X12 Standardization Streamlines EDI Transaction Flow for Supply Chain and Health Care Industries
While electronic data interchange standards have enjoyed a long and prolific legacy, their intrinsic value was tested and proven again by trading partners across all industries during the pandemic. Over the last 16 months, X12 EDI standards have continued to support the successful procurement and distribution of goods and services at unprecedented levels.
To that end, X12 continues to maintain its standards representing more than 300 transaction sets that uphold wide-ranging businesses and industries in addition to hundreds of implementation guides and derivatives. This body of work enables companies to seamlessly communicate and transfer information electronically from business to business.
In simple terms, an EDI transaction set, which conforms to the X12 EDI standard, converts information content to a standardized computer format, enabling data flow for specific business and logistical purposes from machine to machine.
EDI, then and now
From the 1970s through today, representatives of various industry segments ─ food and beverage, retail, automotive, banking and materials management among others ─ collaborate to define new electronic-based business processes to automate and improve business efficiencies. This was a significant leap in the 1970s, given that trading parties traditionally communicated via telephone to discuss items of interest and strike an agreement on an acceptable price or exchange for a product.
With the advent of the internet and ecommerce, the fundamental phone call initiated to generate an order soon converted into a simple EDI order transaction.
The EDI transaction quickly became the common conduit linking trading partners with manufacturers and product users. However, the transaction ordering process was in its infancy and often lacked accurate product information and documentation, created confusion and transaction issues. Businesses realized the need for a standardized information exchange process, today known as data alignment, to connect trading partners bilaterally.
Governing the flow of information
As ecommerce evolved with the growth of consumer online purchasing, industries, too, evolved to align their business using 21st century digital technologies. Today, tens if not hundreds of thousands of organizations use X12 EDI transactions to govern the flow of electronic documents between companies.
Supply Chain transaction sets
Supply Chain Transaction Flow includes diagrams depicting typical exchanges between trading partners related to items offered for sale between retail, wholesale or manufacturing parties. The diagrams, which include sale of raw materials, as well as finished products, are intentionally simplified for presentation purposes.
Presented are the basic item supply chain process steps supported by EDI transaction sets for:
- Item information exchanged between trade partners
- Purchase order
- Deliver process
- Invoice Process
- Payment Process
The X12 Supply Chain subcommittee (X12M) is responsible for transaction sets related to the supply chain industry. Omitted are transportation-specific transaction sets, which are maintained by X12’s Transportation subcommittee (X12I).
Health Care transaction sets
The exchange of business documents supporting the administration of health care and insurance is illustrated with X12’s Health Care Transaction Flow. This section specifies the X12 transaction sets and their various usages to meet defined business purposes.
The health care diagrams depict various exchanges between trading partners based on the implementation guides developed within X12’s Insurance subcommittee (X12N).
Trading partners for X12 health care exchanges include health plans, health care service providers and other entities that administer health plan services, fund health plans, or enrolled members. Some of these transactions are adopted under HIPAA and are bolded. The transactions can be transmitted at various times in the care delivery cycle.