What is an EDI File? EDI File Formats and Functions Guide

An EDI file consists of several components that work together to communicate key information:

Segments: Segments are groups of related data elements. For instance, in an EDI 850 (Purchase Order), one segment might detail information about the buyer, while another specifies the items being ordered.

Data Elements: These are individual pieces of information, such as item codes, quantities, or prices. Each element is coded to ensure uniformity and clarity.

Loops: Loops are repeating groups of segments, like multiple product details in a single purchase order.

Delimiters: Special characters (e.g., *, |, ~) separate the data within the file, helping to organize segments and elements clearly.

Most Common EDI Formats

EDI files come in various formats, depending on the industry or geographic region. Below are some widely used formats:

• ANSI X12: Often referred to simply as X12, is a widely adopted EDI (Electronic Data Interchange) standard in North America. Developed by the Accredited Standards Committee X12 (ASC X12) under the American National Standards Institute (ANSI), it provides standardized formats for electronic business communication across various industries, including retail, healthcare, transportation, and finance. Examples: EDI 850 (Purchase Order), EDI 810 (Invoice).
• EDIFACT: EDIFACT (Electronic Data Interchange for Administration, Commerce, and Transport) is a globally recognized standard for EDI. Developed under the guidance of the United Nations (UN/CEFACT), EDIFACT is designed to facilitate international trade by providing a universal structure for electronic business transactions. Examples: ORDERS (Purchase Order), INVOIC (Invoice).
• XML: EDI XML combines the robust features of traditional EDI with the flexibility and accessibility of XML (Extensible Markup Language). By leveraging XML for EDI, businesses can achieve easier integration with web-based systems and modern software solutions while maintaining structured, standardized data exchange. Examples: cXML used for e-commerce transactions.
• TRADACOMS: TRADACOMS (Trading Data Communications Standard) is an EDI standard widely used in the United Kingdom, particularly in the retail and supply chain sectors. Introduced in the early 1980s by the UK Article Numbering Association (now GS1 UK), TRADACOMS is one of the earliest EDI standards, offering a structured and consistent format for business transactions. Examples: ORDERS (Purchase Order), INVFIL (Invoice).
• HL7: HL7 (Health Level Seven) is a globally recognized set of standards for the secure exchange, integration, sharing, and retrieval of clinical and administrative healthcare data. Established by Health Level Seven International, HL7 enables interoperability between diverse healthcare systems, facilitating seamless communication among providers, payers, and other stakeholders. Examples: Patient admission or discharge records.

Reading an EDI File: A Simplified Example

Here’s an example of an EDI 850 (Purchase Order):

ISA*00* *00* *ZZ*SENDER ID *ZZ*RECEIVER ID

*211216*1234*U*00401*000000001*0*P*>~

GS*PO*SENDER ID*RECEIVER

ID*20241216*1234*1*X*004010~

ST*850*0001~

BEG*00*SA*12345**20241216~

REF*DP*001~

N1*ST*BUYER NAME~

PO1*1*10*EA*100.00*NE*BP*123456~

SE*6*0001~

GE*1*1~

IEA*1*000000001~

Each line represents a segment, and the * and ~ characters serve as delimiters to organize data.

How EDI file formats work

EDI standards ensure that both the sender and receiver can understand and process data correctly by adhering to structured rules. These standards are the backbone of electronic communication between businesses. Here’s a more detailed explanation of the principles and components of EDI messages:

Syntax: Syntax rules govern how the data is formatted. These rules define what characters are allowed and the correct order of these elements. This ensures that when an EDI document is transmitted, it follows a recognized structure, allowing receiving systems to decode the message correctly. Think of it like the grammar rules of a language.

Codes: Codes represent common information such as currency (USD, EUR), country names (USA, GER), or date formats (DDMMYYYY). By using standardized codes, businesses avoid ambiguity. For example, using “USD” ensures that the receiver understands the currency being referred to without needing to spell it out in full.

Message Designs: This defines how specific types of messages (like an invoice, purchase order, or shipping notice) should be structured and which rules apply to them. A purchase order, for instance, may have a particular design that includes sections for product details, quantities, and pricing, following the prescribed syntax rules.

Identification Values: Identification values are used to mark and locate specific data within an EDI file. These values can be based on the position of the data in the message or by using separators. For example, a separator like a tilde (~) might mark the end of a segment, allowing the receiver’s system to understand where one piece of data ends and another begins.

Choosing the Right EDI Format

To select the right format, consider:

• Industry Standards: Ensure compatibility with regulatory requirements in your sector.
• Partner Requirements: Align with the preferences of your trading partners.
• System Compatibility: Verify that your internal systems and EDI software can handle the required format.

Advantages of Using EDI Formats

Using EDI formats brings a range of advantages that can transform how businesses communicate and operate. One of the most significant benefits is the speed it offers—transactions that once took days or weeks to process through manual methods are now completed in seconds, enabling businesses to respond quickly to market demands. EDI also improves accuracy by minimizing the need for manual data entry, reducing errors like duplicate or missing information. This not only saves time but also builds trust with trading partners. Moreover, EDI can significantly cut costs by eliminating paper-based processes and reducing administrative overhead. It also ensures compliance with industry standards and regulations, making it easier to do business with partners who require specific formats, such as in retail or healthcare. Overall, EDI streamlines operations, fosters stronger relationships with trading partners, and helps businesses stay competitive in a fast-paced, digital world.

EDI files are integral to modern business communication. By adopting standardized formats, companies can streamline their operations, reduce errors, and meet industry requirements. Whether you’re handling retail orders or healthcare data, understanding EDI basics ensures successful digital collaboration with your partners.

To learn more about how Infocon Systems can take care of your EDI needs for trading partners, please don’t hesitate to give us a call at +1 888-339-0722 or email sales@infoconn.com. We’d love to hear from you.