What is EDI (Electronic Data Interchange)

What is EDI (Electronic Data Interchange)

EDI (Electronic Data Interchange) is the transfer of data from one computer system to another computer system by standardized message formatting, without the need for human intervention.

EDI System

Before EDI

A typical manual process or half-computerized process is with lots of paper & people involvement

There are too much human involve with the process because of that

• Slow down the Process
• Generate more Errors 

Steps in an EDI System

1. Prepare the documents to be sent.
2. Translate the documents into an agreed standard EDI format. 
3. Connect and transmit EDI documents to business partner.
4. The trading partner receives the file.
5. An acknowledgement document is generated and sent to the originating organization.

steps in an EDI system

EDI Standards

• ANSI, EDIFACT, TRADACOMS and ebXML are some of the standards used by the EDI.
• For each standard there are many different versions, e.g., ANSI 5010 or EDIFACT version D12, Release A.
• When two businesses decide to exchange EDI documents, they must agree on the specific EDI standard and version.
• Businesses typically use an EDI translator: either as inhouse software or via an EDI service provider to translate the EDI format.
• So, the data can be used by their internal applications and thus enable straight through processing of documents.

Benefits of EDI 

• Reduce cycle time
• Improved operational Efficiency 
• Better inventory management
• Increased productivity 
• Reduced costs
• Improved accuracy
• Improved business relationship
• Enhanced customer service
• Increased sales
• Minimum paper use and storage
• Increased cash flow 
• Increased ROI
• Less errors