What Is EDI?

EDI, also known as Electronic Data Interchange, is the computer-to-computer exchange of business documents in a standard format. Typical EDI documents (or transactions) for retail are the purchase order, the invoice, and the advance ship notice. In today’s environment, most transactions are delivered via a value-added network (VAN). The VANs commonly used in retail are nationwide networks such as GE, IBM Advantis, with which GXS is affiliated, and Sterling. By using a VAN, a retailer can issue an EDI purchase order, place it in a mailbox, and let the VAN be responsible for holding and delivering the document.

Learn About EDI Basics

​​If the vendor has a communication problem picking up the purchase order, the VAN is notified of the re-delivery of the order. EDI documents are all sequenced and interchanges numbered so that there should be no loss of documents even with a communication problem. Businesses that exchange EDI documents are termed trading partners. Each time a trading partner transmits a document, the receiver sends back a Functional Acknowledgment (997 transactions), which indicates that the interchange has been received. Here is a typical electronic commerce workflow: The vendor assigns Universal Product Codes (U.P.C.s). A U.P.C. uniquely identifies the vendor’s product according to style, size, and color.

The U.P.C. is on the barcode tag that is scanned at the point of sale. Once the codes are assigned, the vendor uses an EDI 832 Price Sales Catalog transaction to load an electronic catalog at INOVIS or GE. When the retailer selects a style to order from the vendor, the retailer’s computer system accesses the electronic catalog to pull the UPC into their system with no re-keying of codes or information.​​​​​​ The vendor also transmits an EDI 810 Invoice. Many retailers do not process paper invoices, using EDI format exclusively.

After the merchandise is received and the invoice is processed, payment can be scheduled automatically and can be issued via check or electronic funds transfer to the vendor’s bank. The EDI 820 Remittance Advice transaction gives payment details for each paid invoice. Other EDI documents used in retail include 816 Organizational Relationships, used to convey store address information. 852 Product Activity: – provides the point of sale information. It can include quantity on order, quantity on hand, quantity sold, and dollar values of these amounts.

864 Message Text: free-form text that can be used like email for general information, sometimes to indicate problems with EDI transmissions, and sometimes for store addresses. 860 Purchase Order Change: used to make changes in a purchase order. Because there are many practical implementation issues, some retailers use this transaction only for cancellations.

The 860 is also used to extend delivery dates. The biggest implementation challenge occurs when a retailer issues a change and the shipment has already been sent to the vendor.​​​​​​

The retailer issues an EDI 850 Purchase Order transaction. The order is sent to the vendor’s mailbox and is typically picked up by the vendor the next day. If the vendor’s systems are integrated, the charge is automatically entered into the computer without data entry. Many retailers are now asking for the retail price of their tickets. If the retail price is sent on the order, this information can feed the ticketing programs at the vendor site.

The vendor is often asked for pre-tickets and to place apparel on approved hangers as part of a Floor Ready Merchandise program. The floor-ready merchandise goes straight to the selling floor when it arrives at the store. When the vendor is ready to ship the merchandise, GS1 UCC-128 labels are printed on the cartons, and the EDI 856 Ship Notice is created and transmitted to the retailer. The GS1 UCC-128 label contains a barcode that uniquely identifies the carton. The ship notice gives the retailer advance information as to the exact quantities being shipped and the anticipated arrival time.

This information is used to schedule receiving at the distribution center and to update on-order systems. The ship notice contains bill of lading information (bill of lading number, carrier, weight), purchase order information, and detailed carton contents. When the carton arrives at the retail distribution center, it is scanned, and the ship notice information is pulled up. From the shipping notice, the system knows what is in the carton and which store is the destination. The carton can be routed on conveyor belts without human intervention.