• For small EDI teams with no or moderate EDI knowledge, first and foremost it is important to choose the right EDI partner based on your requirements.

• End-to-End Testing is a must before going live.

• Continuous monitoring & optimization is key to a successful EDI implementation

Step 1: Define Your EDI Requirements

Once you have been mandated by your new trading partners to do EDI (Electronic Data Interchange), you start your journey of learning about EDI. If you have a tech team, you reach out to them and ask if anyone knows how to do EDI or know someone who knows about EDI. You and your team will do your own research online and among peers or external tech consultants. You need to understand which EDI providers can help you, different types of EDI, whether to choose a cloud-based or an on-premise EDI solution, and how EDI will integrate into your existing systems like your accounting or ERP or a warehouse management software. As you do your research, simultaneously pen down all your business requirements like:

a. Determine what you want to achieve (e.g., reducing manual data entry, improving order-to-cash cycle, ensuring compliance).

b. How do you plan on growing from here? How many trading partners you think you will do business with in next 6 months or a year and so on?

c.1 Make a list of all trading partners that require EDI transactions.

c.2 Contact each trading partner and ask:

c.3 What EDI documents they require (e.g., 850 Purchase Orders, 810 Invoices, 856 ASNs)?

c.4 What EDI standards they follow (e.g., X12, EDIFACT, XML, CSV)?

c.5 What communication protocols they support (AS2, FTP, VAN, API)?

c.6 Do they have a required timeline for EDI implementation?

c.7 What are their compliance requirements?

d. Do you need full automation or partial/manual processing?

e. Will your EDI data integrate with your ERP, WMS, or accounting software?

f. What is your budget?

Step 2: Choose the Right EDI Partner or Solution for Your Small Business

Selecting the right EDI solution and partner is crucial for small teams with limited resources. Some common challenges you might face as a small team is lack of direction, limited resources for project management, strong EDI expertise and too much reliance and support needed from an EDI service provider or managed EDI service to run your EDI operations. You need the right partner to help you choose the right solution, talk to and ask questions from trading partners on your behalf to implement the solution perfectly. You should be able to spot red flags when you shop around for EDI providers. This video will help you determine how to choose the right solution/provider that fits for your business.

1. Evaluate EDI Solutions:

• • Cloud-based vs. On-premise: Cloud EDI offers flexibility, lower maintenance, and easier updates.
  • In-house vs. Managed EDI Service: If you lack expertise, a managed service provider (MSP) can handle EDI processing, monitoring, and troubleshooting.

2. Assess EDI Partner Capabilities:

• • Can they handle all required EDI document types and formats?
  • Do they provide 24/7 support or only during business hours and how do they handle any emergency queries?
  • Are they transparent about pricing or do they have hidden costs?
  • Are they flexible enough to scale with your business growth?
  • Is there a contract lock-in for a year or 5 years? What if you are not satisfied with their service in that time frame?

Step 3: Set Up EDI Communication & Connectivity

Once you have selected a provider, you need to establish how EDI data will be exchanged between your systems and your trading partners.

There are 4 most commonly used communication protocols in EDI: AS2, FTP, VAN and API

➢ AS2 (Applicability Statement 2):

• • • Widely used in retail (e.g., Walmart, Amazon).
    • Secure, encrypted file transfer.

➢ FTP/SFTP (File Transfer Protocol/Secure FTP):

• • • Simple and secure way to exchange EDI files.

➢ VAN (Value-Added Network):

• • • Acts as an intermediary to route EDI transactions between you and your trading partners.
    • Involves additional costs.

➢ API (Application Programming Interface):

• • • Provides real-time data exchange directly between systems.

• • Ensure your EDI system can send and receive messages successfully.
  • Confirm firewall settings allow EDI communication.
  • Perform test transactions to confirm stability.

Step 4: Configure Data Mapping & Integration

EDI data must be mapped correctly to integrate with your internal systems.

1. Data Mapping Basics:

• • Convert raw EDI data (e.g., X12 format) into your system’s readable format (e.g., CSV, JSON, XML).
  • Define how data fields (e.g., order number, price, quantity) will be mapped between EDI files and your internal system.

2. Ensure Seamless Integration:

• • Test how EDI transactions flow into your ERP or business system.
  • Automate data validation to prevent errors from reaching your system.

Step 5: Conduct Thorough End-to-End Testing Before Going Live

Testing is critical to prevent costly mistakes when your EDI goes live. At EDI Support LLC, we believe in end-to-end EDI testing which means each document should be tested not only going out and coming into your EDI portal but to and from your back-end ERP also. It is important to ensure there are no hiccups with your internal back-end ERP when you are in production or live with your trading partner. Skipping this step can lead to failed transactions and compliance issues.

1. Internal Testing:

• • Test data mapping for accuracy.
  • Check if required fields (e.g., PO numbers, invoice amounts) are correctly populated.

2. Partner Testing (Certification Process):

• • Test data mapping for accuracy.
  • Check if required fields (e.g., PO numbers, invoice amounts) are correctly populated.

3. Error Handling Strategy:

• • Set up alerts for failed transactions.
  • Assign responsibilities for troubleshooting and resolving issues quickly.

Step 6: Train Your Internal Team on EDI Management

Small EDI teams must be proactive in handling daily operations.

1. Basic EDI Knowledge:

• • Ensure your team understands EDI document types and formats.
  • Teach how to read and troubleshoot EDI transaction logs.

2. Error Resolution Training:

• • Learn how to handle rejected transactions and resend failed files.
  • Know when to escalate issues to your EDI provider or IT team.

3. Trading Partner Relationship Management:

• • Assign a contact person for EDI inquiries.
  • Maintain up-to-date partner requirements to avoid non-compliance issues.

Step 7: Monitor & Optimize Ongoing EDI Operations

EDI is not a one-time setup- it requires continuous monitoring and optimization.

1. Set Up Alerts & Automated Monitoring:

• • Use dashboards and email alerts for failed transactions.
  • Track EDI transmission times to avoid SLA breaches.

2. Review Transaction Logs & Error Reports Regularly:

• • Identify recurring issues and find solutions to reduce errors.
  • Update data mappings as trading partners make changes.

3. Plan for Scalability:

• • As your business grows, ensure your EDI system can handle increased transaction volumes.
  • Periodically review if your current EDI solution is still the best fit.

By following this detailed guide, small EDI teams can successfully set up, manage, and optimize their EDI processes with minimal effort and maximum efficiency.

FAQs

Things to keep in mind when signing EDI provider contracts

Learn about the top 5 things you should know before signing EDI provider contract. When you know what to ask your EDI provider, you are more empowered to take the right decision or your business.