Schematic process of EDI transfer from the sending to the receiving company. In the automotive sector, a network protocol is used for direct electronic data transfer, based on recommendation 4914/2 of the German Association of the Automotive Industry.

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The core of every EDI connection to an ERP system is the import and export of structured data. The corresponding interface in an ERP system is responsible for processing external data. Data is usually transferred to an EDI converter, which takes over the further processing of the data. Data can be transferred to the EDI converter in various ways, for example via an SFTP server or via direct API integration. The EDI converter receives the exported data, converts it, the recipient receives the file and imports it into their own system via their EDI solution. Once the question of the import/export interface has been clarified, it is important to examine in detail the scope of data that can be imported and exported via the interface.

Depending on the business relationship and industry, different types of data can be expected in the EDI data. For example, the following fields are required to create an invoice in accordance with EDIFACT: GLN (Global Location Number) of the sender of the document, GLN of the recipient of the document, invoice date, invoice number, number of the associated purchase order, date of the associated purchase order, number and date of the associated shipping notification, invoice items and the invoice amount including net and gross values.

Warehousing in the automotive industry: QR codes enable the automated allocation of packaged individual parts.

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However, there is a special feature in fixed supplier relationships in the automotive industry. If there are fixed supplier contracts, the invoices must also be provided with an agreement number. The EDI converter can only generate this form of invoice if all the data required by the client is included in the export format of the ERP system. In addition, relevant master data must be maintained in the ERP system. This is because the export cannot work correctly if it is not maintained properly due to inadequacies in the ERP system.

Minimize input errors

The interaction of the external EDI processes with the internal processes of the ERP system is crucial for the efficiency of the processes. The customer orders using 'EDIFACT Order', the order is converted and imported into the ERP system. In order to avoid duplicate data entry and to be able to utilize the advantages of EDI as much as possible, the order data is transferred and an immediate order confirmation is generated. Both the ERP user and the person responsible can make changes to the order confirmation. The order confirmation is then electronically translated by the EDI converter into an EDIFACT ORDRSP message (order response) and sent.

A shipping notification must be sent to the business partner before the goods are dispatched. Here too, the data is taken from the order confirmation to avoid duplicate data entry. The EDI service provider then handles the conversion and delivery. Finally, the invoice is created based on the shipping notification data and sent to the business partner. The original order is gradually and chronologically refined into an invoice. The data is transferred from the document above it, also known as the turnaround process. The prerequisite for the turnaround procedure is the corresponding implementation of the processes in the ERP system.

Another important consideration is the choice of a suitable EDI service provider to carry out the necessary conversions. Two different methods are available for this: First, an in-house, local EDI converter can be purchased and provided by a service provider. However, external service providers can also handle the entire EDI transfer process.

Purchasing your own local EDI converter is only worthwhile for companies with a high level of technical expertise. In addition to the local converter, a separate EDI service provider must be commissioned to connect the business partners via the required protocols (AS2, X.400, OFTP or SFTP). However, a local converter also generates costs in the five-digit range. For larger suppliers, the costs can run into six figures, with annual maintenance costs in addition to the purchase price.

If an external service provider carries out the EDI processes, it will not only convert the data but also transmit it to the individual partners. In contrast to a local converter, there are no high one-off costs for the procurement or maintenance of the converter - payment is based on performance.

Mandatory VDA standard for EDI

The special requirements of the automotive industry, such as those arising from just-in-time and just-in-sequence production, are met by the EDI standards developed by the German Association of the Automotive Industry (VDA) back in 1977. However, the current fixed-length VDA standards are gradually being replaced by EDIFACT document types. To this end, the VDA is adopting recommendations on how document types can be mapped using EDIFACT messages. Nevertheless, the VDA message types used to date are still in use, without a definitive end date.

Author:
Christian Bieblis Managing Director of Planat.