EDI and UN-EDIFact - Ability (or Inability to Do Business)
Wednesday, April 4, 2012, 8:00 AM
EDI and UN/EDIFact - Ability (or Inability?) to Do Business
Used by U.S. businesses everywhere, Electronic data interchange (EDI) is a mode of transferring data between businesses electronically (computer to computer) without human assistance to complete the transaction.
There is also an international, worldwide standard for EDI developed by the United Nations, called EDI/FACT, (short for United Nations/Electronic Data Interchange For Administration, Commerce and Transport.) Preferring not to use the EDIFACT standard, the American Standards Committee (ASC X12) chose an "administrative alignment," in which X12 users could still generate other standards based on the X12 design. Years later X12 usage was still commonplace for U.S. businesses.
A vast number of companies want to keep their current systems and procedures in place. The benefits of lowering operating costs and increasing sales with EDI generally dont show up until years after the high costs of startup and training have been recouped. After spending as much as $30,000, in some cases, for software and installation, not to mention training, its no wonder users would shirk at the idea that they must convert the operational systems they now use to meet a whole new measure of specifications and standards.
Nevertheless, a unanimous vote to switch systems by the ANSI X12 Committee was declared and those who use EDI in their places of business have been given a deadline to make this conversion. Likewise, all new set ups and developments must conform to EDIFACT, while standards for X12 will have to yield to United Nations EDIFACT standards.
Even though it has been a decade since the ANSI X12 standards came into effect for the purpose of replacing older EDI platforms developed and used by warehouse and other such industries, the EDI industry is still small in size. Of the 31,000 companies globally that use EDI, 68% are in the United States.* This denotes a 45% increase during the last twelve months in the number of EDI customers. Yet, on average, the EDI-related cost per year currently averages $6,000 per customer, falling from a previous $10,000 amount.
As mentioned before, the initial, basic cost and time incurred to equip a business with UN/EDIFACT can be steep. Therefore, when outfitting your system with the new one be sure to choose the appropriate set up to correspond with your own personal business needs. If you have only a few business dealings with EDI users, it might be wise to go with lower cost “rip and read” methods. With these, people can read the formats, instead of computers, and do the communicating for the transactions.
Another less expensive means to achieve integration and compliance needs could be to contract the services of the EDI Service Bureaus. Depending on the quantity of trade, some companies may still find that it is better for them to bring in EDI resolutions to conduct business efficiently.
In order to meet the criterion for being called EDI, for years, users have met and maintained strictly defined guidelines approved by the standards makers. Now, however, EDI users have become aware of a new and different set of strict standards designed to replace the ones now in existence. Why? The current system has worked well. So if something doesnt need fixed, why not just leave well enough alone?