LOGISTICS

ANSI X12
110 – Air freight details and invoice
210 – Motor carrier freight details and invoice
410 – Rail carrier freight details and invoice
204 – Motor carrier load tender
214 – ransportation carrier shipment status message
856 – Ship notice/manifest
990 – Response to a load tender

GROCERIES

ANSI X12

810 – Invoice
880 – Grocery Products Invoice
820 – Payment Order / Remittance Advice
850 – Purchase Order
875 – Grocery Products Purchase Order
855 – Purchase Order Acknowledgement

HEALTH CARE SUPPLY

ANSI X12

810 – Invoice
850 – Purchase Order
855 – Purchase Order Acknowledgement
865 – Purchase Order Acknowledgement / Request
856 – Advanced Ship Notice / Manifest
860 – Purchase Order Change Request

HEALTH CARE INSURANCE INDUSTRY

ANSI X12
270 – Eligibility, Coverage or Benefit Inquiry
271 – Eligibility, Coverage or Benefit Information
276 – Health Care Claim Status Request
277 – Health Care Claim Status Notification
278 – Health Care Services Review – Request for Review
278 – Health Care Services Review – Response to Request for Review
820 – Payment Order / Remittance Advice
834 – Benefit Enrollment and Maintenance
835 – Health Care Claim Payment / Advice
837 – Health Care Claim: Professional
837 – Health Care Claim: Dental
837 – Health Care Claim: Institutional

Please check back later for more industries to come !!

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Unitech EDI explains what the latest EDI news means to you.

You may have recently received this email from Amazon announcing the opening of new DCs:

Amazon.com Fulfillment Center PHL3 going live in October 2010

Find out more about it at http://compliance.unitechedi.com/2010/09/15/amazoncom-fulfillment-center-going-live-in-october-2010/

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Oliver Schmid

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How does EDI reduce cost and increase Profits?

Shared Forecast		Inventory Turns Increase		Lowered Costs!
Transaction Automation		Reduce Labor		Lowered Costs!
Automated Systems Integration		Fewer errors, rework, less paper		Lowered Costs!
Electronic Payments (EFT)		Increased Cash-Flow		Lowered Costs!
Shared Sales & Inventory Data		Improved Product Availability		Increased Sales!
Integration and automated data transfer		Improved Access to Quality Information		Increased Sales!
Transaction Automation		People add value		Increased Sales!

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The economic downturn is forcing organizations to review their current IT business processes.
Increasingly Third Party Outsourcing (TPO) providers are reporting of being approached in regards to outsource EDI operations.

Initially the decision on doing EDI is an easy one. It is considered of making a one-time upfront investment in hardware, software and development and then pocket the gains from decreased transaction costand over a short time the initial investment cost have been recovered.

This is the time, when EDI moves from being a profit center, to being a cost center and companies start looking how they could save even more money. At this point outsourcing EDI may become a consideration.

Outsourcing EDI comes in many varieties and flavors. Finding and implementing the right solution depends of the readiness state of an organization. A readiness state is defined as followed:

• Is the business just beginning EDI operations?
• Does the business perform already EDI is one or more trading partners?

Under the first scenario, a business maybe forced into EDI by one or more of their trading partners. It could also mean that EDI just may become a corporate necessity.

The first scenario is easy to evaluate, since no established EDI processes and operational requirements have to be considered.

The second scenario becomes more complex, since the EDI department of a business may fall into one of three categories.

• A one-man shop, handling a minimal amount of transactions, with occasional mapping changes or version upgrades.  This person spends most of his or her time waiting for new EDI activities.
• A one- or two-man department with high transaction volumes that is overwhelmed with change requests, constant production problems, and setting up (Certifying) new trading partners.
• Last but no least there is the solid and established EDI shop with a staff of 3 or more handling and monitoring the EDI production around the clock, as well as setting up new trading partners and implementing change requests.

In all three of these scenarios, the inefficiencies are obvious.

In the first, the company is allocating resources towards staff that goes underutilized.

The second is worse, as business opportunities are not being advanced, and revenue is lost, due to understaffing.

Finally, the last example, where despite its efficient appearance, the company has dedicated a huge annual budget to develop proficiency in a discipline that it may have a difficult time turning into a profit center.

All three scenarios have the two main challenges.

• Efficient use of staff and core competencies
• Investment in hardware and software, including maintenance and error handling.

Other issues that must be considered in hosting and managing EDI business operations include:

• Investment required to maintain the Infrastructure
• Down-time management
• Environmental stability
• System redundancy
• Backup procedures and disaster recovery
• Security
• Acquiring, training and retaining staff

All of these factors play a role in a company’s decision of the direction it takes for its EDI operations.

Many businesses are deciding to outsource EDI in order to reduce staff and its associated cost, since a cost-benefit-analysis reveals in most cases that the overall employment cost in one year is higher than the cost of outsourcing the EDI operations partially or completely.

Employment costs are:

• Employee acquisition
• Training
• Salaries/Wages/Bonuses
• Employee retention

A large majority of any EDI budget is appropriated to maintenance.

Maintenance includes tasks, such as:

• Production monitoring
• Problem resolution
• Trading Partner interaction
• Version changes
• Map changes
• Map additions
• Trading Partner additions
• Backups
• Security
• Handling of occasional system issues

Outsourcing EDI operations enables you to handle these issues in a more cost-efficient manner. Depending on transaction volume and the number of trading partners, it makes sense to negotiate either a fixed cost model or a model based on time and material.

A further issue that can have a significant impact on a business is trading partner satisfaction. The most negative impact on trading partner satisfaction is within the area of error handling and timely response to any occurring issues. It is imperative to catch and resolve any errors early.

Untimely error resolution can lead to:

• Lost revenue
• Damaged trading partner relationships

Most organizations batch process their EDI transactions, which usually happens at night and any occurring errors may not be noticed until the next morning. Working with an inhouse solution may even result in an error not being detected until later in the day or week, due to internal staffing and processing limitations.

By using a third party EDI outsourcing provider, service level agreements (SLA) can be established that eliminate crucial error resolution time. This could even become a bigger issue for organizations operating globally and within different time zones.

EDI executed the right way has many intangible benefits.

The Top 10 Benefits are:

• Improved Customer Service
• Better Trading Partner Relationship
• Creates a competitive advantage
• Lower per-transaction cost
• Reduces/eliminates manual handling of data, errors and rework
• Enhances data accuracy
• Automates routine transactions
• Shortens transaction processing cycles
• Improves productivity and business controls
• Transfers information faster and more accurately

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EDI eliminates the need for sending paper documents through traditional means — including mail, faxes or e-mail — it is a major contributor to creating a “paperless” office environment.

EDI messages adhere to a set of rules and regulations governing the flow of electronic data, known as “protocols.” The use of standardized data formats allows computers to exchange various business documents without companies needing to customize their hardware or software system.

EDI can be formally defined as ‘The transfer of structured data, by agreed message standards, from one computer system to another without human intervention’.

EDI standards were designed to be independent of communication and software technologies. EDI can be transmitted using any methodology agreed to by the sender and recipient.

There are four major sets of EDI standards:

• The UN-recommended UN/EDIFACT is the only international standard and is predominant outside of North America.
• The US standard ANSI ASC X12 (X12) is predominant in North America.
• The TRADACOMS standard developed by the ANA (Article Numbering Association) is predominant in the UK retail industry.
• The ODETTE standard used within the European automotive industry

Today, EDI is used by a large number of businesses. EDI has a number of benefits. Cost is one of the main benefits. Processing one paper based order usually costs between US$ 50.00 and US$80.00, depending on the complexity of the order, where as processing the same EDI based order will cost less than $2.00.

Another benefit is time. A paper order can take up to 2 weeks from the time it is issued by the purchasing entity, send to the vendor and entered into the vendors system and shipped. The same order can now being processed in less than a day. This in return will allow to keep more efficient stock levels, better use of warehouse space which in return means reduced warehousing cost and improved cash flow.

EDI BENEFITS

► Speed

► Accuracy

► Simplicity

► Security

► Faster sell-buy cycle time

► Improved Cash Flow

► Reduced Order Lead Time

► Reduced Inventories

► Ability to have Just-In-Time (JIT) Production Runs

► Improved Customer – Vendor relationships

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Unfortunately EDI has one big drawback. As mentioned, EDI is usually first implemented at larger organizations and then pushed down to their vendor. These larger organizations developed their own standard within the already existing ANSI X12 (mainly deployed US/Canada) or EDIFACT (mainly deployed in Europe and Asia). This standard is then passed on to their trading partners. These trading partners or vendors can be larger organizations that have the resources to maintain their own EDI department, but they can also be smaller organizations that do not have the resources available to have their own EDI department or people.

Now why would I need my own EDI people you may ask. The answer here to is: You have a number of customers of which only a handful may require from you to be EDI compliant. These are usually organizations that deal with a large number of vendors. The way it usually works is that these organizations dictate the trading standard, meaning they tell you what your transaction sets you trade with them has to look like. The most common transactions organizations usually start out to trade are purchase orders (ANSI X12 – 850 / EDIFACT – ORDERS)  and invoices (ANSI X12 – 810 / EDIFACT – INVOIC), since these documents lay the base for all other subsequent transactions and are the easiest to setup.

The problem now is, that you have only a small number of customers that do EDI, but usually every single one of them has a standard developed that fits their ERP Solution and they force you now to adhere to this standard even if it does not fit your system. Your organization needs somebody to develop maps that translates your customers standard into a file format that your system can understand and vice versa any document coming from your system will have to be translated/mapped into a file/transaction that can be read by your customers ERP Solutions.

This process is called “Certification”. It means that your organization needs to get certified by your trading partner as EDI-compliant. EDI compliant means that your trading partner certifies that you were able to import  the transactions (e.g. purchase orders) you received into your system in such a way that you were able to produce an order in your system and then fulfill the order and send back an invoice, which was correct in regards and relation to the original sent purchase order and  that it  could be read and imported into your trading partner’s system without any issue.

Developing these maps and perform testing and certification can be a fairly lengthy and expensive process if you have to do it on you own. The reasons here for are that you will have to invest into you own EDI Mapping Software Solution (Translator), have people who not only are familiar with your Translator but also understand the various EDI Transaction sets (orders, invoices, advanced ship notices, order confirmations, change orders, etc.).  Remember maps have to be developed for every single one of your trading partners and be tested.

You may think that should not be to difficult. Let us just take an order. An order that is  entered manually from a printed form has various information in various places. Take now these manual orders from all your trading partners and compare them side by side. Non of them looks the same. None of them has the same information in the same place on the purchase order form. One PO may require you to ship the product on a certain date. Another PO asks for the product to arrive at the customers location on a certain date. Others give you shipping windows, meaning a product can arrive as early as … but not later then … .

When these orders are now sent in a file the same happens. All the relevant information is in different places within the file.  A human eye can easily detect the various information that is required to process the form. A software unfortunately has to be programmed and told where the information is located within the file and then mapped/pointed into a new file format that fits your system.  This must be done for each trading partner and each single document type for each trading partner.

On top of this, there are various communication methods in which organizations want to send and receive their transactions. Some utilize a Value Added Network or VAN. A VAN is more or less an electronic mailbox in which transactions are stored until they are picked up by the respective party. Then others want to trade directly with you using AS2, Secure FTP (S-FTP) or Secure HTTP (S-HTTP). Some want to send you the transaction in its native ANSI X12 or EDIFACT Form others use their own file format using XML. The variations are almost endless.

For an organization that deals only with a small number of trading partners it may be to expensive now to invest and acquire a translator and have their own resources to develop and maintain transaction sets and on top of it monitor the daily transaction volume.

This is when outsourcing makes sense. Outsourcing providers come in various flavors. There are the ones that require you to invest in your own mapping solution and they then develop the maps. You invest in hardware, software and monitoring resources. Then there are the ones that provide you with the whole service; meaning  they not only have the software and the resources to develop the translation maps, but they also monitor the transaction and are your first line contact for all your trading partners EDI issues and deal as intermediary between you and your trading partner for any questions or issues that may arise.

If you have a large number of trading partners and a high traffic volume it may make sense for you to invest in your own EDI resources (hardware, software, staff, knowledge, etc.)

Often organizations feel overwhelmed with the task evaluating what is the best solution for them and finding the right software and or outsourced EDI Service Partner.

Here is where you may want to talk to me. With more than 15 years of EDI experience, I have dealt or worked  with many different possible solutions. Whether it is doing everything inhouse, partially outsourcing EDI or completely outsource the whole solution, I have spend many ours and days, evaluating various EDI Translators. I have talked to and dealt with various solution partners.

I not only now what to look out for and what questions to ask, but I also have the experience to evaluate with you what may be the right EDI Solution for you, this includes providing a cost/benefit analysis for your business.

Feel free to contact me for a free 1 hour consultation by calling me at 770-776-6182 or sending me an email to oliver.schmid@4954itc.com

(c) Oliver Schmid

ANSI-X12

Transaction Description

Oliver Schmid

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