Electronic Data Interchange (EDI) is an electronic communication method that provides standards for exchanging data via any electronic means. By adhering to the same standard, two different companies or organizations can electronically exchange documents such as purchase orders, invoices, shipping notices, bill of lading, customs documents, inventory documents, shipping status documents and payment documents.
EDI provides a technical basis for automated commercial “conversations” between two entities, either internal or external. The term EDI encompasses the entire electronic data interchange process, including the transmission, message flow, document format, and software used to interpret the documents.
Benefits of EDI
By moving from a paper-based exchange of business document to one that is electronic, businesses enjoy major benefits such as reduced cost, increased processing speed, reduced errors and improved relationships with business partners.
EDI has existed for more than 30 years, and there are many EDI standards, some of which address the needs of specific industries or regions. Some major sets of EDI standards:
- The UN-recommended UN/EDIFACT is the only international standard and is predominant outside of North America.
- The US standard ANSI ASC X12 (X12) is predominant in North America.
- GS1 EDI set of standards developed the GS1 predominant in global supply chain
- The TRADACOMS standard developed by the ANA (Article Number Association now known as GS1 UK) is predominant in the UK retail industry.
- The ODETTE standard used within the European automotive industry
- The VDA standard used within the European automotive industry mainly in Germany.
- HL7, a semantic interoperability standard used for healthcare data.
Read more about our EDI integration solution Cleo Clarify.