Home Blockchain Will Blockchain Replace EDI? Yes And No – Forbes

Will Blockchain Replace EDI? Yes And No – Forbes

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The first version of the GS1 EPCIS standard was drafted in 2007 by GS1 and GS1 US. GS1 is a nonprofit organization that creates and maintains standards for business communications and GS1 US is a member of GS1. The standard enables organizations to create and share visibility event data, both within and across organizations. The standardized data (the payload) was intended to be exchanged as XML files. Little could anyone have foreseen the standard using blockchain as a transmission medium.

GS1 had announced in September 2017 that it was collaborating with IBM and Microsoft to leverage their standards for blockchain. The recently launched IBM Food Trust blockchain uses GS1 EPCIS standard and GS1 XML to transmit electronic data interchange (EDI) payloads to a blockchain network. This is an example of a blockchain-era EDI system, which we can expect to gain more traction.

There is the notion out there that blockchain will eradicate EDIs and magically solve all integration problems, but I can’t help but feel this idea is a bit exaggerated.

How EDI Works

• EDI standards: The information your trading partner needs is extracted out of ERP or other data sources and formatted according to the standards (X12, GS1 XML, EDIFACT, etc.) agreed between you and your trading partner.

• EDI transmission: The file with the standardized payload is then transmitted to the trading partner over sFTP, AS2 or VAN.

EDI Standards Are Critical And Set To Stay

EDI standards were created for a reason, and they are still very much relevant. They define a common format for all trading partners, enabling their independent systems to communicate with each other. Standards render meaning to your data payload. Without it, it’s all gibberish.

Though IBM Food Trust is a blockchain platform, it still uses GS1 EPCIS and GS1 XML standards to shape the data. This makes sense. People have put in decades’ worth of effort in defining these standards to make sure they can address all business cases for their respective industries.

EDI Transmission As A File Over Internet Protocols Will Go Away

In the blockchain era, EDI data is being transmitted to a blockchain network as opposed to AS2, FTP or VAN. Because blockchain is a distributed ledger, all participating organizations in a value chain get to see any transaction across the entire value chain. This enables end-to-end visibility, removing the visibility barriers that come along with point-to-point transfer.

There is simply too much to gain from end-to-end visibility for us to ignore blockchain as the transmission medium of EDI.

• One version of the truth across the supply chain: Perhaps the most important problem blockchain can solve for the industry is that it can help organizations involved in a supply chain maintain one version of the truth that is close to the reality on the ground. This is a problem the supply chain industry has been struggling with for ages. Nonsensically, a shipment can be at two different places at once, and inventory count in your ERP and your 3PL’s ERP can be different. These are problems that frequently happen with existing systems. Of course, there are massive financial losses because of such discrepancies. Having a distributed, decentralized system that can come to a consensus on transactions is a very effective way of solving this problem.

• Pro-active error monitoring: With end-to-end visibility, you are breaking down information silos. This will empower companies to be proactive about issues that occur anywhere in their supply chain. “Bullwhip” effects can be prevented by catching issues early in the supply chain. 

• Insights: Data coming in from all key portions of your supply chain will enable you to derive insights and key performance indicators (KPIs) across the entire chain, enabling companies to optimize their efficiency and cut costs.

Change In EDI’s Transmission Medium Is History Repeating Itself

The lesson is, EDI standards are very much critical and will be part of the game. They have stood the test of time for valid reasons. Anyone who has worked closely with EDI standards will certainly appreciate the kind of effort that these committees creating the standards (be it X12, GS1, EDIFACT) have put in over many years. We are standing on the shoulders of giants.

But I believe transmitting it over a file from one party to another will become obsolete. Retailers might soon be transmitting EDI over a blockchain network. Change in EDI’s transmission medium is not new, and this would be history repeating itself. VAN was eventually replaced by internet-based protocols such as FTP and AS2. AS2 became the preferred transmission medium over FTP as it came with better security features. Walmart kickstarted this movement in 2002 as it transitioned to AS2. 

And the retail giant might have once again kickstarted the next era of EDI transmission with blockchain by mandating its leafy green suppliers get on board the IBM Food Trust blockchain platform.

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