For businesses that trade across international borders, a specific set of electronic data interchange (EDI) standards — EDIFACT (Electronic Data Interchange for Administration, Commerce and Transport) — is the foundation of efficient and accurate communication.
Backed by the United Nations, EDIFACT is the leading standard for global trade outside North America. Its structured framework simplifies digital data exchange and ensures consistency across industries worldwide.
In this guide, we’ll explore EDIFACT, including its definition, structure, document types, subsets, and how it compares to other EDI standards like X12.
What Is EDIFACT?
The U.N. created EDIFACT in the 1980s to structure and regulate how trading partners exchange data across digital supply chains. Today, it supports industries and businesses by standardizing communication within their networks worldwide.
UN/EDIFACT simplifies trade processes by enabling companies to exchange digital documents in EDI format seamlessly. This standard sets clear rules for how EDI messages work between trading partners, specifying both the syntax and content to ensure interoperability.
Benefits of Using EDIFACT in EDI
One of the most widely used EDI formats worldwide, EDIFACT simplifies complex data exchanges by bundling and transmitting multiple transaction sets — such as invoices, purchase orders, and shipping notices — into a single file. This reduces processing time, enhances digital communication across industries, and gives businesses the flexibility and scalability to manage supply chains and international trade effectively.
In addition to serving as the universal format for EDI worldwide, EDIFACT standards offer several other advantages, including:
Greater Flexibility
The EDIFACT file format accommodates a wide range of business processes, from order management to financial transactions. Its ability to handle complex data exchanges makes it especially valuable for companies managing diverse international operations or multi-step workflows.
International Compliance
Designed to meet global regulatory requirements, EDIFACT helps businesses navigate compliance challenges when trading across borders. By adhering to international standards, organizations can avoid costly penalties and maintain smooth operations in different markets.
Better Communication
EDIFACT supports various message types, including shipping notices, invoices, purchase orders, and payment details. This versatility allows trading partners to exchange all necessary information efficiently, improving communication and reducing misunderstandings in supply chain interactions.
Fewer Errors
By automating data exchange, EDIFACT eliminates manual input errors that can disrupt operations. Its structured format ensures greater data accuracy, reduces operational inefficiencies, and improves customer satisfaction by delivering reliable results.
Comprehensive Transaction Sets
EDIFACT’s extensive library of EDI transaction sets covers every aspect of business communication, including order cycles, supplier collaboration, material handling, and warehouse fulfillment. This breadth allows companies to manage a wide variety of workflows within a single system, streamlining their operations.
Frequently Used EDIFACT Document Types
EDIFACT assigns six-character alphanumeric codes to identify its variousmessage types, providing standardized formats that streamline global communication across industries and supply chains. These formats ensure consistency, reduce errors, and simplify the exchange of critical business information. Here’s a closer look at commonly used document types and how they look in real-world scenarios:
AUTHOR (Authorization)
AUTHOR messages allow businesses to approve or reject transactions in financial and administrative operations. For example, a bank might use an AUTHOR message to greenlight a loan request or deny a withdrawal that doesn’t meet requirements. Companies rely on this message to make decisions and keep transactions safe and trackable.
BALANC (Balance)
BALANC messages share account balance information, helping businesses stay on top of their finances. A corporate treasurer, for instance, might receive a BALANC message showing available funds, completed transactions, and pending balances to close the books for the quarter.
CUSDEC (Customs Declaration)
CUSDEC messages make customs clearance easier by directly sending import, transit, or export details to customs authorities. A logistics company might use this message to share shipment information like value, origin, and contents to meet trade regulations.
DESADV (Dispatch Advice)
DESADV messages let recipients know when goods are on the way. Retailers often use this message to prep for deliveries, with details like packaging, quantities, and shipping methods. For example, a clothing store might use a DESADV message to coordinate warehouse teams before a shipment arrives.
INVOIC (Invoice)
INVOIC messages are used to send payment requests between trading partners. A supplier might send an INVOIC message to a distributor for a bulk order, listing payment terms, quantities, and shipping charges to keep the process smooth and straightforward.
ORDERS (Purchase Order)
ORDERS messages request goods or services. A manufacturer might use an ORDERS message to tell a supplier what products they need, how many, and when they should arrive to stay on schedule.
PAYORD (Payment Order)
PAYORD messages instruct financial institutions to process payments. In a B2B setup, a software provider might use this message to collect recurring subscription fees, keeping payments organized and hassle-free.
RECADV (Receiving Advice)
RECADV messages confirm that goods or services have been received. A food distributor, for example, might send a RECADV message after receiving a produce shipment, noting any quality or quantity issues. These messages help trading partners stay on the same page.
EDIFACT Message Structure
The EDIFACT standard uses specific syntax rules to organize and interpret messages, creating uniformity across EDI systems. Here’s a closer look at how its structure works:
Data Segments
Data segments form the building blocks of EDIFACT messages, organized into logical groups. There are two main types:
Service segments: These are easy to identify because they start with "UN." These segments handle message-level tasks like defining characters or headers. Examples include UNA (character definition), UNH (message header), and UNB (header information).
User service segments: User data segments contain the actual business information within a message, like product quantities, delivery addresses, or payable amounts. Common examples include DTM (dates), PRI (prices), and QTY (quantity).
Segment Groups
EDIFACT uses segment groups to bundle related data segments together. Each group can include required or optional segments and, in some cases, might repeat. This organization allows flexibility in handling different transaction scenarios.
Messages
A message combines all the segments needed to represent a single transaction. Every message starts with a message header segment (UNH) and ends with a message trailer segment (UNT), forming a complete data exchange unit. Messages can cover purchase orders, shipping details, or invoice transactions, among others.
Interchanges
An interchange acts as the "envelope" for EDIFACT messages, containing details like sender, receiver, and date information. This layer ensures the standardized transmission of messages between trading partners.
Enveloping Data Pairs
Envelopes define the start and end of specific sections within an interchange. Each envelope uses unique data segments to mark its beginning and end, helping maintain accuracy and consistency across multiple transactions.
Envelope data pairs can include:
Group envelopes: These contain multiple EDI documents.
Interchange envelopes: These include details for transferring information to a recipient.
Transaction set envelopes: These are for single documents only.
Data Elements
Data elements are the smallest units in an EDIFACT message, holding individual pieces of information like dates or quantities. These elements follow specific rules, including length and frequency, ensuring messages stay structured and predictable.
What Are EDIFACT Subsets?
EDIFACT subsets are tailored variations of the UN/EDIFACT standard designed to meet the specific needs of different industries. These subsets simplify the EDI standard by adding fields and mandatory elements unique to each sector, making it easier to automate and handle industry-specific information.
For example, the EANCOM subset, developed by GS1 (a global organization specializing in supply chain standards), adapts EDIFACT for the consumer goods industry by including additional fields for post-item types and processes unique to global commerce.
EDIFACT also has other subsets in other industries, including:
EDIFICE (Electronic, Software, and Telecommunications)
This subset adapts EDIFACT for the high-tech industry, focusing on the unique processes and data needs of electronics and telecommunications businesses.
EDIFOR (Freight Forwarding)
EDIFOR is tailored for transport and freight forwarding, addressing logistics management challenges. It simplifies EDI processes for shipping, tracking, and managing freight operations.
EDITRANS (Transportation)
Designed for the broader transportation sector, EDITRANS makes EDI more efficient for businesses involved in various modes of transport, from air and sea to road and rail.
ODETTE (Automotive Industry)
ODETTE specializes in facilitating EDI in the automotive sector, connecting manufacturers, suppliers, and logistics providers. This subset enables precise scheduling, inventory tracking, and seamless communication across the supply chain, reducing delays and improving operational efficiency.
X12 Versus EDIFACT: Key Differences
X12 and EDIFACT are two widely used EDI standards, each designed to streamline data exchange but with distinct features tailored to specific regions and industries. Here’s a closer look at how they compare:
Geographical use: EDIFACT is the standard for global trade, especially in Europe, where it’s widely adopted across industries. Meanwhile, X12 is mostly used in North America, with businesses in the United States and Canada relying on it for regional data exchange.
Structure: EDIFACT takes a flexible approach with a hierarchical structure. Its messages are broken down into segments and data elements, allowing detailed and customizable descriptions. X12 also uses a hierarchical format with elements and segments but organizes transaction sets into predefined groups, which can feel more rigid.
Security: Both EDIFACT and X12 support encryption and secure transmission, but they handle security differently. X12 depends on the transmission medium for protection, while EDIFACT adds an extra layer of security with built-in authentication for some applications.
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