Evolution of EDI

EDI has been established within various industries as a reliable and efficient form of data transmission. It is a technical representation of a business conversation between two entities, either external or internal. From its inception, EDI was applied differently within these industries, and therefore different standards were set up.

In the late 1960s, EDI was established within the transport industry, and they created their own standards. Soon other industries followed suit and various standards were created. Thus each of these standards is not necessarily compatible, which causes confusion and an inability to communicate. EDI was designed to function outside of communication and software technologies, and can be transmitted between sender and receiver via any means the two share. These may include modem, FT, AS1, AS2, Email or HTTP.

Although the methods of EDI transmission are changing – as with the increased use of Internet options – the actual EDI documents have remained the same. And this is due to the use of standards within the field of electronic data interchange, which have established and maintain the continuity of data information transmission.

The History of EDI Standards

During the 1960’s processing of business orders and shipping data was transmitted using networks. This was referred to Electronic Data Interchange or EDI. This occurred within the transport industry, where it was found to be more time efficient to transfer data between trade partners on the same network. As such, the networks required to be talking about the same information in the same language.

A set of documentation was created for this purpose. The Transportation Data Coordinating Committee was formed to coordinate the development of translation rules among four existing sets of industry-specific standards. Standardization was more in range when the X12 standards of the American National Standards Institute (ANSI) were issued. These were an expansion on the TDCC standards, and eventually replaced them.

At the same time, the UK Department of Customs and Excise in collaboration with the British Simplification of Trade Procedures Board (SITPRO) was also making moves to create standards for its documentation in international trade called Tradacoms.

These were eventually extended by the United Nations Economic Commission for Europe (UNECE) into the General purpose Trade Data Interchange standards (GTDI), and were gradually taken on by about 2000 British exporter organizations. As two of the major traders of the world had created different and somewhat incompatible systems of standardization, problems arose. These have been addressed by the formation of a United Nations Joint European and North American working party (UN-JEDI). Hence began the development the Electronic Data Interchange for Administration, Commerce and Transport (EDIFACT) document translation standards.

The automotive industry went through a similar confusion when GM attempted to reduce costs by holding an inventory which would be only a day’s worth of supply. In this way, their inventory costs were reduced considerably. They did this through EDI and thus set up their own mode of communication with suppliers. This style was soon adopted by other automotive entities in order to similarly reduce their costs. This led to a need for standardized documentation across the industry. These were made clear through the Automotive Industry Action Group which worked with automakers and suppliers to develop an EDI standard for the entire industry. As such, the industry was able to create a standard which was related just to the automotive industry.

Currently there is a large list of business documents which the standard covers, from shipping to trucking, to re-ordering. This list has developed over the last ten years, and includes the finance, health, trucking, shipping, automotive and various other sectors of industry. It has widened the scope of efficiency, decreased human related errors and reduced delays. EDI is used worldwide from Australia to Alaska.

Improvements can be seen in areas such as inventory management, transport and distribution, administration and cash management. Currently EDI is in a great phase of expansions, where it is being used in collaboration with other data tools such as XML, and the Internet. These allow for the potential of EDI to come through as a tool not simply for data transmission, but as a means to create closer ties and networks for businesses and corporations.