What is EDI (Electronic Data Interchange)?

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EDI stands for electronic data interchange and is defined as computer-to-computer exchange of business information in a standard and structured format. Organizations are moving to electronic data interchange to streamline and improve operational efficiency of business processes and communications by exchanging data electronically.

Electronic data interchange allows for:

  • The automated flow of business information between organizations
  • Integrated information flows into and out of respective business systems
  • Common “language” among different computer systems and data format
  • Data in a standard and structured format is translated into information that is understood by different systems used by organizations


For more information on how EDI works, simply view the video and learn how DataTrans can help get your company in EDI compliance today.

EDI Made Simple with DataTrans

Contact our EDI experts to learn more about:

  • How EDI can reduce your operating costs 
  • Scalable solutions: from web-based to complete integration
  • Lowering transactions costs and drop ship rates
  • Integrating with your business systems and shipping solutions
  • Live phone support, 24/7 system monitoring

Why EDI & How Can it Help Your Business?

Businesses adopt EDI to enhance efficiency, improve communication and accuracy of data exchanged, strengthen partnerships, and drive down costs. It eliminates the need to re-key information, reduces error-prone data entry and speeds up the process of exchanging business documents with customers and other trading partners. As seen in the following example, common transactions such as (EDI 850) Purchase Order and (EDI 810) Invoice, helps simplify and streamline the entire transaction process.

Order process without EDI

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order process without edi

Order process with EDI

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order process with edi

How does EDI work?

EDI optimizes workflow by replacing previous order processes such as mail, fax or email and electronically exchanges documents between two companies with different business systems. A translator will convert the business application data between the sender and receiver, such as trading partners. Trading partners is referred to two separate organizations, for example buyer and supplier or OEM and manufacturer. The order processing life cycle is shortened significantly.

EDI Document preparation: Generate the electronic file to be sent. Document preparation varies based on how each business generates the data, refer below to types of EDI software.


EDI Translation: With the use of an EDI solution, the data is translated to or from an EDI file in a standard and structured format. The common “language” among different computer systems and data format is translated into information that is understood by different business systems.


Transmitting EDI documents: Once the data has been translated to an EDI format, the document is ready to be transmitted to your trading partner. There are different methods of communication to send/receive data.

EDI Process Infographic: For Buyers & Suppliers

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Infographic detailing the EDI Process for Buyers and Suppliers

The most common communication methods include:

  • AS2 which specifies how to connect, deliver, validate and acknowledge data, and creates an envelope for a message which is the sent securely over the internet. An implementation of AS2 involves two machines, a client and a server, communicating with each other over the internet using HTTP/HTTPS protocol.
  • SFTP is a secure file transfer protocol that provides file transfer and manipulation functionality over any reliable data stream.
  • VAN, value added network, is a third-party network that acts as an intermediary between trading partners, an is responsible for routing, storing and delivering EDI messages.
  • HTTP/HTTPS is a communications protocol used to transfer information on intranets and the world wide web.
  • Direct EDI (Point-to-Point EDI) allows for companies to connect to business partners through various communication methods (including AS2, SFTP, VAN, HTTP/HTTPS). Direct EDI is most often seen in large corporations such as retailers, OEMs or hospitals, that have numerous business partners and exchange a high volume of documents.

How to Get Started with EDI

Easily become EDI enabled and compliant with all your trading partners via WebEDI. As DataTrans adheres to trading partners’ specifications, users maintain compliance with their entire network. With a seamless sign up link, you will have an analyst working on your behalf, testing directly with your trading partners and setting a go-live date. Attend WebEDI training sessions to anticipate what to expect when you receive your first order.

DataTrans reliable cloud-based infrastructure provides maximum up-time so that your solution is always available to access. WebEDI requires no special software or computer knowledge. The only requirements to use WebEDI is to have access to the internet. Thus, you can become compliant quickly with minimal cost and very little training. DataTrans WebEDI allows users to manage all of their activity and transactions from one simple, easy to use webpage. If you can use email, you can use WebEDI.

What are EDI Standards?

ANSI ASC X12 is the official designation of the U.S. national standard body for the development and maintenance of EDI standards. The most widely used standard in the United States and much of North America.

EDIFACT, known as Electronic Data Interchange for Administration, Commerce and Transport, is the international standard developed under the United Nations. The EDIFACT standard provides messages which allow multi-country and multi-industry exchange.

HIPAA (Health Insurance Portability and Accountability Act) is a subset of X12 with healthcare specific requirements. Part of the HIPAA initiative seeks to establish standardized mechanisms for electronic data interchange, security, and confidentiality of all healthcare-related data.

Tradacoms is an EDI standard introduced and implemented for the UK retail sector.  Tradacoms was introduced in the early 1980s and is maintained by the UK Article Numbering Association now known as GS1 UK.

Benefits of EDI

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

Improve the order to cash cycle

Quicker exchange of business information

Accuracy eliminates errors and submission of inaccurate data

Efficiency integrated electronic data interchange makes the order processing more efficient and streamline

Types of EDI Software 

EDI Outsourcing (also known as B2B outsourcing and EDI data management solutions), is designed to enable companies to communicate business data electronically. Outsourcing EDI allows your company to focus on your business while a team of specialists manage your EDI environment. A few outsourcing software options include: WebEDI, EDI VAN, Mobile EDI.

WebEDI (also known as Web EDI or web-based EDI), provides EDI communication through an internet browser. WebEDi is a simple, affordable, easy-to-use solution for companies to connect, manage documents and process transactions. Learn more about DataTrans WebEDI.

EDI VAN, value added network (VAN), is a third-party network provider that is solely responsible for routing, storing and delivering messages to and from the sender/receiver. Learn more about DataTrans VAN solutions.

Mobile EDI provides user access to WebEDI via mobile device with basic/limited functions like other software applications/mobile apps.

EDI Integration

The benefits of EDI are fully realized when integrating with your business processes. Seamless integration with your ERP, WMS, MRP, EMR or TMS allows for a completely automated EDI environment. Our integrated solution is great for companies requiring a more robust, automated, cost-effective and fully integrated solution.


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