A basic description of how EDI works

Written by Act Data Services, Inc. 1-800-ACT-DATA

Decades ago, companies exchanged business documents in one of two ways: by post, or by fax. Anything official that they could not communicate through a phone went through one of the two methods above. The documents in question were Purchase Orders, Fulfillment Orders, Shipping Records, Bills of Lading, Invoices, Warehouse Inventory Movements, Stock Replenishment’s, etc.

Then, over the next few years, better communication technology, like modems, ISDN became affordable. With these communication tools, businesses started coming up with methods of sending their documents using one of the technologies. This lead to competing standards in the 90’s which gave way to the eventual setting of standards in the early 2000’s. This is how electronic data interchange was born.

Here are the standards that remain today, that qualify for EDI compliance:

The UN-recommended UN/EDIFACT is the only international standard. This standard is used predominantly outside of North America.

The US standard ANSI ASC X12 (X12) is predominant in North America.

The TRADACOMS standard developed by the ANA (Article Number Association is now known as GS1 UK) is the dominant standard in the UK retail industry.

The ODETTE standard used within the European automotive industry

The VDA standard used within the European automotive industry mainly in Germany

The HL7, a semantic interoperability standard, used for healthcare administrative data.

The standards are an agreed upon mode of transmission (which could be: modem, e-mail, file transfer, website, etc.) to send data back and forth between entities and an agreed upon format in which to build the data packets.


Act Data is an EDI service bureau that provides EDI solutions and logistics standards implementation.