IQMS Blog for Manufacturing ERP Expertise

Shedding Light on Electronic Data Interchange (EDI)

Posted by John Asi on Wed, Mar 10, 2010 @ 08:47 AM

Electronic Data Interchange.  The words by themselves are common and simple, but once you put them together, they can be intimidating.  Let's cover a very brief history regarding EDI and shed some light on how it came into existence.

The concept of EDI has been around for quite a long time (in computer years that is).  In the mid-1960s many companies jumped on the success of the second generation of computer systems coming from industry giants such as IBM and DEC.  These computers could correlate and manipulate amazing amounts of data compared to the manual process of retrieving information from filing cabinets and people's memories and the prospects of putting these machines to work in corporate environments opened up a new era for business.  With a cost of up to $1 million, over 100,000 of these systems were put into place globally.  It was soon realized that in order to be competitive in the new market that was emerging, it would be necessary to minimize the errors and inefficiencies created by the large volume of paperwork being managed.  Primarily driven by the transportation industry, the Transport Data Coordinating Committee was formed in 1968 to create a standardized protocol for data translation and exchange.  While not the first implementation of an EDI protocol, it was the work done by the TDCC to standardize the documents being used by the transport industry that eventually provided the basis for the establishment of the ANSI ASC X12 body in 1979.  This body has created the 300+ transactions that are part of the X12 standard.  In addition, in 1987 the United Nations formalized the UN/EDIFACT standard with the intent to support standardization at a global level.  These organizations continue to develop and modernize the standards as technology progresses.

EDI has been around for quite a few years and does not show any signs of weakening.  The use of the standard has found a strong following from large corporations to sophisticated family businesses.  While at first the standard can be daunting with the huge amount of documents that are supported, an extensive amount of information and support can be found regarding the effective use and implementation of EDI transactions.  Application suites such as EnterpriseIQ from IQMS can simplify the process of implementing EDI.  Through the integrated EDI module, business transactions can be read and converted into usable data within the system quickly, with fewer errors, and without human interaction.  These benefits are the direct result of the vision of early pioneers in the industry and do show that a collaboration of minds can make a lasting difference in the way we do business.

Tags: IQMS, ERP, manufacturing ERP software, eCommerce/EDI, Automotive ERP