The EDI standards can be explained by answering several basic questions.
ASC X12 membership is open to "any individual, company, or organization that may be directly and materially affected by ASC X12 activities."
ASC X12 has agreed to move toward EDIFACT standards as indicated by the existence of the X12/EDIFACT Alignment Task Group (ATG), a standing task group of ASC X12.
Six regional UN/EDIFACT Boards represent the consolidated opinions of their member nations:
The United States is a member of the Pan American EDIFACT Board (PAEB) which coordinates the regional activity in EDI message development, maintenance, and technical assessment. DISA is the secretariat for both PAEB and ASC X12.
The United States Department of Defense and other government agencies were slow to adopt EDI due to legal restrictions, but have moved strongly to the use of EDIFACT.
A 1992 study by EDI Research, Inc. found that 79% of business transactions are via paper, 15% verbal, 4% fax or e-mail and only 2% EDI. The concentration of users is in the Fortune 1000 because the greatest benefit is to the larger companies. Small businesses find that the investment is sometimes too great a price to pay. However, as more business is conducted via EDI, it may become a required cost. Some companies already require that all their trading partners do business via EDI.
Movements toward the use of the Internet as the electronic media will make EDI a possibility for more users.
ASC X12 specifies business forms by defining standard data elements with dictionaries that specify name, length of data field, description, data type, and meaning.
Full X12 standard consists of:
EDIFACT consists of data elements (a value), segments (a logical group of data elements), and messages (a collection of segments relating to a business function), and rules for combining them.
Each data element has attributes such as
The full standards consists of:
X12 was developed in response to industry needs and put to practical use. EDIFACT emphasizes design and has been slow to achieve practical use.
Recently, ASC X12 has agreed to develop standards based on EDIFACT principles. The US government has also adopted the use of EDIFACT.
The X12 standard and its use is ahead of EDIFACT. As of 1994, EDIFACT had only 43 standard messages defined, and 14 messages in development. In 1992, there were 37,000 users of X12 in the United States, while only 1% of businesses in the United Kingdom used EDIFACT.
Individual industries saw the benefits of electronic transfer of information and began to develop industry specific procedures. These industries saw the need for standards and began to develop them independent of government assistance.
The Transportation Data Coordination Committee (TDCC) developed standards for the transportation industry. In 1969, it was renamed the Electronic Data Interchange Association (EDIA) reflecting the broader application of its work. The auto industry and large retail chains moved to EDI through the 1970's.
Gradually industry specific forms were abandoned in favor of standard forms. In 1979, ANSI ASC X12 was formed to develop cross-industry standards based on the work of EDIA.
In 1983 X12 published 5 standards, by 1989 there were 32 and by 1990 there were 100 standards. Industries converting to the EDI standard also increased over the years from 5 in 1983, 14 in 1986 to 30 industries by 1992.
Acceptance of X12 was helped by ready inclusion of industry specific requirements (i.e. it absorbed industry forms as subsets.) With each transition users had to endure multiple versions. In 1989, grocers merged with X12 and ANSI accepted their transaction sets and grocer-specific definitions. Drug manufactures accepted more sophistication than they needed in order to comply. Individual trade groups accepted changes neede by others. As a result, no new proprietary industry standards have been developed outside X12 since early 1990s.
The Department of Defense (DOD) was limited in its use of EDI due to legal restrictions. However, it began to use EDI in 1988. An estimated 92% of all DOD paperwork was to be replaced by EDI by 1996. DOD has also worked to prototype Intelligent Gateway Processors between VAN and mainframe and pushed ANSI for formats query of stock availability, price quotes, status reports, etc.
Work on what was to become EDIFACT (EDI for Administration, Commerce, and Transport) was started in the 1960s by United Nations Economic Commission for Europe. In September, 1987, Technical Committee 154 of International Organization for Standardization agreed to EDIFACT, designated ISO 9735.
But EDI is not universally accepted. Growth has been slowed by incompatible software and standards, lack of sophisticated capabilities, and lack of cross industry standards.
Small businesses have been slow to get onboard due to cost of implementation, but using the Internet will enable more use.
A 1988 MIT Sloan School of Management study found that EDI would grow but users would gain little or no competitive advantage. It would become a cost of doing business without significant benefits. EDI can lower costs, but maybe not as much as thought. As large companies increase their use of EDI, all businesses within the associated enterprise will be forced to use EDI.
Conversion to EDI may require overhauling some business practices. "Just in time" stocking which generates purchase requests based on point of sale data sent directly to vendor will monitor inventory levels automatically.
The use of EDI will continue to grow as more industries adopt its use. Currently, most banks are not EDI capable. The National Automated Clearing House Association (NACHA), which administers the electronic banking network in the United States, is exploring whether to require banks to be EDI-capable.
A 1995 article noted that there were 30,000 users of EDI in Europe and the number is expected to rise to 300,000 by the year 2000.
EDI speeds the process and improves the accuracy of getting information into the user's computer system. The traditional connections between businesses are telephone and mail. Both can be slow and require human intervention. EDI uses direct links to the computer system to minimize the transmission delay.
Direct links also eliminate the need for transcribing the data into the computer. This reduces errors and saves time.
EDI solves business problems, offers cost savings, and strategic benefits, and provides a competitive edge and improved marketshare.
EDI helps organizations improve communications and increase competitiveness, efficiency, and customer service by cutting costs and maximizing productivity and profitability.
EDI can lower costs by reducing inventory investments by more timely ordering. EDI can enable better business practices, such as "just in time" stocking. If point of sale data is sent directly to vendors, inventories can be monitored and orders automatically generated to minimize overstocking.
The sender must convert data from an internal system to EDI formats for transmission. The receiver must be ready to receive transmissions must in a timely fashion as agreed by trading partners. This could be instantaneous or at regualar time intervals. Data could be transmistted to a VAN and stored for later retrieval by the receiver. The receiver converts the EDI transmission data to the internal system for processing.
Each transaction set represents a single business form. The header area contains the preliminary information such as business name, address, date, etc. Next is the actual transaction information, the item, description, quantity, etc. where each line corresponds to on segment and each item in the segment is a data element. Last is the summary data which contains the control information.
Each data element is assigned a unique reference number in the EDI master data element list. The structure of each message is strictly defined while allowing for variable length data. The transfer of information can be done by any electronic media from magnetic tape to telecommunication. EDI standards are designed to be independent of communications media. Before any transaction can occur the sender and receiver must ensure that a valid connection has been made.
Methods of error checking and recovery must be established to safeguard against lost of data.