EDI Translation: What It Is & How It Works

In the modern supply chain, seamless communication between business partners is crucial. Electronic data interchange (EDI) is the backbone of this communication, allowing companies to electronically exchange business documents such as purchase orders, invoices, and shipping notices. EDI ensures that transactions are conducted efficiently, quickly, and with minimal errors by adhering to specific data formats and standards. However, not all systems understand EDI formats natively. This is where EDI translation software comes in, translating EDI messages into formats that various internal systems can understand and vice versa.

EDI translation is essential for ensuring smooth data exchanges between organizations, especially when different systems and standards are involved. In this article, we’ll guide you through the basics of EDI translation software, explain how it works, and provide insights into how businesses can effectively leverage EDI translators for maximum efficiency in their supply chain operations.

What is EDI translation?

EDI translation is the process of converting structured EDI messages into a format that can be understood and processed by internal systems, such as ERP (enterprise resource planning) software or warehouse management systems. It also involves converting internal system data into an EDI-compliant format for transmission to trading partners. Essentially, EDI translation acts as a bridge, allowing different systems with different data formats to communicate effectively through a standardized medium.

Why is EDI translation important?

When businesses exchange data via EDI, they must adhere to specific EDI standards (like ANSI X12 in the U.S. or EDIFACT in Europe). These standards ensure that the structure of the data is consistent and readable across different systems. However, internal systems rarely work natively with EDI formats. For example, a company’s ERP might generate an invoice in a custom XML format, while its trading partner expects an EDI X12 810 (Invoice) document. Without translation, the two systems would not be able to communicate effectively, resulting in errors, delays, or even failed transactions.

EDI standards and translation

There are various EDI standards used globally, with ANSI X12, EDIFACT, and TRADACOMS being some of the most widely recognized. Each of these standards has specific rules governing how information is structured and transmitted between business partners. For instance, ANSI X12 is predominantly used in North America, while EDIFACT is more common in Europe.

EDI translation software ensures that documents conform to the appropriate standard by converting messages from one format into the required EDI format. It also handles any conversion from one EDI standard to another, ensuring interoperability between systems that may use different standards.

How does EDI translation work?

EDI translation involves several key steps, each of which plays a critical role in ensuring accurate and timely data exchanges between trading partners. Below is a step-by-step breakdown of the EDI translation process.

Document collection and preparation

The first step in the EDI translation process involves collecting the necessary documents from internal systems. These documents could be purchase orders, invoices, shipping notices, or any other type of transactional document generated by a company’s internal ERP or accounting system. In most cases, these documents are not in an EDI format but rather in a format that the internal system can process, such as XML, CSV, or JSON.

Once these documents are collected, they are prepared for translation by the EDI translator. This preparation could involve verifying the data for accuracy, ensuring that the required fields are populated, and formatting the data for conversion.

Document translation into EDI standard

Once the document is prepared, the EDI translator converts it into the appropriate EDI format (such as X12 or EDIFACT) based on the requirements of the trading partner. This process is known as mapping, where the data fields from the internal format are mapped to their corresponding EDI fields.

For example, in an X12 850 Purchase Order document, the buyer's information might be mapped to specific segments such as N1, while the purchase order number might be mapped to BEG02. This mapping ensures that the data is structured according to the standard and can be processed by the recipient’s EDI system.

Connection and transmission

Once the document has been translated into the appropriate EDI format, it is ready to be transmitted to the trading partner. This is typically done via a secure communication protocol such as AS2, FTP/SFTP, or VANs (value added networks).

During transmission, the document is securely sent to the recipient’s EDI system, where it will undergo a reverse translation process—converting the EDI file back into a format the recipient’s internal system can process. After transmission, acknowledgment documents, such as the X12 997 Functional Acknowledgment, are often exchanged to confirm that the document was received and processed successfully.

Benefits of EDI translators

EDI translation software offers a range of benefits, making it indispensable for businesses involved in EDI transactions. Below are some of the key advantages:

• Enhanced data security: EDI translation ensures that sensitive business data is transmitted securely, often using encryption protocols like SSL/TLS during transmission. This helps protect the data from interception or unauthorized access, ensuring compliance with industry regulations such as HIPAA or GDPR.
• Increased transactional processing speed: By automating the translation and transmission of documents, EDI translators significantly speed up the exchange of data between trading partners. Transactions that would have taken days or weeks using manual methods can now be completed in a matter of minutes, improving overall business efficiency.
• Cost reduction: Manual data entry and document exchange processes are time-consuming and prone to errors, both of which can incur significant costs. EDI translators automate these processes, reducing labor costs, minimizing errors, and lowering the cost of reprocessing transactions due to incorrect data.
• Reduced complexity: Handling multiple formats and standards can be a complex and error-prone task. EDI translators simplify this complexity by automatically converting and mapping data between various systems, allowing businesses to focus on their core operations without worrying about compatibility issues.

How to choose the right EDI translation software

Choosing the right EDI translator for your business depends on several factors. Below are some key considerations to keep in mind when evaluating EDI translation software solutions:

• Scalability: As your business grows, so will the volume of EDI transactions. It’s important to choose a solution that can scale with your needs, accommodating increased transaction volumes without compromising performance.
• Ease of use: The EDI translator should be user-friendly, especially for non-technical users. Look for solutions with intuitive interfaces, easy-to-configure mapping tools, and streamlined workflows that simplify the EDI translation process.
• Compatibility: Ensure that the EDI translation software is compatible with your internal systems (ERP, WMS, CRM, etc.) and supports the specific EDI standards (X12, EDIFACT, etc.) you need for your industry. Some EDI translators also offer pre-built connectors for popular software platforms, which can streamline the integration process.
• Support for multiple standards: If your business operates globally or trades with partners that use different EDI standards, it’s important to choose software that supports multiple standards, like X12, EDIFACT, and TRADACOMS. This ensures that your system is flexible enough to accommodate various trading partners.
• Pricing: Consider the pricing model of the EDI translator. Some solutions are subscription-based, while others may charge based on transaction volumes or the number of trading partners. Make sure to choose a solution that fits your budget without compromising essential features.

CData Arc: An end-to-end EDI platform

When looking for a comprehensive EDI solution, CData Arc is a powerful option. As an end-to-end EDI platform, CData Arc offers robust mapping and translation capabilities, making it easy for businesses to manage EDI transactions across multiple trading partners and standards. The platform supports a wide variety of EDI formats, provides seamless integration with internal systems, and ensures compliance with industry regulations.

With CData Arc’s unified EDI integration, businesses can automate their EDI processes, enhance security, and reduce operational complexity—all while scaling to meet the demands of growing transaction volumes. Whether you’re a small business or a large enterprise, CData Arc has the tools you need to streamline your EDI operations.