How does EDI Work?

Purchase Ordering Example
1. The buyer enters order information into the production database, which generates a purchase order on the computer. The order information is then channeled through a number of interface programs.
2. The interface software programs perform edits and checks on the document and direct the order data into predefined EDI intermediate files.
3. The EDI intermediate files contain information in a form that the EDI translation software can read.
4. The translation software is a set of programs that translates the interface file data into a document formatted according to EDI standards that the supplier's computer can recognize.
5. The electronic document now consists of a file that contains the order data in a predefined, recognizable order.
6. The communications software adds appropriate communications protocols to the EDI document in preparation for transmission via telephone lines.
7. Using a modem and telephone line, the buyer transmits the EDI purchase order to a VAN (Value added network). Think of this as a mailbox.
8. The communications software on the supplier's computer picks up the document from the VAN, interprets and/or converts the communications protocols to open the electronic document.
9. The purchase order is now in a standard, recognizable format in a file and is available to the supplier's computer.
10. The supplier's translation software interprets the documents from the EDI format and places the order information in EDI intermediate file(s).
11. The EDI intermediate files contain the translated purchase order information.
12. The interface programs perform edits and checks before the data is integrated with the supplier's production database.
13. The application software on the supplier's computer can now process the buyer's order.