B2B EDI
B2B EDI is simply the use of Electronic Data Interchange for the purposes
of exchanging documents between trading companies. Using B2B
EDI a vendor might send exchange purchase orders and invoices with
its customers in place of paper methods. B2B EDI has been in
use in some form or other for a number of decades and has made the
exchange of transaction information significantly faster and more efficient
in a number of industries. Through B2B EDI small and large organizations
alike can benefit from improved efficiency, reduced costs and greater
throughput.
How B2B EDI Works
B2B EDI begins with the translation of data into a standardized form. This
translation is done by the EDI translator, a software tool that can
take inputed data (wether manually or through integration) and translated
to or from the EDI standard. The B2B EDI transfer takes place
after this translation is complete. While B2B EDI standards
govern how EDI should look they do not provide any standards for how
the should be exchanged, but there are two prevailing methods.
The first B2B EDI Exchange
The first B2B EDI exchange method involves dedicated networks known
as Value Added Networks (VANs); the second B2B EDI exchange method
involves sending data over the Internet. To enable B2B EDI over the
Internet many companies use FTP (File Transfer Protocol), FTPS (Secure
File Transfer Protocol) or AS2/AS3 (Applicability Statement 2 or 3).
Internet B2B EDI is by far the most inexpensive since VAN charges can
become onerous over time. Wal-Mart was the fist company to utilize
AS2 communications in a major manner for B2B EDI.
B2B EDI Standards
As mentioned earlier B2B EDI is governed by a number o standards that
control how EDI documents should be formatted. The ANSI X12 standard
is the most commonly accepted B2B EDI standard in the US, while the
UN/EDIFACT BN2B EDI standard is prevalent outside the United States. There
are other minor B2B EDI standards in use around the world including
the UK-based Tradcoms standard and the ODETTE B2B EDI standard that
is heavily used in the European automotive industry.
History of B2B EDI
B2BN EDI has been available in the US in one form or another since
the mid 1960’s. In 1968 a group of railroad companies concerned
with the quality of inter-company communication and the exchange of
transportation data created a consortium to find a solution. This organization
became known as the Transportation Data Coordinating Committee (TDDC). While
this was happening, other multi-national corporations such as General
Motors, Sears and K-Mart were investigating ways to improve inter-corporate
communication – especially concerning the movement of documents
such as purchase orders and invoices, by using proprietary electronic
systems with their larger trading partners. While these systems
were not true “B2B EDI”, they laid the groundwork for what
would eventually become the B2B EDI standard. By the mid 80’s,
K-Mart was the largest user of such an “B2B EDI” system,
with well over 500 companies using their EPOS electronic system. |
