Electronic data interchange (EDI) is the structured transmission of data between organizations by electronic means. Today, EDI is a mandate of large retailers, but it took many decades to get to this point. Here is a brief timeline and overview on the history of EDI.
EDI can trace its origin to the 1960s when computer systems acquired the ability to exchange data with each other. Ed Guilbert, the father of EDI, expanded upon the standardized shipping manifests he had developed with U.S. Army officers during the 1948 Berlin airlift. Guilbert’s expansion was an electronic message format for sending cargo information. The first EDI messages were sent in 1965 when the Holland-American steamship line sent trans-Atlantic shipping manifests using telex messages, which could send a full page of information in roughly 2 minutes. These messages were then converted into tape that could be loaded onto computers. In 1968, the Transportation Data Coordinating Committee (TDCC) was formed by a group of railroad companies to develop EDI standard formats, as oceanic shipping companies, railroads, airlines, and trucking companies were exchanging electronic messages. These messages were in varied formats, and it was creating confusion and problems.
By 1973, the File Transfer Protocol (FTP) was published and enabled file transfer between internet sites. In 1975, the TDCC releases the first EDI standards, of which Guilbert was a major contributor. In this year, the first Value Added Network (VAN), Telenet, was established. Telenet was the first commercial packet-switching network which added more than the basic service of linking computer systems, hence the name VAN. In 1977, a group of grocery companies and their business partners begin drafting an EDI project. The TDCC is renamed the Electronic Data Interchange Association (EDIA) in 1978. Later on that year, the EDIA is chartered by the American National Standards Institute and becomes the ANSIX12 committee. The ANSIX12 committee is responsible for the publication of EDI standards.
In 1981, the ANSIX12 standards are published and include the transportation, food, drug, warehouse, and banking industries. The following year, companies in the automotive industry, such as Ford and General Motors and large retailers, including Sears and Kmart, begin to mandate EDI for their suppliers. The EDIFACT EDI standard is created by the UN in 1985 to assist with the global reach of technology. While EDIFACT was adopted by the automotive industry, the other United States industries stuck with the ANSIX12 standard.
Nearly 12,000 companies in the Unites States were using EDI by 1991. In 1996, The Uniform Code Council started EDI over the internet (EDIINT) to standardize the communications of EDI data over the internet. In 2001, the AS/2 communication standard is published by the UCC. The AS/2 enables encrypted transmission of data over the internet, and uses the HTTP protocol. By 2004, Wal-Mart adopted the AS/2 standard to communicate with suppliers. While other major retailers follow, many retailers continued to use VAN communication.
Today, over 100,000 companies in the United States use EDI to communicate with business partners. The AS/2 has risen in popularity, as it is less expensive than VAN and eliminates the need to go through a ‘middle man’. Companies such as Target and Lowe’s utilize AS/2, and require all of their suppliers to use it too. Over 90% of Fortune 500 companies are EDI capable, but more and more small businesses are adopting EDI as well. This reflects just how important EDI has become in regards to business to business relationships and communication.