What does EDI Stand For?

(Electronic Data Interchange)

EDI stands for Electronic Data Interchange which is the exchange of large amounts of information computer-to-computer in a specified format between business partners. 

EDI has been in use since the 1960s, however in more recent years EDI came to play a key role in enabling supply chain automation, digital transformation and B2B business process automation.

More than 85% of all electronic business transactions take place using EDI. This method of exchanging documents is used in industries including retail, banking, high-tech, manufacturing, and services. 

Computer to Computer 

Computer to computer EDI saves time and cost associated with manual data entry, eliminating the need to mail, email, fax, and manually process documents.

Electronic Data Interchange (EDI) follows a certain set of standards that allow the senders documents to flow straight through to the intended application on the receivers end. This enables the processing and return documents to be accepted and processed immediately.

Manual Process (No EDI)

Manual Process (no EDI)

 

 

Common Errors with No EDI System

 

  • Missing or lost documents 
  • Time delays
  • Hard and soft costs
  • Pricing inconsistencies 
  • Weak security 
  • Poor customer relationship

Staying compliant with your business partners’ EDI requirements is crucial to a positive customer relationship.

Automated EDI Process

Benefits of an EDI System

  • Immense savings in time
  • Significant cost savings
  • Reduced drain on resources overall
  • Reduced error rates in data transfer (we almost want to say ‘eliminate’ here!)
  • Improved security of data being transferred
  • Reliability – you can have confidence that data is reaching its destination

 

Automated EDI Process

 Information moves directly from one internal system in one organization to a internal system in another.  

EDI Standards 

EDI standards define the location and order of information in a specific document format

  • Standards eliminate company-to-company fluctuations, allowing each business partner's computer system to speak the same language.
  • Standards describe the format in which the data will be sent and received.
  • Most common standard sets: American National Standards Institute (ANSI) X12 in North America, UN/EDIFACT globally 

EDI integration enables businesses to share a wide range of document types, most common are the purchase orders (850) and EDI 810 invoice

Businesses will need an EDI translator to translate the EDI format so the data can be used by their internal systems and thus enable straight through processing of documents. These translators can either be an in-house software or an EDI service provider

 

Complete EDI System

A complete EDI system consists of the following components 

  • Translator or Internet EDI application
  • EDI mapping 
  • A secure, dedicated reliable network that sends and receives the transactions 
  • Support services 

 

Types of EDI 

Integrated EDI Solution

An Integrated EDI solution translates your inbound documents, like purchase orders, from your trading partners’ EDI files into a format that can be imported directly into your ERP, accounting or other business system.

Internet EDI Solution

Communication of EDI messages via the Internet. Internet EDI is most often considered in contrast to doing EDI via a VAN (Value Added Network). In this situation, Internet EDI is simply a communications pathway, where EDI data is passed between trading partners using Internet protocols.

EDI Outsourcing

EDI outsourcing is also suitable if you have implemented a fully integrated EDI compliant system but still have partners who want to send you faxes. Commport’s managed EDI Service Bureau can be your clearinghouse for fax automation. We can process all of your paper-based documents and generate their electronic equivalents in the format of your preference for electronic integration. What could be easier?

 

 

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Author: Commport Communications

We opened our doors in 1985, since then Commport Communications’ focus has been to enable business to business communications. With over 25 years of experience we can help you find the right solutions for your business needs all in one place.