A Complete Guide to EDI Transactions per Industry
An ideal business environment consists of smooth client relationships, reduced errors in purchase orders and confirmation receipts, faster document-processing time, and more. Enter electronic data interchange (EDI) — a digital approach companies use to send and receive information with other organizations.
EDI has revolutionized the way the global supply chain works, replacing stacks of papers and couriers with automated software and seamless integration.
And that’s not it. Every industry has its own set of EDI transaction types and corresponding codes, each with a specific function. Our dynamic platform, where buyers and suppliers exchange business documents that leverage EDI standards to automate and streamline B2B data trading, supports many of these codes.
Here’s everything you need to know about the basics of EDI transactions, common and industry-specific codes, and what it takes to implement EDI technology. It’s time to automate business processes and save time and money.
What are EDI transactions?
An EDI transaction is a paperless communication between two companies — also called trading partners. Instead of sending a courier with a stack of documents from one location to another, trading partners use a fast, efficient exchange to send business information.
Businesses make EDI transactions using agreed-upon communication standards. For example, the American National Standards Institute (ANSI) created the ASC X12, or just X12, to provide standards for various industries. Presently, there are more than 300 X12 EDI standards that govern transactions across various sectors, including insurance, transportation, and retail.
Each standardized EDI type or set has its own three-digit identifying code. While some EDI transaction sets are unique to a specific industry, some are “crossovers” shared across related sections. For example, the transportation, logistics, and supply chain industries share identical EDI codes.
EDI transaction set components
EDI documents are called transaction sets because they include data components that adhere to a particular order and format. This makes it easy for the technology to scan and find information, such as the buyer’s name, ordered products, and each item’s cost.
And each transaction set includes three component types:
- Data elements: These are individual information pieces, such as company name and item quantity, essential to each document. Examine EDI standards to see the definition for each set’s data elements and parameters, such as minimum and maximum allowable length and associated code values (e.g., currency type).
- Segments: Related data elements are grouped into segments labeled with a segment ID to identify the data type. And transaction sets often have mandatory and nested/conditional segments that companies may or may not require depending on the information included.
- Sets/Envelopes: These electronic folders store completed transaction sets for transmission. All EDI envelopes include a header segment that contains a control number to identify the envelope and a trailer segment that signifies the end of the envelope’s contents. There are three types of envelopes:
- Message envelopes to hold individual transaction sets
- Group envelopes to hold groups of similar transaction sets, such as a purchase order batch
- Interchange envelopes to hold all group envelopes involved in an exchange
What EDI transactions does your business need?
Before jumping to the specifics of building and sending EDI transactions, it’s important to know your business and trading partners’ needs. It’s also vital to understand that information can change based on the organizations involved. For instance, instructions and code lists on a retailer’s online vendor portal could be outdated or not applicable to your business.
To ensure you use the right process, contact every potential partner’s EDI team. Ask which transaction types you need and compare the provided list to your documentation. If you see any mismatches, you’re likely not ready to move forward and begin the implementation process.
And if you’ve never worked with EDI, you may feel overwhelmed by the initial steps. That’s because, besides gathering and reviewing information from your trading partners, you’ll need to learn the following before pressing forward:
- Which communication channel(s) (SFTP, FTP, VAN, AS2) your trading partner prefers
- How to test transactions
- How to sign off on passed tests
- Who to contact if there’s an issue and you need to create a support ticket
- How/where to upload your product catalog
- How to know you’re okay to finally go live
Managing all the moving parts integral to a successful EDI integration can be difficult, but Orderful can help you ask the right questions and stay compliant from start to finish.
5 common types of EDI transactions
Many companies, regardless of their size, use EDI codes to automate and simplify transactions. Here are five common codes to denote EDI transactions across multiple industries:
- EDI 810 –– Invoice: This is a payment request for services rendered by the provider or products acquired by the buyer.
- EDI 820 –– Payment order/remittance advice: The buyer sends this in response to an invoice (EDI 810), confirming they understand and agree to the detailed payment instructions.
- EDI 850 –– Purchase order: This is often the first step in a transaction, indicating in detail the products or services a buyer wishes to purchase from a vendor/supplier.
- EDI 855 –– Purchase order acknowledgment: This is an order confirmation receipt indicating that the order workflow’s next step is underway.
- EDI 856 –– Ship notice/manifest: This notifies buyers that a shipment is en route. It often lists the shipment’s contents and arrival time.
EDI transaction codes per industry
Organizations across almost every industry use EDI codes to do business. Here are some of the most important EDI codes associated with a specific industry:
- EDI 204: Motor Carrier Package Status
- EDI 210: Motor Carrier Freight Details and Invoice
- EDI 211: Motor Carrier Bill of Lading
- EDI 212: Motor Carrier Delivery Trailer Manifest
- EDI 214: Transportation Carrier Shipment Status Message
- EDI 990: Response to a Load Tender
- EDI 816: Organizational Relationships
- EDI 846: Inventory Inquiry/Advice
- EDI 875: Grocery Products Purchase Order
- EDI 876: Grocery Products Purchase Order Change
- EDI 880: Grocery Products Invoice
- EDI 940: Warehouse Shipping Order
- EDI 943: Warehouse Stock Transfer Shipping Advice
- EDI 944: Warehouse Stock Transfer Receipt Advice
- EDI 945: Warehouse Shipping Advice
- EDI 830: Planning Schedule with Release Capability
- EDI 832: Price/Sales Catalog
- EDI 844: Product Transfer Account Adjustment
- EDI 845: Price Authorization Acknowledgment/Status
- EDI 847: Material Claim
- EDI 866: Production Sequence
Healthcare and insurance
- EDI 100: Insurance Plan Description
- EDI 186: Insurance Underwriting Requirements Reporting
- EDI 272: Property and Casualty Loss Notification
- EDI 274: Health Care Provider Information
- EDI 362: Cargo Insurance Advice of Shipment
- EDI 837: Health Care Claim
Eliminate complexity and move faster with Orderful
So now that you know the importance of EDI for your business’ smooth operations, it’s time to leverage it.
Orderful helps you streamline EDI adoption by gathering your trade partners’ guidelines and digitizing them onto our platform. Then, our API validates all inbound and outbound EDI transactions –– we double-check every communication or transmission as it happens. This way, you can test transactions against your trading partners’ requirements to identify, catch, and correct errors before they have a chance to derail productivity. This allows you to go live with new trading partners in days, not months.
For more information about EDI solutions, speak to an expert today. We’re always happy to walk you through the process, demonstrate our innovative Cloud EDI Platform, and discuss how Orderful can assist with your specific needs.
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