The X12 Protocol is a Favorite Among Many Industries
Electronic data interchange (EDI) allows businesses to send business documents, communicate messages, and synchronize data quickly and securely with other business partners and vendors in their supply chain. EDI protocols are fundamental to the EDI communication process.
Imagine EDI protocols as a type of language – both trading partners have to use the same protocol for effective communication. Different protocols accommodate various needs based on the type of data a business is exchanging, the level of security required, and the type of technology a business is using.
The X12 protocol is one of the most popular EDI protocols, used in virtually every industry that exchanges EDI data.
Overview of X12 EDI Transactions
The X12 EDI protocol was developed in 1979 by The American National Standards Institute (ANSI) as a means for exchanging large volumes of data securely. While the military and logistics industries were the first to make use of X12 EDI transactions, a wide variety of industries have created X12 transaction sets to serve their needs as well.
As technology has improved, so has the X12 protocol, which delivers real-time communication between trading partners around the world. Since X12 EDI transactions are highly secure, it is one of the preferred communication methods for governments and the international finance industry. In fact, X12 is the national HIPAA protocol that was mandated for health care transactions after Congress passed the Health Insurance Portability and Accountability Act (HIPAA) in 1996.
In general, X12 transmissions are broken down into three main elements:
- Data: Includes simple data elements, such as a name or data type, and composite data elements, such as a phone number or other data elements that require data element separators. This is the raw data that comprises the information being exchanged.
- Segments: Groupings of data elements based on record types. Each segment starts with two or three character tags to designate what type of data is being segmented.
- Loops: Organized sets of segments within the transaction set.
Fortunately, you won’t have to worry about how the data within the X12 protocol is structured and organized because EDI software does that for us.
Examples of EDI X12 Transaction Sets
X12 transaction sets accommodate a wide variety of communications. Below are some of the most common uses:
- 204 Motor Carrier Load Tender: Requests the movement of a shipment to a full truckload carrier.
- 810 Invoice: An electronic version of a traditional paper invoice or bill.
- 820 Payment Order/Remittance Advice: Sent to either initiate a payment or send information for remittance.
- 850 Purchase Order: Replaces a regular paper purchase order.
- 855 Purchase Order Acknowledgment: Confirms the fulfillment of a purchase order as requested by the buyer.
- 856 Advance Shipping Notice: Includes details regarding how items are packed for shipment, the delivery schedule, and the destination of delivery.
- 990 Load Tender Response: Provides confirmation or rejection of a specific shipment for pickup, as requested by the shipper.
- 997 Functional Acknowledgment: Provides confirmation that an EDI transaction has been received.
Why the X12 Protocol is Valuable to Businesses
Although most businesses that use EDI don’t use X12 exclusively, it remains one of the most popular EDI protocols utilized today. The X12 protocol is the standard EDI protocol for a variety of industries because it’s fast, secure, and reliable.
In the digital age, where cyber security is a major concern, businesses prefer time-tested technologies that have proven themselves over and over. The X12 protocol meets the strict security standards of HIPAA regulations and government communications, exceeding the security needs of most small-to-medium-sized businesses that use EDI.
While you might expect a powerful technology to put a financial burden on your business, X12 EDI transactions are actually more cost-effective than other methods of communication – especially when you outsource to an affordable EDI VAN such as BOLD VAN.
In fact, businesses that switch to BOLD VAN save up to 80% on their EDI costs with our signature Trading Partner Pricing, while exchanging UNLIMITED EDI data every month!
There’s no hardware to purchase, no software to configure, and no IT knowledge required. All you need is an internet connection to get started, and we handle everything else for you.
In addition to the X12 protocol, our EDI service allows you to use any EDI protocol you need, and we even handle EDI compliance for you to ensure you successfully exchange EDI data with all of your preferred vendors.
Contact us today to learn more!