Electronic Data Interchange

What is EDI?

EDIElectronic Data Interchange is computer-to-computer communications and transmission of business information in a standard and structured format. Organizations are moving to EDI to streamline and improve business processes and transactions by communicating data electronically.



EDI, Electronic Data Interchange


EDI replaces previous order processes such as mail, fax or email by electronically exchanging documents between two companies with different internal systems. A translator will convert the business application data to and from another data format between the trading partners. Trading partners are two separate entities, i.e. supplier vs. buyer. View more EDI Industry Terminology.


The order processing life cycle is shortened significantly by creating a link between computer systems of different entities seen in Figure A. The most commonly-used documents in Figure A. are for example (850) Purchase Order and (810) Invoice. View more Commonly-Used EDI Documents.

Figure A

Benefits of Electronic Data Interchange

  • Labor minimizes data entry
  • Cost Savings eliminates expense of manual steps
  • Inventory reduces lead time on orders
  • Communication improves efficiency of communication and relationship with partners
  • Responsiveness quicker response time
  • Accuracy eliminates errors and submission of inaccurate data
  • Efficiency integrated electronic data interchange make the order processing more efficient and streamlined
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