EDI is primarily a standardised automatism for electronic document management. However, this automatism is realised not within a network protocol, but above that, at application level. EDI is in fact more of a language than a network protocol for the applications of the application level. This language refers to data exchange related to documents that is initiated by business management applications (such as issuing orders and invoices, generating and recording delivery documents, managing production and storage documents, etc.) As a result EDI is basically independent from infocommunication standards as it runs on those as the standard language for document management. EDI can be used both via dial-up phone lines and the most cutting-edge internet protocols.
The standard of EDI bears more similarity to the grammar of an actual language than to the standard of a technological protocol. EDI standardisation is multi-level and recursive (its levels are embedded within each other). Similarly to grammatical rules, the “information” consists of recursive elements from various levels, such as letter – code, word – data element, sentence part - complex data element, sentence – segment, information – message, information exchange (communication) - EDI scenario. The information is the content of a document, represented by a single message. The content of these documents can be referential (e.g. the content of an invoice referring to those of the order and the delivery note). Document exchange constitutes a “business management logic” between business management systems, whose messages make up a so-called Message Scenario, which represents the documents exchanged in the electronic business management connection between the two parties. Recursions can be repeated several times or form cycles at the levels of embedding. A segment, for example, can be repeated several times at a given position of the message.
Another important charactertistic of the EDI standard is that standards are created for the structure formed by all data elements (super-set) in the document. In practice, we use only a part of all possible data (sub set) in a document, but its “position” is “defined” by the standard of the super-set structure. The data elements which are omitted do not alter the standard structure of the message. In the actual process of standardisation those involved in the project reviewed which data could possibly occur in a document and at which levels of message organisation. This review resulted in a data super-set, whose data elements could be organised into a previously standardised recursive structure. Actual EDI connections generally use a partial set of the data super-set, this is the sub-set of message data. However, the position of sub-set data is pre-defined in the standard of the message structure. This way, message structures do not need to be reconciled (unlike with schemes in the case of XML), only the data content of the sub-set. The documents relating to this data reconciliation are also standardised, and constitute the so-called Message Implementation Guidelines (MIGs). Manufacturers or buyers use this document to inform their suppliers of the data they wish to use in EDI in connection with a specific message document.
Within a given EDI sphere (the supply chain of a large buyer, for example) electronic business management systems belong to different companies and organisations. Naturally, these companies use different business management systems, which employ different file and document formats. The EDI converter brings these different file and document formats to a “common denominator” according to the EDI standard described above. The process involved is the EDI message, which may use various EDI standards (e.g. EDIFACT, VDA, X.12). A given range of EDI users normally uses a common EDI standard, but even if this is not the case, there is no problem, as the EDI converter can “translate” between standards. This way, different business management systems distribute the data content of the documents exchanged in a form they can understand, which enables their automatic sending, receipt, and processing. This automaticity is the essence of EDI. EDI integrates the different business management systems of different organisations through its electronic message management automatisms.
General experience shows that the sales of suppliers increase with the implementation of EDI. This is due to the fact that thanks to these automatisms customers can communicate more efficiently with suppliers who use EDI, which makes is worthwhile for them to work with the latter. On the other side of this equation - particularly on the long run in manufacturing systems - no one can become a supplier without EDI. EDI is becoming an essential requirement for suppliers.
Overall, the answer to the question: “WHAT IS EDI?” is rather complex and cannot be given in the form of a “simple technological” answer. The possible answer instead describes a positive outcome that the use of EDI can lead to:
EDI is a standard language for communication that describes documents and automates document exchange between business management systems in a standard manner. This automation enhances the efficiency of cooperation between organisations that use different business management systems, which in turn increases commerce between the buyer and the supplier and improves the position of the supplier. This is why it is worth using EDI. Those who don’t use EDI miss out on the advantages that result from the efficiency of cooperative automatisms. Large buyers will have problems with sales, while on the long run suppliers will be forced out from the sphere of suppliers.