About EDI

What is EDI?

EDI (Electronic Data Interchange) - exchange of commercial and financial documents (e.g. orders, order response, despatch advice, receiving advice, invoice, correcting invoice, remittance advice, etc.) in the form of standard electronic messages, directly between the IT systems of business partners.

What steps should a company undertake to start EDI?

Before starting an EDI project a company should:

1. Estimate Return on Investment (ROI) of the project taking into consideration:

• Readiness of current and potential business partners to start an EDI project 
• Cost of paper document services (e.g. printing, packing, sending, storage)
• Investing in existing IT infrastructure modifications
• Resources to re-organize processes 
• Time frame for launching the project

During this stage it is also recommended to define the project's scope incl. message types that will be exchanged with business partners as well as the volume of documents and number of business partners. 

2. Indicate the team responsible for project implementation

Members should concentrate on project organization and implementation rather than dividing their time among other current duties. Much depends on the project's scope but the team should indicate representatives from Purchase, Sales, Accounting, Logistics and IT departments where one person from each department would be appointed as project owner and would be responsible for reporting to top management.  

3. Adjustment to GS1 codes

The company should put its master data in order. It is recommended to use EAN codes and agree with business partners on their uniqueness. As for localization the company is recommended to use a Global Localization Number - it serves to identify each location which must be explicitly and uniquely identified in the supply chain (more information>>)

4. IT solution choice

The company should decide whether to implement and maintain a project with its own resources or outsource it to an EDI provider. When making such a decision the following issues should be considered:

• Experience 
• Business model
• Resources
• Timeline

The company should define the communication protocol that will be used to exchange documents with business partners (e.g. AS2, FTP/VPN, sFTP, WebService). 

5. Pilot project

The company should choose a business partner to execute tests. It is important to agree on a test period during which all the data will be exchanged and verified with their paper counterparts. If all test results are positive then a paper document switch off' date should be defined (the shorter the period of time the better).

6. Project roll-out

After starting communication with a first business partner the company should roll-out the project to reach a defined volume of electronic documents within a shortest possible time period. 

What are the most popular electronic document formats? Where can example electronic document specifications be found?

First and foremost, the UN/EDIFACT format (United Nations/Electronic Data Interchange for Administration, Commerce, and Transport), followed by XML.

• Specifications of electronic documents used in Poland in XML format. Click here>>
• Specifications of electronic documents in EDIFACT format.  Click here>>

Who should adjust the data format in case partners use different systems?

The partners should agree on the data format and content of the message. One of the possibilities is to adjust own systems to the needs of each business partner but we recommend to outsource this to an EDI provider who has experience in the conversion of various formats and data validation.   

Is it possible to send e-invoices through EDI and resign from paper invoices?

Yes. In most European countries the law allows to replace paper invoices with electronic equivalents. Especially, within the EU where the Council Directive 2010/45/EU is in force and were most countries have adjusted their local legislation.