter is integrated into the solution so that no external converter is required.
• Large retail chains and platforms such as EDEKA, REWE or AMAZON can be easily connected and supplied.
• The EDI solution supports all common standards and message types.
• Partner data, communication channels and message types are managed centrally and transparently
• Changes to EDI standards or legal requirements can be responded to flexibly and promptly.
• Incoming and outgoing EDI messages are automatically compared with the data in the ERP and correctly posted.
• Errors or deviations are detected immediately and reported to the responsible parties.
• Transparent monitoring and logging functions make it possible to check all important EDI processes.

The more statements you answer yes to, the smoother your EDI processes will be.

Modern EDI software should be able to do more than just enable the exchange of business documents. It must integrate seamlessly into the existing IT landscape, remain adaptable at all times and meet legal and industry-specific requirements.

The most important requirements for a professional EDI solution at a glance

• Seamless integration into the ERP system:
  Optimal EDI software is directly integrated into the ERP system. This means that all processes run automatically and without system interruptions.
• Support for all relevant EDI standards and message types:
  Whether EDIFACT, XML, XRechnung, ANSI X12 or industry-specific formats - the software must be able to deal flexibly with different partners and requirements.
• Central administration and simple partner connection:
  Business partners, communication channels and master data can be controlled centrally via the EDI software and new partners can be integrated easily - without long set-up times.
• Automated monitoring and error handling:
  The EDI solution offers real-time monitoring, logs all message flows and provides automatic information in the event of errors or deviations.
• Scalability & future-proofing:
  The EDI software grows with the company and supports new business models, platforms and international partners.
• User-friendly interface and transparent processes:
  All EDI processes are traceable, operation remains understandable even for specialist departments - without programming knowledge.
• Cloud-ready:
  A cloud-based EDI solution adapts to your growth, always remains up-to-date and is ready to go immediately - without any additional IT investment.