Electronic data interchange (EDI)
EDI is a standard format to exchange business information between two organizations electronically instead of using paper documents
What is electronic data interchange?
Electronic data interchange (EDI) is the business concept that electronically communicates information that was traditionally communicated on paper, such as purchase orders, deliveries and invoices. To facilitate these EDI transactions, various standard formats have emerged with which companies communicate without the need for special arrangements.
With the advent of EDI, companies have automated business processes, leading to significant savings in both time and money and better accuracy of communicated data, eliminating manual errors.
Usually, the information provided by these systems is transferred between various companies and is integrated into ERP (Enterprise Resource Planning).
With the complexity of different business environments, various EDI standards have emerged, which have the role of hosting data in a standard format that meets the business needs of both the customer and the supplier.
Nowadays EDI is the basis of business-to-business (B2B) communications, business partners simply and quickly exchanging commercial documents.
Benefits of EDI
Even is used since the late 1960s EDI continues to demonstrate the core value of its business by reducing costs, improving the speed, accuracy and efficiency of its business.
The biggest benefits of EDI are:
lowering the operating expenditure by at least 30%
improve process automation,
improve data accuracy
remove manuall errors
real time tracking of all produced goods and stock
The EDI service usually takes place between 2 business partners and involves the establishment of standard protocols used and communication.
EDI standards are many and sometimes depend on the business field. Among the most common EDI standards are: EDIFACT (found globally), ODETTE (found in Europe, especially in the automotive industry), ANSI ASC X12 (predominantly in America), VDA (used in the European automotive industry, mainly in Germany), TRADACOMS (used in the retail industry, mainly in the United Kingdom), HL7 (especially in the medical industry), AECMA, EIAJ, SWIFT.
In terms of communication, here are also a number of options and protocols, such as: Value Added Network (VAN), AT&T, EXITE, OpenText GXS, Telebox X.400, Tradanet, OFTP, OFTP 2, AS2, AS4, FTP, SFTP, http.
A typical example of an EDI process: Partner 1 buys goods from Partner 2. Thus, Partner 1 sends orders and receives deliveries and invoices from Partner 2.