TechTarget refers to EDI (Electronic Data Exchange) as “the transfer of data from one computer system to another by standardized message formatting, without the need for human intervention”. Regarding EDI, it is important to keep in mind the document standards and the EDI communication protocols.
EDI communication protocols are a set of rules for the electronic exchange data format. The protocols include the process of obtaining the EDI data from the sender to the receiver. This article will go through the most common EDI messaging protocols.
VAN (Value Added Network)
“A value-added network (VAN) is a private, hosted service that provides companies with a secure way to send and share data with its counterparties.” (Investopedia)
Simply put, VAN acts as a network or a middleman that facilitates electronic data interchange between business entities. There are three types of VANs: one-to-one, one-to-many, and many-to-many. VANs use encryption in order to be safe and secure for data transmission. The network also supports correcting errors, decision-making, and maintaining records as data exchange is real-time with VANs.
Disadvantages
However, VANs are expensive and require costly maintenance. Upgrading can be challenging, too. That is why some businesses prefer direct EDI to VANs.
Nonetheless, one should consider his or her business needs carefully before arriving at a decision to use VANs or direct EDI.
HTTP
Only requesting a browser, HTTP, or Hypertext Transfer Protocol is a well-known EDI communication protocol for its simplicity. It is a simple way to transmit data from person to person, or from person to server (in this communication protocol, the application operating on the computer hosting the website is considered the server). HTTP is often requested to transmit web pages and web page components.
It is not difficult to locate HTTP resources. This can be easily done via Uniform Resource Identifiers (URLs).
Disadvantages
Due to its simplicity, HTTP is not capable of securing the data or complying with complex regulations. HTTP also does not offer automatic receipts, leading to a lack of traceability. It is not recommended that you use only HTTP protocol, but at least think of using HTTPS with transport layer security (TLS).
OFTP – OFTP 2
OFTP stands for Odette File Transfer Protocol. This EDI communication protocol was developed in 1986 in the relation to the ODETTE automotive sector. The ODETTE organization is an organization in Europe for data exchange by teletransmission – “a European standardisation, services and networking platform for the entire automotive supply chain.” This protocol was built particularly for B2B (business-to-business) document exchange. It is one of the most widely-used protocols for documents transmitted via EDI.
OFTP has fourteen commands and is easy to use. It was originally created to provide a standardized platform for the automotive industry in Europe. Recently, however, it has been widely adopted by other industries, such as bank industries, government, transport, white label goods, insurance, manufacturing, retail, supply chain, and many more. OFTP’s powerful features include
- Its high efficiency
- Its capability to produce digitally signed delivery receipts
- Its direct, point-to-point EDI
There was an update of OFTP in 2007: OFTP2 was created. It is just as widely used as its predecessor. Nonetheless, OFTP holds many advantages over OFTP:
- Capability to compress large files (up to 500GB).
- The protocol has become a global communication standard and any company has access to it, as long as they have an ODETTE ID.
- Has the ability to work with special characters, namely Chinese and Japanese.
- Provides secure data exchange: encryption, SSL/ TLS, signature, identification, and so on over native X.25, X.25/ISDN, TCP/IP, and the internet.
- Incorporates file restart.
Disadvantages
Despite the many attractive aspects of OFTP, there are still a few drawbacks:
- To use OFTP, the documents have to be sent and received by servers using the same protocols. This limits the protocol’s adoption.
- You need to have certain knowledge to use this protocol.
- To obtain the ODETTE ID, you have to register with the ODETTE organization.
FTP
FTP stands for File Transfer Protocol. FTP is another common EDI communication standard. You can install and use it on Mac OS, Windows, Linux, etc., and use it with password authentication or anonymous user access. This EDI protocol standard transmits and manipulates files over the internet, one of the TCP/IP based networks.
This protocol facilitates
- Bulk file transfer
- Quick website update
- Quick program downloads from different servers
However, FTP is not considered a secure communication standard and is not used for B2B file exchange. As a result, it is often used for internal communication. If businesses wish to continue using FTP to transfer files, FTP should be coupled with a VPN (Virtual Private Network) to secure the transmission and ensure the client performs the transfer.
AS2
AS2 stands for Applicability Statement 2. The EDI standard was created in 2002 by the IETF (Internet Engineering Task Force) and specifically developed for B2B data exchange right from the beginning.
The protocol sends EDI messages using HTTP but offers several advantages over HTTP protocol. AS2 transmits files as attachments through an encrypted tunnel, from an AS2 server to another AS2 server. The receiving end needs to accept the receipt, or Message Disposition Notifications (MDNs). The protocol provides users with several MDN return options. Additionally, there is a final receipt request once the EDI message reaches the receiver.
For traceability and authentication, it is possible to digitally sign all file formats. In addition to the increased security thanks to the receipts and digital signatures, the verification happens in real-time, boosting efficiency and visibility.
AS2 was made popular largely because Walmart required its suppliers to use it. Other large retailers used this protocol soon after. AS2 became popular in healthcare, too, due to its compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
Disadvantages
Like every other EDI communication protocol, AS2 has its disadvantages. In this case, it is the knowledge required to complete its setup and handle the maintenance and troubleshooting. Furthermore, AS2 must be integrated separately as no ERP system offers inbuilt AS2 yet.
Final note
Above are some of the most frequently encountered EDI communication protocols. It is important to clearly understand your business needs and models in order to choose the protocol that best fits your needs. Do you find these protocols confusing? Let SCS Solutions help you get through the challenging journey of learning your EDI solution! Contact us via our website https://www.scssolutions.io/, Linkedin, or Facebook. Allow us to go through the journey of learning and understanding EDI together with you.