Electronic Data Interchange (EDI)

What is EDI?1

What is Electronic Data Interchange (EDI)? The purpose of this article is to

provide a layperson's understanding of the electronic data interchange
process. An overview of EDI benefits and drawbacks is included.

The electronic data interchange process is the computer-to-computer

exchange of business documents between companies. EDI replaces the
faxing and mailing of paper documents.

EDI documents use specific computer record formats that are based on
widely accepted standards. However, each company will use the flexibility
allowed by the standards in a unique way that fits their business needs.

EDI is used in a variety of industries. Over 160,000 companies have made

the switch to EDI to improve their efficiencies. Many of these companies
require all of their partners to also use EDI.

Overview of EDI benefits and drawbacks

The EDI process provides many benefits. Computer-to-computer exchange of

information is much less expensive than handling paper documents. Studies
have shown that manually processing a paper-based order can cost $70 or
more while processing an EDI order costs less than one dollar.

• Much less labor time is required

• Fewer errors occur because computer systems process the documents
rather than processing by hand
• Business transactions flow faster.

Faster transactions support reduction in inventory levels, better use of

warehouse space, fewer out-of-stock occurrences and lower freight costs
through fewer emergencies expedites.

Paper purchase orders can take up to 10 days from the time the buyer
prepares the order to when the supplier ships it. EDI orders can take as little
as one day.

One drawback to EDI is that companies must ensure that they have the
resources in place to make an EDI program work; however, the need for

1
http://www.covalentworks.com/what-is-edi.asp

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buying and hiring these resources or outsourcing them may be offset by the
increased efficiency that EDI provides.

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Why should I use EDI?2

EDI and other similar technologies save company money by providing

alternative to or replacing information flows that require a great deal of
human interaction and materials such as paper documents, meetings, faxes,
etc. Even when paper documents are maintained in parallel with EDI
exchange, e.g. printed shipping manifests, electronic exchange and the use
of data from that exchange reduces the handling costs of sorting,
distributing, organizing, and searching paper documents. EDI and similar
technologies allow a company to take advantage of the benefits of storing
and manipulating data electronically without the cost of manual entry.

Benefits of EDI include:

• Reduced cycle time

• Better inventory management
• Increased productivity
• Reduced costs
• Improved accuracy
• Improved business relationships
• Enhanced customer service
• Increased sales
• Minimized paper use and storage
• Increased cash flow

Today, when companies move some of their business to the web and have to
compete against other companies who already doing business online, not
using the web consider suicide. The day that all businesses will be fully or
partially online is not far and signs show that no matter what type of
business it’s in, being on the web and having a web site is a must. If
company won’t move to the web, then it will lose some or all of their
business and might have a significant disadvantage from their competitors
who uses the web to trade and do business. The EDI business is growing
every year and in the past few years it grew from $3 billion U.S.D. in the year
2000 into a $32 billion U.S.D.

There is a reason for that and the reason is that all companies want to sell
online, trade over the web, send and receive business transactions online
and by that save time and money. In addition, the speed of EDI and online
business and un-bitable and reliable, ready to be utilize by all types of
companies.

2
www.scribd.com/doc/2956558/Why-should-I-use-EDI

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Every year, more standards are being added to EDI, make it possible for
more types of businesses to trade electronic documents online.

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EDI example

Here is an example of how the electronic data interchange process works. A

buyer prepares an order in his or her purchasing system and has it approved.

Next, the EDI order is translated into an EDI document format called an 850
purchase order.

The EDI 850 purchase order is then securely transmitted to the supplier
either via the internet or through a VAN (Value Added Network).

If the purchase order is sent using a VAN, then the buyer’s VAN
interconnects with the supplier’s VAN. The VANs make sure that EDI
transactions are sent securely and reliably. The supplier’s VAN ensures that
the supplier receives the order.

The supplier’s computer system then processes the order. In the case of
CovalentWorks’ clients, we provide VAN transportation and our servers
provide all of the software and hardware required to process EDI documents.
Only internet access and email are needed.

Data security and control are maintained throughout the transmission

process using passwords, user identification and encryption. Both the buyer’s
and the supplier’s EDI applications edit and check the documents for
accuracy.

Disadvantages of EDI3

Too Many Standards

There are too many standards bodies developing standard documents

formats for EDI. For example your company may be following the X12
standard format, while your trading partner follows the EDIFACT standard
format.

Changing Standards

Each year, most standards bodies publish revisions to the standards. This
poses a problem to EDI users. You may be using one version of the standard
while your trading partners are still using older versions.

EDI is Too Expensive

3
http://ksi.cpsc.ucalgary.ca/courses/547-95/seanh/edi.html#Disadvantages_of_EDI

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Some companies are only doing business with others who use EDI. If a
company wants to do business with these organizations, they have to
implement an EDI program. This expense may be very costly for small
companies.

Limit Your Trading Partners

Some large companies tend to stop doing business with companies who
don't comply with EDI. For example Wal Mart is only doing business with
other companies that use EDI. The result of this is a limited group of people
you can do business with.

What kind of company uses EDI (size, role, revenue)?4

About 90% of the fortune 1000 companies currently use EDI. Companies
such as
American Airlines, BMW, Coca-Cola, Dunkin Donuts, Eastman Kodak, Federal
Express, Gordmans, Heinz, InFocus, JCPenney, Kohls, Lowes, Macys, Nike,
Openheimer, Prudential Insurance, Queens City Government, Radio Shack,
Staples,
Texaco, United Airlines, Verizon, Wachovia, and Yokohama Tires to name but
a few.
EDI is widely used in manufacturing, shipping, warehousing, utilities,
pharmaceuticals, construction, petroleum, metals, food processing, banking,
insurance, retailing, government, health care, and textiles among other
industries.

Any company that buys or sells goods or services can potentially use EDI.
Because it
supports the entire business cycle, EDI can streamline the relationship that
any
company has with its customers, distributors, suppliers, and so forth.
According to
a recent study, the number of companies using EDI is projected to quadruple
within
the next six years.

Liz Claiborne Inc. Leading Global Fashion Designer is using EDI.

4
http://ezinearticles.com/?What-is-EDI?&id=166174

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(PDF Attached for review)

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EDI Implementation5

Panning an EDI software system implementation across a trading community

is a complicated activity to manage. This section provides an overview of the
EDI implementation and a look at the factors involved in each step of the
process.

• Organizational Management Structure

• Review of Business Strategy
• EDI System Solution Development
• Integrating EDI with Existing Business Systems
• Internal Business Process Mapping and Data Analysis
• Establishing an EDI B2B Pilot Project
• Complete Deployment Among Trading Partners

Step 1—Organizational Management Structure

To successfully deploy EDI, many companies assign an EDI coordinator to

manage the EDI program on a daily basis. Depending on the scope of the
company’s EDI project and the company’s culture, a company will either hire
someone with EDI experience or develop the experience in-house. For large
organizations with integrated EDI projects of a larger scope, a dedicated
team of people to focus on EDI is usually needed. In these cases, additional
management information systems (MIS) resources will be hired and given
the full-time responsibility of working with the EDI system.

When devoting a team to EDI responsibilities, the team should be divided to

focus on two key areas. One group should focus on managing EDI
implementation within the organization, including cost-benefit analysis and
education and training for EDI. The group of MIS employees should evaluate
EDI software and various network options and should focus on management
of EDI integration with internal systems.

Employees in other areas of the business also need to take part in EDI
implementation. Determining the number of people needed to efficiently run
the project is one of the EDI coordinator’s first tasks.

To ensure that EDI implementation develops in a manner that meets

business needs, we recommend an organization form an EDI steering
committee. This committee is led by the EDI coordinator and usually consists
of the Director of MIS, department heads from purchasing and sales, and
members who serve in advisory roles, such as legal.

5
http://edi.gxs.com/implementation

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Comprehensive support across the organization will provide maximum
benefits. It is vital to obtain the backing of functional managers. Reserving
room for functional managers to serve on the EDI committee plays a large
part in obtaining their support. They then have a stake in a successful
outcome of the EDI project.

One of the first tasks of the steering committee is to determine which area of
the company will be the target of the first EDI application.

Gaining Support across the Organization

When it comes to EDI implementation, one of the first and most important
steps is obtaining the commitment and support of those in top management
positions. The budget needed for implementing an EDI solution can be quite
sizable. To obtain critical support, the EDI coordinator must make sure that
the cost-benefits analysis is solid, and that top management understands
how EDI supports key company strategies and what ROI can be expected.

It is important to also gain the support of employees who will be affected by

EDI implementation. Many employees are uncomfortable with EDI because
they fear it will negatively impact job security. They need to understand EDI
and how it may enable them to resolve problems. The initial stages of EDI
implementation are focused on building teams and support rather than the
design and deployment of technology.

Step 2—Review of Business Strategy

The benefits of an EDI system can vary greatly among organizations. To

discern the area of your business where an EDI system would make the
biggest difference, your coordinator should conduct an e-business EDI survey
of your organization’s customers and suppliers. Your organization will see the
greatest returns in areas where an EDI system can be supported by either a
large number of trading partners or a small number of high volume trading
partners.
One of the primary advantages of EDI implementation is the level of
flexibility and customization it offers for B2B integration.

• Many large companies have started EDI implementation within their

purchasing departments as a way to improve business process
management (BPM) of supplier purchase orders (POs) and subsequent
cost savings.
• Manufacturers tend to find materials release documents a good
starting point for their EDI systems, as it helps to foster improved just-
in-time (JIT) manufacturing strategies.

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 • Suppliers generally use an EDI system for sales order processing
because many of their major customers prefer to send POs
electronically.
• Accounts payable can profit from EDI services, especially within
organizations that have many invoice transactions.

Companies in the buying position often have the power to require EDI of
their trading partners as a condition of doing business. This is why
purchasing is often the first focus of a large organization’s EDI integration
efforts.

Undertaking an EDI Survey or Cost-Benefit Analysis

Your EDI implementation coordinator will be responsible for conducting a

cost-benefit analysis to further identify the ideal corporate applications for
EDI system deployment and lists their priority.
Keep in mind, however, that a cost-benefit analysis should be short enough
to maintain momentum towards completing EDI system implementation. It
should include a description of the present systems and a determination of
the ways EDI implementation can improve those systems.

Since the handling of each type of business document is based on human

and machine interaction, this should be a point of focus for determining
efficiencies that can be gained with an EDI system. EDI
consulting professionals further encourage organizations to look for ways to
improve current systems before automation because automating an
inefficient system has the effect of magnifying the inefficiency. Improving a
process before EDI system deployment may take more time and money (i.e.,
system development, employee training) at the front end, but will certainly
provide greater financial return over time.
To determine where your organization could benefit most from EDI services,
your EDI implementation coordinator should consider the following
questions:

• How many vendors or customers are involved in each business cycle*?

• How much paperwork is involved in each business cycle?
• How much time does each business cycle currently require?
• Can an EDI system reduce or eliminate

οRedundant steps in the business cycle?

οRedundant data entry?
οClerical effort?
οThe need to carry inventory?
 Can an EDI system improve or support

ο Relationships with your trading partners?

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 ο Customer service through improved delivery times?
ο Larger business strategies (e.g., JIT manufacturing)?

*A business cycle includes all of the processes and documents involved in

completing a transaction. An example of a business cycle is PO receipt, PO
acknowledgement, picking list production, issuing shipping notices and
invoices, and receiving payment.

The more questions you can answer affirmatively, the greater the
opportunities for improvement through an EDI implementation exist.

To get the most benefit from a cost-benefit analysis, it is important that your
EDI implementation coordinator first have a comprehensive understanding of
a variety of systems types. In this situation EDI consulting is available and
can be a very advantageous move to ensure your organization’s investment
in an EDI system yields the greatest possible returns.

Typical costs associated with an EDI system implementation

For a large organization, a basic, yet thorough analysis of EDI opportunities

or ROI can cost as much as $100,000. System hardware (e.g., computers and
telecommunications), EDI software, staff time, training, and EDI consulting
may cost between $1-2 million. Transitioning from the pilot stage to
deployment can cost another $1-2 million.

Smaller companies with less complex needs can use basic EDI software
running on PCs at a much lower cost. Hardware, software, and EDI VAN-
based system installation for a PC can cost $3,000 – $5,000 for stand-alone
EDI. If the PC system is integrated into a much larger computer system,
investment increases by at least another $5,000; however, you begin to
open up the system to further uses within the company. For example, the
inbound transactions such as purchase orders move directly into the in-
house system.

Typical benefits and cost-savings from an EDI system

implementation

Following and EDI implementation, the most noticeable change around your
office may be the drastic reduction of paper and paperwork. Still, most EDI
systems offer the most savings not in paperwork and mailing, but in:

• inventory reductions
• more working capital
• shorter order cycles
• improved order accuracy
• greater staff productivity

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 • better trading partner relationships

The EDI implementation coordinator should ask the accounting department

to create a three-to-five year expense projection.

High Level EDI System Analysis

Regarding information systems, an EDI system needs-analysis must also

consider:

• Data required by current system

• Data required by trading partners, but lacking in current system
• Data required by EDI standards

For cost analysis purposes, be sure to include all costs inherent in the current
system if it does not include data required by trading partners.
The organization’s existing telecommunications environment must also be
evaluated. Many organizations opt to transmit EDI data through third party
value added networks (VANs) rather than construct their own data networks
for EDI. The Internet also offers a cost effective and viable alternative.
Document capacities gathered during the analysis phase of business
processes should be stated in terms of required network capacities for
current and future needs.
Keep these questions in mind:

• Does your current internal network have enough capacity to handle

EDI traffic?
• Will projected traffic through an EDI system require a mainframe or PC
system?
• Based on projected EDI system usage, what are the cost differences in
managing multiple, individual trading partners vs. using a single
connection to an EDI VAN?
• What are the internal programming needs relative to meeting data
capacities required by EDI standards and trading partners using your
internal systems?
• How easily can an EDI system be integrated with current internal
applications?

All of these questions are designed to help your organization determine the
most valuable type of EDI system to address your needs in the most cost-
effective way.

Summary of EDI Survey

The EDI analysis report from the EDI implementation coordinator should be
detailed from financial, management, and deployment perspectives. It

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should include the following elements relative to a final decision-making
process*:

• Project scope
• Current system strengths and weaknesses
• Alternatives to current system that offer process improvement
• Alternatives considered but not chosen
• Relative financial information on alternative systems
• Timeline and funding for EDI system development Personnel needed
for successful EDI implementation
• EDI implementation schedule

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Step 3—Solution Development

After the EDI steering committee has selected and approved the appropriate
EDI solution, the project then moves into development. During this stage,
five important pieces of the EDI system play a role in its launch:

1. Telecommunications Medium:

The first piece of EDI is most commonly a value added network (VAN)
or the Internet.

2. Telecommunications Software:

This piece is not specific to the EDI system; however, it plays an

important role in the execution of an EDI solution. Usually, the
functionality of this software mimics MS Windows dial-up networking.

3. EDI Translator:

The primary function of the EDI translator is to convert the data sent
via EDI from the X12 format into a format that is more compatible with
in-house systems and applications. In addition to this primary function,
an EDI translation package may have several subsystems including the
handling of the EDI envelope, document management/audit trails,
compliance checking, and generation of a functional
acknowledgement. The functional acknowledgement is roughly
equivalent to the postal service return receipt to confirm delivery. The
EDI translator is usually a package licensed from an EDI software
company or VAN provider.

4. EDI Interface

The EDI interface completes the final translation and reformatting of

the transferred data. When the EDI translator completes the
conversion of the data, the interface reformats the data into a format
that can be easily used by the in-house EDI application software.

5. EDI Application Software

The EDI application software selection is a very important aspect to the

success of the EDI project. Choosing the right software package is
crucial.

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Choosing an EDI Network

EDI network communications exist in two primary methods: point-to-point

communications and value added networks (VANs).

• Point-to-Point (P2P) Communications—P2P communications occur

between trading partners when lines are established using standard
communication protocols. The connection can be set up as a leased
line, which is paid for on a monthly basis and is readily available for
electronic data interchange; or as a dial-up line, where the
communication or information transfer is established in a way similar
to a telephone call. A dial-up link allows senders to batch transactions
and make connections to send at certain points. A dial-up link is a
more cost-effective approach when the amount of transmitted data is
low. Point-to-point lines frequently present a scheduling problem to
trading partners. Often, it is not convenient for the receiver to get
transactions when the sender chooses to transmit them.
• Value added networks (VANs)—VANs are the most widely used
method. VANs provide a store-and-forward mailbox service. The sender
connects with the VAN and sends its EDI transactions to the recipient’s
mailbox where they are stored. The sender then disconnects from the
service. When it is convenient, the recipient connects to the network
and receives those transactions from its mailbox. With this approach,
both sending and receiving parties must use the same EDI standard
transactions.

Deciding what type of EDI network depends on several variables. The

following considerations must be made when choosing the network type for
your EDI system:

• In-house data processing operations—This aspect to business

operations can be a more significant factor in choosing an EDI network
service (VAN) than how modern the technology the vendor is using.
When using a VAN, trading partners are free to connect with the
network, transmit or receive data, and then disconnect as the data is
not actually sent to the trading partner, but to the server that routes
the data into the correct mailbox.
• Number of partners in the EDI trading community—The reach of the
network is also an important consideration. A good tip is to list the
members of the trading community and the EDI networks they use
before speaking with an EDI outsourcing vendor.

Choosing an EDI Vendor

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It’s important at this stage to identify and communicate your expectations of
what the VAN is required to provide. You must also determine how you will
begin using an EDI solution. Some turnkey programs simply turn the system
on at different stages of the implementation process. Larger companies that
are adding smaller suppliers to their trading community will include training
and education to the process to ensure all systems are working properly for
all partners. If your company requires this level of service during EDI
implementation, it is important that you discuss this with vendors to ensure
availability and determine the cost.

An organization could broaden its customer base by choosing a VAN

entrenched in its own industry, and use EDI to establish new trading partner
relationships within that particular industry sector. If this is a goal for your
company, trade associations are excellent sources for information about EDI
activity within a particular vertical industry. They deal with the maintenance
of standards as they apply to a particular industry. In fulfilling this role they
act as a sounding board for users’ problems and concerns and can be very
helpful to novice users.

Pricing is an important consideration when choosing an EDI vendor.

Depending on frequency, size, volume, or even time of day, pricing can vary
greatly. For example, some vendors charge a separate fee (in addition to the
kilo character transmitted charge) for each document sent. Prior to
contacting a vendor, it is important to establish transmission patterns so that
the vendor can build out a pricing structure based on this information. It is
also important to be aware that hidden charges may exist and any
limitations or ceilings on the number of transmissions need to be discussed
at this stage.

It is equally important to consider the vendor’s added services. Additional

offerings such as consulting and community liaison services add value and
can benefit your EDI system.

Finally, before you select a vendor for EDI services, evaluate their
involvement and consideration for EDI standards. Participation in such
groups is an indication that they are concerned with providing quality EDI
services. Along these same lines, your company will find it useful to evaluate
the vendor’s reputation and credibility in the industry as well as if it has
strong financial backing, which may indicate longevity in the industry.

Network service providers traditionally come from three backgrounds: time-

sharing / information retrieval services, public data network providers, and
EDI service bureaus. Each category has advantages and restrictions for EDI
services.

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Vendors entering the EDI market from a time-sharing background generally
offer a number of value added services such as translation software
packages, access to third party databases, database capture of trading
information, audit reports and historical activity summaries, and archiving
services.

Vendors with a public data network orientation are traditionally viewed as

data movers and have extensive experience operating large packet switched
networks. Users typically find it easy to work with these EDI network
vendors, although they may not provide as wide a range of extra services.
While these companies do not supply EDI translation software, they do
provide long lists of certified software packages from third party developers.
These networks offer less extensive in-network translation services.
Most public data network vendors are recent entrants into the EDI arena.
Users can expect to see more newcomers in this category from network
providers and hardware vendors. Although these companies are new to EDI,
their entrance into the market is not trivial. They are armed with impressive
network expertise and financial resources. In addition, their alliances with
experienced EDI software / service providers can compensate for their lack of
EDI experience. Networks also offer one-stop-shopping for EDI clients. They
will provide everything a customer needs to set up an EDI system: software,
translation, consultation, education, record keeping, reporting of EDI
transactions to clients, and electronic mailboxes.

Sending EDI documents through a third party (VAN) may cost more out of
pocket, but the services and support provide enhanced VAN performance,
thus making them very popular among trading partners today.

Legal Requirements for EDI

EDI implementation can change more than just the way a business conducts
daily processes and communications. Through the integration of an EDI
system, a company also may experience changes in the organizational
policies. For example, EDI integration may change the way documents are
stored, how they are archived, and how they are recovered. Auditors must
understand and endorse these new procedures.

Moreover, EDI changes the way legal considerations are carried out as well.
Instead of each document containing the terms and conditions of an
agreement, these same legal conditions are addressed with EDI documents
that outline and establish what terms are in effect throughout the EDI
transmissions. It is important for the legal counsel to draft, review, and
approve these terms.

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Step 4—Integrating EDI with Existing Business Systems

Work can begin on system configuration upon selection of the EDI software
and network. EDI vendors can provide invaluable assistance in the setup of
their respective aspects of the EDI system. This stage requires the most
attention from assigned EDI staff members.

The amount of custom work an organization plans to expend largely

determines how an EDI system is developed and designed. A complex EDI
system that serves multiple departments and utilizes EDI integration with
corporate applications needs substantial data routing and internal
programming. However, a turnkey EDI system deployed on a PC needs little
else than the vendor’s recommendations.

The largest development task that EDI systems generally face is EDI
integration with existing corporate applications. EDI mapping is required to
take data out of internal applications and transport it via EDI software. As
such, developing EDI integration software can often be the largest cost of an
EDI system. Methodologies used for system prototypes are developed prior
to the coding of systems. Computer Aided Software Engineering (CASE) tools
enable streamlining of development.

EDI integration typically consists of three key activities:

• Analysis of data during EDI mapping

• Using EDI software to map data
• Custom interface programs and user exit development

The EDI team should inquire as to whether second and third items above
have been completed by the software development company, as this can
affect whether your back-office systems can be integrated without the need
for additional costs.

Step 5—Internal Business Process Mapping and Data Analytics

During EDI implementation, start with data analysis and the end goal in
mind. For example, if the first planned transaction is the inbound purchase
order (PO), the EDI team begins with analysis of the order processing
system’s requirements. For this portion of the project the team must include
the person most knowledgeable about the application.

Data analysis starts with a comparison of the end goal data structure to
current data structure. After all of the fields have been identified, origin
content and end goal content should be compared closely. If there are

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discrepancies between the number and nature of the format data, a cross
reference file can often make the field(s) available.

For example, the major groups of records in the original purchase order in
the X12 format are header, detail, and trailer. An outbound invoice in X12
also has header, detail, and trailer as major groups of records. However, the
invoice may originate in an accounts receivable system that has shipment
header, shipment detail, order header, order detail, and a customer master
file. If a customer number is not usually sent, one may be built into the cross-
reference file via an EDI Sender ID.

Special attention should be paid to primary keys such as customer PO, PRO
number, claim number, invoice number, and so on. Secondary key data can
include customer department number, service provider ID, carrier code,
store number, and the like. Industry-wide codes make EDI implementation
easier and are suggested for EDI implementation if such usages are currently
being used minimally or not at all. Examples of valuable industry-wide
numbers are below:

• Dun and Bradstreet (DUNS)

• Standard Carrier Alpha Code (SCAC)
• Health Industry Number (HIN)
• Universal Product Code (UPC)
• National Drug Code (NDC)

Business Process Mapping: Defining to the EDI Software

After data analysis has been completed for EDI system implementation, the
resultant map is defined to the EDI translation software. Most comprehensive
EDI software systems let the EDI implementation coordinator define the map,
which is similar to a basic database definition.

After the information has been mapped, the EDI software stores that map.
When an appropriate transaction reaches the EDI translation section, the
mapped data is used to determine if and how to reformat the data.

Development of Custom EDI Interfaces

EDI interfaces occasionally require logic that is beyond the capabilities of the
most robust EDI mappers. The somewhat complex structure of the accounts
receivable databases might call for a selection or pre-processing program.
This program could build outbound header, detail, and trailer records for
example, a structure similar in nature to X12.

View logic to convert particular fields with suspicion. For example: Is it wise
to remove the DUNS prefix from a WALMART store number? Is it wise to

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extract the size of a garment from positions 7 through 12 of the
manufacturer’s “intelligent” product code?

Occasionally a field conversion may be necessary. Such conversion may be

done in a pre- or post-processing program or in a user exit callable by the
EDI program. An example is conversion of a date in century, month, year,
day format to X12’s CCYYMMDD format.

Also to be viewed with suspicion would be custom edits per trading partner.
For example, it is not the responsibility of an outbound EDI interface or
translator to avoid JCPenney freight charges. Rejection of such charges by
JCPenney quickly comes to the attention of the EDI coordinator, but should
be addressed further upstream. If a warehouse is incorrectly submitting
charges, the warehouse software must have additional edits made.

Barriers to implementation6

There are a few barriers to adopting electronic data interchange.

One of the most significant barriers is the accompanying business process

change. Existing business processes built around slow paper handling may
not be suited for EDI and would require changes to accommodate automated
processing of business documents. For example, a business may receive the
bulk of their goods by 1 or 2 day shipping and all of their invoices by mail.
The existing process may therefore assume that goods are typically received
before the invoice. With EDI, the invoice will typically be sent when the
goods ship and will therefore require a process that handles large numbers
of invoices whose corresponding goods have not yet been received.

Another significant barrier is the cost in time and money in the initial set-up.
The preliminary expenses and time that arise from the implementation,
customization and training can be costly and therefore may discourage some
businesses. The key is to determine what method of integration is right for
your company which will determine the cost of implementation. For a
business that only receives one P.O. per year from a client, fully integrated
EDI may not make economic sense. In this case, businesses may implement
inexpensive "rip and read" solutions or use outsourced EDI solutions
provided by EDI "Service Bureaus". For other businesses, the implementation
of an integrated EDI solution may be necessary as increases in trading
volumes brought on by EDI force them to re-implement their order
processing business processes.
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http://www.edigenie.com/index.php?option=com_content&view=article&id=15:barriers-to-
implementation&catid=30:information-on-edi&Itemid=893

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The key hindrance to a successful implementation of EDI is the perception
many businesses have of the nature of EDI. Many view EDI from the
technical perspective that EDI is a data format; it would be more accurate to
take the business view that EDI is a system for exchanging business
documents with external entities, and integrating the data from those
documents into the company's internal systems. Successful implementations
of EDI take into account the effect externally generated information will have
on their internal systems and validate the business information received. For
example, allowing a supplier to update a retailer's Accounts Payables system
without appropriate checks and balances would be a recipe for disaster.
Businesses new to the implementation of EDI should take pains to avoid such
pitfalls.

Increased efficiency and cost savings drive the adoption of EDI for most
trading partners. But even if a company would not choose to use EDI on their
own, pressures from larger trading partners (called hubs) often force smaller
trading partners to use EDI.

VALUE-ADDED NETWORKS (VANS)7

When firms first began using EDI, most communications of EDI documents
were directly between trading partners. Unfortunately, direct computer to-
computer communications requires that both firms (1) use similar
communication protocols, (2) have the same transmission speed, (3) have
phone lines available at the same time, and (4) have compatible computer
hardware. If these conditions are not met, then communication becomes
difficult if not impossible. A value-added network (VAN) can solve these
problems by providing an electronic mailbox service. By using a VAN, an EDI
sender need only learn to send and receive messages to/from one party: the
VAN. Since a VAN provides a very flexible computer interface, it can talk to
virtually any type of computer. This means that to do EDI with hundreds of
trading partners, an organization has to talk to only one party.

VANs also provide a secure interface between trading partners. Since trading
partners send EDI messages only through the VAN, there is no fear that a
trading partner may dip into sensitive information stored on the computer
system nor that a trading partner nay send a computer virus to the other
partners.

One of the most important recent developments in EDI is the use of the
Internet as the delivery network for EDI transactions. Since the Internet is so
widely available, even smaller firms have access to and familiarity with the
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EDI.html

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use of browsers. Some service providers are using browser technology to
permit trading partners to enter data into forms on web pages. The data can
then be translated into EDI format and transmitted to the receiving party.
While not strictly computer-to-computer, this process allows a receiver to
make greater use of EDI on their side of the transaction.

Service providers for EDI implementations

List of companies if you want to get their contact information please let me know I
will work on it.

http://www.covalentworks.com/companies-and-edi.asp

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