What is EDI?
EDI stands for Electronic Data Interchange.
1. It’s the exchange of electronic file.
2. In a standard format that is easily processable by a computer.
3. This exchange can be automated without any human interventions.
EDI has been around since before the Internet. Back then communications between businesses was slow and prone to errors. Exchanges of invoices, shipping notices, purchase orders, and sales reports between different trading partners were sent via paper documents.
This was the 1960’s. As technology advanced, EDI evolved to allow businesses to communicate using paperless document transfers between different companies.
One thing to remember is that EDI is not dependent on technology. There are ways to implement EDI, but there are different approaches to choose from. These approaches needs to be driven by your business needs, and not by a particular technology.
Advantages of using EDI
1. Manage huge volumes of transactions
2. Less operating costs
3. Eliminate mailing delays
4. Eliminate human data entry errors.
Example of different Business Work Flow Scenerios that are improved when using EDI:
Buyer (customer) creates a purchase order (PO)
PO is sent to supplier via EDI
Supplier loads a Sales Order in response to the PO, with optional changes.
Supplier acknowledges PO (with any changes)
Buyer changes quantity of a line (part)
Buyer-initiated Change Request is sent to supplier via EDI
Supplier implements or rejects changes
Supplier sends summary of changes/rejects to buyer via EDI
Supplier needs to delete a line as they can no longer supply
Supplier sends supplier-initiated change request to buyer/customer via EDI
Buyer receives change request and implement or rejects changes
Supplier ships material
Supplier sends an Advance Ship Notice (shipping manifest) via EDI
Supplier sends invoice via EDI
There are a few components that you need to have to get EDI working on your environment.
1. Mapping Software – The mapping software retrieves data from your accounting software, ERP or WMS.
2. Translation Software – The translation software translates the data into an EDI format.
3. Network or VAN provider ( Value added Network Provider) – A VAN provider will securely transport your EDI data to and from your trading partner. Your Van provider will provide support and maintenance making sure the data is correctly being received and sent.
With the components in place, you are now able to apply your process to execute an EDI transaction. There are two processes for EDI. The outbound process and the inbound process.
The outbound process is when your mapping software generates the data out of your database. In the pharmaceutical world, this usually happens when a shipment is being prepared to be shipped.
Next, the EDI translator retrieves this mapped data and translates the data into an EDI file.
Let’s look on what a sample EDI file looks like:
ISA*00* *00* *13*2362340301 *12*6734245337 *150515*1537*U*00401*000000548*0*T*>~
N1*ST*COMPANY PHARMACEUTICAL LLC*11*RL0362347~
N3*EAST ADDRESS UNIT 5~
N1*SF*COMPANY PHARMACEUTICALS, INC.*23*GCFNP5N00~
N3*8333 ELM STREET~
N3*26515 ELM ROAD~
N3*1343 EAST ELM RD~
YNQ**Y***This wholesale distributor, or a member of its affiliated group, purchased the product directly from the manufacturer, exclusive distributor, or repackager that purchased directly from the manufacturer.***99*DPS~
YNQ**Y***This wholesale distributor has complied with each applicable subsection of FDCA Sec. 581(27)(A)-(G).***99*TS~
As you can see, the file is quite cryptic. Remember, this was created for a computer to process, not a human.
The EDI file is then sent to a trading partner via your VAN. The method of transfer can be many. Most commonly, this data is transported using an AS/2 server.
The inbound process is similar to the outbound, but instead inbound. The data when received to the trading partner gets translated to a readable format, which is then mapped into the receiving trading partners ERP or accounting system. A mapping and translation software is of course needed to accomplish this.
And that’s it! A full EDI communication from trading partner to trading partner exchange is complete.
Finally, we believe that EDI will play a big role with the DSCSA interchangeable requirements. Especially when serialization starts to become a reality in 2017. Please contact TrackTraceRX to find out how our EDI solution can improve your business productivity.