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How can you reduce the risks of EDI transactions?

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Electronic Data Interchange (EDI) is a technology that allows businesses to exchange documents and transactions electronically, without the need for paper, fax, or mail. EDI can improve efficiency, accuracy, speed, and cost savings for various industries and processes. However, EDI also comes with some risks, such as data breaches, errors, fraud, and compliance issues. How can you reduce the risks of EDI transactions and protect your data and business relationships? Here are some tips to help you.

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1 Use secure protocols and encryption

One of the most important ways to reduce the risks of EDI transactions is to use secure protocols and encryption to transmit and store your data. Secure protocols, such as HTTPS, FTPS, SFTP, or AS2, ensure that your data is authenticated, encrypted, and verified during transmission. Encryption, such as AES, RSA, or SSL, protects your data from unauthorized access or modification by encrypting it with a key that only you and your trading partner have. You should also use digital signatures and certificates to verify the identity and integrity of your data and trading partner.

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jaya Krishna tummala ,MS, CSM

Award Winning Senior Functional Quality Assurance|BSA|SAP QA|Safe 6.0 Agilist|Sigma Xi Full Member|IEEE Senior Member|Fellow IETE|Author
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Ensure secure configuration and patch management practices for EDI systems, servers, and software components to mitigate known vulnerabilities and security risks. Regularly update and patch operating systems, applications, and firmware to address security vulnerabilities and ensure compliance with security best practices.

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2 Implement data validation and quality checks

Another way to reduce the risks of EDI transactions is to implement data validation and quality checks to ensure that your data is accurate, complete, and compliant. Data validation and quality checks can include rules, formats, standards, and schemas that verify that your data meets the requirements and expectations of your trading partner and industry. You should also use acknowledgments, such as 997 or 999 in EDI X12, to confirm that your data was received and processed correctly by your trading partner. If there are any errors or discrepancies, you should correct them as soon as possible and notify your trading partner.

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Mikhail Kalyabin

SAP SD/MM Consultant, EDI expert. I'm passionate about creating comprehensive solutions by combining EDI standards, SAP techniques, and middleware opportunities to enhance business efficiency.
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I can categorize data validation into two types: compliance with interchange standards and with business requirements. E.g., a sales order with two items of the same material may meet EDI standards but could be prohibited by some customers. From my experience in consumer goods trading EDI, technical compliance is usually managed by the EDI provider (EDI VAN in the US), and the best of them provides effective error notification and explanation tools. Regarding business rules, it is preferable to implement them on the source system side, such as ERP or CRM. Mature ERP systems, like SAP S/4 HANA, provide some basic tools for such controls; however, these often need to be extended to enhance visibility and flexibility for business users.

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3 Follow best practices and guidelines

A third way to reduce the risks of EDI transactions is to follow best practices and guidelines that are established by your industry, trading partner, or EDI provider. Best practices and guidelines can help you avoid common pitfalls, mistakes, and misunderstandings that can lead to data loss, fraud, or disputes. For example, you should follow the EDI standards, such as X12, EDIFACT, or XML, that are agreed upon by your trading partner and industry. You should also follow the EDI policies, procedures, and specifications that are defined by your trading partner or EDI provider, such as frequency, format, content, and delivery of your data.

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4 Monitor and audit your EDI transactions

A fourth way to reduce the risks of EDI transactions is to monitor and audit your EDI transactions regularly and systematically. Monitoring and auditing your EDI transactions can help you detect and prevent any issues, anomalies, or threats that may affect your data or business. For example, you should monitor your EDI system performance, availability, and security to ensure that it is functioning properly and securely. You should also audit your EDI data quality, accuracy, and compliance to ensure that it meets the standards and expectations of your trading partner and industry. You should also keep records and logs of your EDI transactions for future reference and evidence.

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5 Train and educate your staff

A fifth way to reduce the risks of EDI transactions is to train and educate your staff on the benefits, risks, and responsibilities of EDI. Training and educating your staff can help you increase their awareness, knowledge, and skills on how to use EDI effectively and safely. For example, you should train and educate your staff on how to use your EDI software, tools, and protocols correctly and securely. You should also train and educate your staff on how to follow the best practices and guidelines of EDI. You should also train and educate your staff on how to report and respond to any issues or incidents that may arise from EDI.

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6 Review and update your EDI strategy

A sixth way to reduce the risks of EDI transactions is to review and update your EDI strategy periodically and proactively. Reviewing and updating your EDI strategy can help you adapt to the changing needs, expectations, and regulations of your business, trading partner, and industry. For example, you should review and update your EDI goals, objectives, and metrics to measure your EDI performance and outcomes. You should also review and update your EDI processes, procedures, and standards to improve your EDI efficiency and quality. You should also review and update your EDI security, backup, and recovery plans to protect your EDI data and business continuity.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you reduce the risks of EDI transactions?

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1 Use secure protocols and encryption

2 Implement data validation and quality checks

3 Follow best practices and guidelines

4 Monitor and audit your EDI transactions

5 Train and educate your staff

6 Review and update your EDI strategy

7 Here’s what else to consider

Electronic Data Interchange (EDI)

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